REUTERS | Ognen Teofilovski

Unusually, the TCC refuses to enforce an adjudicator’s decision

The topic for discussion at the last Arbitration Society lunch (which I chaired) was the TCC’s decision in Quartzelec Limited v Honeywell Control Systems Limited [2008] EWHC 3315 (TCC).

This case raised a number of interesting points:

  • In a claim for money, a responding party is entitled to raise any defence open to it, regardless of whether that defence was raised in the run-up to the adjudication. Contrast this with the court’s decision in Benfield Construction Ltd v Trudson (Hatton) Ltd [2008] EWHC 2333, where the TCC refused to enforce the adjudicator’s decision because it was the same dispute as that considered by an earlier adjudicator. The corollary of this? A referring party cannot recast the dispute in a later adjudication although, it seems, the court will permit a responding party a free hand to do so with its defence.
  • Adjudicators must take care when deciding how far their jurisdiction extends. They must consider all the responding party’s defences, even if not all of those defences were raised before the adjudication started.
  • There is a distinction between, on the one hand, the adjudicator deciding whether he has jurisdiction to consider a defence (which will be outside his jurisdiction) and, on the other, deciding the merits of that defence (which is within his jurisdiction).
  • The need for a party to issue withholding notices does not extend to savings due to an omission in an interim valuation.
  • The court’s power to sever the “good from the bad” in the adjudicator’s decision is limited to instances where there is more than one dispute referred to adjudication. Here, as is often the case, one dispute was made up of various issues, which all needed to be resolved as part of deciding that one dispute.

The judge also made some interesting comments about adjudication:

  • Adjudication is a speedy, interim process and there should be no substantial delay or additional cost by starting the process again, with the same adjudicator. I’m not sure the parties (who generally have to bear their own costs and the costs of the adjudicator) will agree with the judge on this, although it is a win-win situation for the adjudicator!
  • A party should be aware that it cannot raise a jurisdictional challenge and then complain when, as a result of the adjudicator’s decision on that challenge, the court later holds the whole of the decision is unenforceable. This should act to caution those parties who fire off jursdictional challenges without a thought for the consequences. Having your cake and eating it springs to mind here.

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