In March 2011, Edwards-Stuart J gave a talk to the Scottish Building Contract Committee and the Society of Construction Law (SCL) in Edinburgh. The SCL has now published his paper for the benefit of all those unable to attend that meeting. The paper, When the adjudicator gets it horribly wrong, refers to the fact that adjudicators make mistakes and that sometimes, those mistakes are fundamental mistakes. It goes on to suggest possible solutions and makes interesting reading.
It is arguable that one of the down-sides of adjudication is the limited recourse the parties have when an adjudicator makes a mistake. Everyone is familiar with Bouygues v Dahl Jensen and the courts enforcing decisions, provided the adjudicator has asked himself the correct question. Indeed, Edwards-Stuart J considered this very question recently in Urang v Century, and enforced an adjudicator’s two decisions even though the adjudicator had, incorrectly, excluded the responding party’s counterclaim in each adjudication. An extreme example of the right question, wrong answer, perhaps (see Matt Molloy’s post from last week).
Challenging an adjudicator’s decision
Edwards-Stuart J discusses the options available when there is a mistake. There is nothing new in a party applying to the court for declarations using CPR Part 8, often in response to a Part 7/Part 24 summary judgment application from the party wanting to enforce the adjudicator’s decision. This may give the parties a final determination of an issue that the adjudicator wrongly decided and has become increasingly common in the TCC. However, it can only work when there is no substantial dispute of fact. (In addition, north of the border, there is no equivalent Scottish procedure.)
Edwards-Stuart J suggests two other possibilities for a party who wants to challenge the adjudicator’s decision. It may make a cross-application for:
- Summary judgment on the ground that there is no defence to the counterclaim.
- The determination of a preliminary issue on the point the adjudicator wrongly decided.
He suggests these options are not widely used because there has been a misunderstanding of the decision in Bouygues, stating that it is sometimes used to argue that “enforcement proceedings cannot be met by an application under Part 8″. He goes on to explain this potential misunderstanding, and refers to the arbitration clause in the contract that prevented Bouygues from asking the court for a final determination on anything.
Edwards-Stuart J also discusses his first ever enforcement case, Geoffrey Osborne v Atkins Rail. The facts of this are similar to Bouygues. The adjudicator’s mistake shifted the balance of payment from one party to the other; an error valued at almost £1 million, which is an expensive mistake for both parties. Interestingly, Edwards-Stuart J decided that the adjudicator had answered the correct question, wrongly, but in contrast to his judgment in Urang, he held that he could make a final determination on the point before him. The effect of this was to replace the adjudicator’s decision on a point with the court’s final determination. In the paper, Edwards-Stuart J describes this in the following terms:
“It is, in my view, an essential requirement that the court is in a position to substitute a decision for the decision of the adjudicator – it is not enough to be able to say that it is wrong.”
Provided this is read in context, and is limited to the declaration that the court makes on the Part 8 application, few practitioners would disagree (and see paragraphs 16.46-47 of Coulson on Adjudication, second edition, Oxford University Press).
However, taken more literally, this quote could mean that the court finds itself faced with some interesting arguments about what it can or can’t do during enforcement proceedings.