I recently resigned on day 27 of an adjudication (you may recall that adjudication under the Construction Act 1996 is supposed to be a 28-day process). You may be wondering why I resigned so late in the day.
Why resign so late in the process?
Although day 27 seems very late, I had actually been invited to resign by the responding party shortly after my appointment. However, I decided that I had jurisdiction, based on Fiona Trust principles, concluding that the contract’s adjudication terms were wide enough to cover a dispute “in connection with” the contract. (The contract was a JCT Design and Build contract, 2005 edition, incorporating the Scheme for Construction Contracts 1998 as the applicable adjudication rules.)
I had been advised by the parties that they were still arguing over an earlier adjudicator’s decision and that the responding party had started Part 8 proceedings to try and set that decision aside. To further complicate matters, the referring party refused to suspend my adjudication pending the outcome of the court proceedings.
Before the court’s judgment was handed down, I held a meeting with the parties. The referring party accepted that if the earlier adjudicator’s decision was set aside by the court, I would have to resign.
When the judgment was handed down, I was left with little choice, but to resign and invoice the referring party for my fees.
What is the basis of this?
It is well established that, provided an adjudicator’s decision is valid (that is, it was made within jurisdiction and without a breach of natural justice), it will be enforced by the courts. That decision is binding on the parties unless, or until, it is challenged in arbitration or court proceedings. This is often described as “temporary finality”. In practice, the majority of adjudicator’s decisions are complied with and, consequently, have an ever-lasting effect on the parties.
Equally, earlier adjudicators’ decisions bind subsequent adjudicators. If the subsequent adjudicator is being asked to decide “the same or substantially the same” dispute as the earlier adjudicator, then he should resign. There is considerable case-law on this point and I have written about resignation and “serial” adjudication before.
Under the Scheme for Construction Contracts 1998, an adjudicator can resign “at any time”, provided he gives written notice (paragraph 9). This is a discretionary right and may have been included in the Scheme to allow for instances of ill-health or other unexpected event. However, it is more commonly used, for example, if the adjudicator does not think he can deal with the dispute referred to him in the time available.
Was there anything the parties could have done to guard against this?
The responding party should always make its jurisdictional challenge as early as possible. In this instance, that happened and the parties could have agreed to suspend my adjudication so they would avoid the time and costs incurred in that adjudication. (It is not for me to comment on whether the dispute should have been referred to me at all, while the court case was pending.)
Alternatively, some may think that I should have resigned in any event, exercising my right under paragraph 9 of the Scheme.
I’ll leave you to decide the rights and wrongs of that and, in the meantime, for tips that may help the parties to ensure the adjudicator makes the right jurisdiction decision, see my blog post.