If you Google my name (so I am told as I obviously wouldn’t do that myself…), I’m nowhere to be seen. The first hit you get is the former lead male in the Royal Ballet (the name is where the similarities end) and an English General who took a pounding from the Scots in 1745. Similarly, if you Google Matt’s name you are normally directed to an Irish musician or a pub in Westport, rather than an experienced dispute resolver. However, after the publication of Ramsey J’s judgment in the adjudication enforcement case of Eurocom v Siemens, I suspect Matt might be climbing the Google list, partly because his name is mentioned 19 times (despite not being the adjudicator in the case), but also because the case seems to be causing quite a stir.
Eurocom v Siemens
By now many of you will have read the case, but a brief background is as follows:
- In August 2012, Eurocom started an adjudication and Matt was appointed as the adjudicator (the first adjudication). In his September 2012 decision, Matt actually decided Siemens was owed £35,283, but payment was not currently due.
- In November 2013, Eurocom, represented by Knowles, served a notice of adjudication on Siemens (the second adjudication). Knowles applied to RICS (as the ANB) for the appointment of an adjudicator and, in answer to the question “Are there any Adjudicators who would have a conflict of interest in this case?”, listed 13 individuals who should not be appointed, including Matt “who has acted previously”. The RICS appointed Tony Bingham as the adjudicator (the second adjudicator), but did not copy the adjudicator application form to Siemens until January 2014, at which point Siemens asked Knowles for an explanation regarding the alleged conflicts of interest. No response was received.
- In his decision dated 28 January 2014, the second adjudicator awarded Eurocom £1.6 million (including interest).
- In May 2014, Eurocom commenced enforcement proceedings and Siemens resisted on a number of grounds, the most interesting one being that the second adjudicator’s appointment was invalid because of the information Knowles provided to RICS in making the application and/or because RICS failed to raise conflicts of interest with Siemens. Other issues raised included an allegation that the second adjudicator decided the same dispute as Matt and that there were breaches of the rules of natural justice resulting from the manner in which the adjudication was conducted.
Knowles “deliberately or recklessly answered the question”
Ramsey J held that the plain and ordinary meaning of the words Knowles used in the adjudicator application form was that it was advising RICS that the people named should not be appointed because they had a conflict of interest. He said that this statement was false in relation to Matt and a number of other potential candidates. Ramsey J also said that there was “a very strong prima facie case that [Knowles] had deliberately or recklessly answered the question” about conflicts of interest so certain individuals who Knowles “did not want to be appointed” were excluded. This was a fraudulent representation to RICS that invalidated the second adjudicator’s appointment, meaning that he lacked jurisdiction.
No breach of rules of natural justice
However, Ramsey J rejected Siemens’ argument that there was a breach of natural justice in the nomination process because RICS did not follow its own policy and send the application form to Siemens at the outset. He accepted that the role of an ANB is limited to the proper exercise of its discretion to make a nomination, and that it is not required to consult with the other party or achieve a balance between the parties. Therefore, RICS did not invalidate the second adjudicator’s nomination by failing to send the application form to Siemens.
Same or substantially the same dispute
Ramsey J also said that, even if he was wrong on the misrepresentation point, there was a significant overlap between the two adjudications and the second adjudicator had made decisions on claims that had already been adjudicated on. He did not have jurisdiction to do that and therefore his decision was invalid on these grounds.
What now for nomination?
This case has caused quite a commotion. In my view this is because what Knowles did is relatively common practice and so is likely to affect how representatives apply for adjudicators. In fact, I would say that in at least 50% of the application forms I see, representatives (both claims consultants and solicitors) have added one or two names of individuals said to have a conflict, or even a separate list. In many instances I have my suspicions that the people named don’t have conflicts at all. In particular, there are certain individuals who appear on such lists more often than others, and given these particular individuals don’t represent parties, act as expert, etc, I see the chances of conflicts arising being quite remote (or perhaps I’m wrong and they have financial interests in multiple construction companies?).
So if you’re applying to RICS or another ANB for an adjudicator, what should you do? Here are my three tips:
Tip 1: the conflicts box is only for genuine conflicts
Only enter names in the conflicts box if those individuals have a genuine conflict of interest. Even if you don’t enter any names in the box, in theory you should not end up with an adjudicator who has a conflict. This is because the adjudicator approached for the nomination has a duty to disclose any conflicts, and not to accept the appointment if conflicts exist.
With RICS there are two opportunities to disclose conflicts:
- When the adjudicator is telephoned enquiring whether he or she can accept the appointment
- The adjudicator’s written declaration that no conflicts exist.
RICS’ adjudicators also have to ensure that they comply with the RICS’ Guidance Note, Conflicts of Interest, which sets out a number of examples of conflicts in a traffic light system similar to the IBA. I would advise all representatives to read my blog on this Guidance Note and then get a copy as it should greatly assist in deciding whether conflicts exist.
Tip 2: take care if naming individuals you don’t want appointed
In theory, even after Eurocom v Siemens, there is nothing to stop a referring party from making representations and enclosing a list of “unsuitable” adjudicators with the adjudicator application form, and the ANB might be forced to take note of this. For example, if the ANB goes ahead and appoints from the list then the referring party could simply refuse to refer the dispute to that individual and just reapply to the ANB. As we learnt from Lanes v Galliford Try, adjudicator shopping is permitted.
However, parties will have to take care because if one of these “unsuitable” adjudicators gets wind of the list, the party or representative could end up finding themselves on the end of a defamation claim.
Tip 3: be proactive and suggest suitable candidates
I would suggest the referring party puts forward a list of, say, five names it considers would be suitable to be appointed as the adjudicator. I personally don’t think there is anything wrong with this approach, provided it’s not just one name. Alternatively, the referring party could state the qualifications of the required adjudicator to narrow down the field (for example, ask for a legally qualified quantity surveyor).
However, one has to be careful. Too much prescription might result in a skewing of the nomination process, for example stating that the adjudicator must be a barrister and engineer with grey hair and offices in a particular part of London might only result in one match.
A useful reminder
This case is a useful reminder that, while the TCC is an ardent supporter of adjudication, it will come down hard on parties and their representatives if they don’t play by the rules of the game.