REUTERS | Denis Balibouse

What happens when adjudicators make a mistake?

I had the idea of doing a piece about what parties can do when they think an adjudicator has made a mistake back in February when I saw the judgment in Northern Ireland Housing Executive v Dixons Contractors Ltd. Therefore, it is simply a coincidence that, last week, another one of my decisions was referred to in the law reports.

There are a number of parallels between the two judgments. In NIHE v Dixons, the adjudicator was asked to decide whether there was an ambiguity or inconsistency between a code of practice and certain drawings. It seems he went one way and, when the matter got to court, it went the other way. Something similar happened to me, although I was concerned with the terms of an agreement dealing with a revised practical completion date. The only major difference is that my decision was severed and partially enforced, whereas the other adjudicator’s decision was not.

However, this post is not about Willow v MTD (I’ll leave others to discuss that one), I’m looking at the use of Part 8 applications following adjudication.

Adjudicators can make mistakes

Before looking at what you can do if you think an adjudicator has made a mistake, it is worth reminding ourselves that adjudicators are allowed to make mistakes. Dyson J (as he then was) told us this almost 20 years ago in Bouygues UK Ltd v Dahl-Jensen UK Ltd, when he said:

“It is inherent in the scheme that injustices will occur, because from time to time, adjudicators will make mistakes. Sometimes those mistakes will be glaringly obvious and disastrous in their consequences for the losing party. The victims of mistakes will usually be able to recoup their losses by subsequent arbitration or litigation, and possibly even by a subsequent adjudication. Sometimes, they will not be able to do so, where, for example, there is intervening insolvency, either of the victim or of the fortunate beneficiary of the mistake.”

This view was upheld in the Court of Appeal by both Chadwick LJ and Buxton LJ, who commented that:

“Here, [the adjudicator] answered exactly the questions put to him. What went wrong was that in making the calculations to answer the question of whether the payments so far made under the sub-contract represented an overpayment or an underpayment, he overlooked the fact that that assessment should be based on the contract sum presently due for payment, that is the contract sum less the retention, rather than on the gross contract sum. That was an error, but an error made when he was acting within his jurisdiction. Provided that the Adjudicator acts within that jurisdiction his award stands and is enforceable.”

Subsequent case law has not undermined these principles and, as Coulson J notes at paragraph 8.07 of his book, one can say “with some confidence” that:

“… errors of law that do not affect the adjudicator’s jurisdiction and do not give rise to some argument as to impartiality or natural justice, will not prevent the enforcement of an adjudicator’s decision.”

He also notes that it is rare for a party to attempt to argue this point at the enforcement stage. It is perhaps for this reason that parties have tended to go down the Part 8 route instead.

Part 8 declaratory relief applications

In adjudication, we often see parties asking for declaratory relief. As declaratory relief is usually used when one party says there isn’t a substantial factual dispute, we are often asked to decide discrete points. These may relate to contract interpretation, or may be about “construction” issues that have arisen, such as whether an extension of time should be granted or a practical completion certificate issued. In my experience, these are often disputed points, giving rise to far more evidence than perhaps would be allowed on a Part 8 application (Part 8 specifically requires that there isn’t a substantial factual dispute).

It is becoming just as common to see parties making Part 8 applications challenging parts of an adjudicator’s decision. Coulson J may have given guidance in Hutton Construction Ltd v Wilson Properties (London) Ltd about how parties should approach this, but it doesn’t stop it happening.

I have seen it suggested that because parties are doing this, they are effectively appealing the adjudicator’s decision, since the court provides a final and binding decision on the point. Consequently, some people have suggested that it demonstrates that adjudication is flawed or broken.

In my view the opposite is true:

  • The fact that adjudication can resolve contractual interpretation points relatively quickly with the ability to have the adjudicator’s decision reversed (if necessary) is a benefit.
  • It is easy to lose sight of the fact that contested cases do not always have clear cut outcomes and that different adjudicators and first instance judges may reach different conclusions on the same submissions and facts. The fact that appeal court tribunals have more than a sole judge (and always an odd number) is a testimony to the fact that not everyone will agree.

Drawing an analogy with football

The football season may be over for a few more weeks (although the cricket world cup is reaching a tense stage, at least for England fans), but a football analogy seems relevant here.

Any regular viewer of football matches, whether in the ground or on TV, will be familiar with the chastising that referees get, both from biased supporters and also “clever” pundits with the benefit of slow motion cameras, replays and VAR. You only have to watch what has been happening in the women’s world cup to see this in practice. Similarly, losing parties in adjudication are not slow in chastising adjudicators for their decisions. Time pressures and the truncated nature of the process, along with the need to get a relatively quick answer (and the primary obligations to reach a decision) may also have an impact. This may well involve decisions being made on incomplete and/or undeveloped submissions and cases, and without the benefit of more thorough testing and analysis.

I will often say that I am allowed to get it wrong. I also believe (without allowing complacency to creep in or being arrogant) it is good to develop a thick skin when faced with criticism or a “reversed” decision. As long as you complied with your obligations and reached the decision you believed was warranted, based on the situation that you faced, then my view is that it is not worth agonising or beating yourself up because someone disagrees with your answer.

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