UK High Court reviews temporary binding effect of adjudicator’s decision

A fundamental characteristic of adjudication as a form of ADR is that it is binding only until the dispute is finally decided through litigation or arbitration. Indeed, the UK Construction Act provides that adjudicator’s decisions are binding on the parties until the dispute is finally determined by other proceedings or agreement. This precludes subsequent decisions by the same adjudicator on the same issues: Vertase v Squibb [2012] EWHC 3194 TCC (13 November 2012). Continue reading

UK: further case on enforcement and severability of adjudicator’s decision

In its third judgment on severability in 2012 (see earlier cases Working Environments Ltd v Greencoat Construction [2012] EWHC 1039 and Beck v UK Flooring [2012] EWHC 1808 (TCC)) the English High Court has ruled that an adjudicator’s decision can be enforced in part only, severing the part reached without jurisdiction. However, where (as here) only one issue is decided by the adjudicator, severance will only be possible where the reasoning of that section is not integral to the remainder of the decision: Lidl UK GmbH v R G Carter Colchester Ltd [2012] EWHC 3138 (TCC). Continue reading

UK adjudication: Court of Appeal denies adjudicator his fees in light of breach of natural justice

The Court of Appeal in PC Harrington Contractors Ltd v. Systech International Ltd [2012] EWCA Civ 1371 has held that where an adjudicator produces a decision that is unenforceable due to a breach of the rules of natural justice, then his fees should not be paid. The adjudicator’s decision was unenforceable because he had failed to consider part of the sub contractor’s defence.  In overturning the first instance decision, the Court decided that the adjudicator’s duty was to produce an enforceable decision and there was no entitlement to be paid if he did not do so, even in respect of services performed by him which were preparatory to making the decision. Continue reading

Scottish court reviews the applicability of natural justice to an adjudicator’s decision

An adjudicator’s decision will only rarely be challengeable on the ground of inadequate reasons. It would have to be shown that the reasons were so incoherent that the reasonable reader could not make sense of them. Likewise the decision cannot be criticised if the adjudicator has asked himself the right question but has given the wrong answer: PIHL UK v Ramboll [2012] CSOH 139. Continue reading

Crystallisation of disputes and severability/part-enforcement of adjudicator’s decision

The TCC has held in Beck v UK Flooring [2012] EWHC 1808 (TCC)  that a dispute cannot crystallise until a claim is not admitted. This may be achieved through silence depending on the facts of the case, but sufficient time must pass before silence can be interpreted in this manner. The TCC also held that an adjudicator’s decision may be severed and enforced in part. The decision is important in that it is one of the first occasions in which an award has been ordered to be severed and enforced in this way. Continue reading

Challenges to the enforcement of Dispute Board decisions in Asia

The use of Dispute Boards is becoming increasingly common on large and complex projects across the Asia Pacific region. In many cases, Dispute Boards have provided an effective means for parties to obtain interim decisions on disputes pending final resolution by arbitration or litigation. Unfortunately, however, enforcement of a Dispute Board determination is not always straightforward. This should be addressed through careful drafting and, in particular, by vesting an arbitral tribunal with jurisdiction to address in an expedited manner any failure to comply with a Dispute Board decision.  We consider some of the difficulties which may arise with particular reference to a recent Singapore case. Please click here to read more.

Court of Appeal finds mediation clause in insurance contract did not give rise to a binding obligation

In Sulamerica CIA Nacional de Seugros S.A. v Enesa Enenharia S.A. [2012] EWCA Civ 638 the English Court of Appeal was asked (amongst other things) to determine the enforceability of a contractual mediation clause.  The clause (condition 11) was contained in an insurance policy, directly before an arbitration clause, and required the parties to mediate before proceeding to arbitration. The insurer had not sought to mediate prior to instituting arbitration. The insured submitted that the mediation and arbitration clauses were part of a single dispute resolution regime, and that mediation was a condition precedent to arbitration. The Lord Justices of Appeal concurred with Cooke J, the trial judge, that these did not give rise to a binding obligation to mediate (and so there was no requirement to comply with the mediation clause in order to be permitted to commence arbitration). Lord Justice Moore-Bick noted that the relevant condition did not set out any defined mediation process, nor did it refer to the procedure of a specific mediation provider. Continue reading

Adjudicator answers correct question so decision enforced in Urang Commercial Ltd v Century Investments Ltd and Eclipse Hotels (Luton) Ltd [2011] EWHC 1561 TCC

Edwards-Stuart J in the Technology and Construction Court considered applications for summary judgment in two separate adjudication enforcement actions, brought by a contractor against an employer. The adjudicator had decided the dispute in favour of the contractor, but the employer failed to comply with the resulting order. The contractor applied to the court for enforcement, and the employer resisted this on the basis that the adjudicator had answered the question wrongly: Urang Commercial Ltd v Century Investments Ltd and Eclipse Hotels (Luton) Ltd [2011] EWHC 1561 (TCC). Continue reading

Validity of provision requiring one party to bear the costs of adjudication

In Yuanda (UK) Co Ltd v WW Gear Construction Ltd [2010] EWHC 720, the adjudication clause in a trade contract provided that if the contractor referred a dispute to adjudication, it would be liable for its own legal and professional costs and those of the employer, regardless of the eventual decision. Edwards-Stuart J in the Technology and Construction Court concluded that this clause was in conflict with the requirements of section 108 of the Construction Act (the Act) and of the Scheme for Construction Contracts and was therefore unenforceable. Continue reading