Adjudication Matters – May 2017


Do ongoing Part 8 Proceedings prevent a party from commencing a new adjudication?
Aecom Design Build Ltd v Staptina Engineering Services Ltd [2017] EWHC 723 (TCC) (05 April […]
Aecom Design Build Ltd v Staptina Engineering Services Ltd [2017] EWHC 723 (TCC) (05 April 2017)
This recent TCC judgment provides commentary on the practice of commencing Part 8 proceedings to undermine an Adjudicator’s decision.
In particular, the Judge criticised commencement of further adjudication proceedings before a Part 8 procedure challenging the enforcement of the current adjudicator’s decision had been concluded.
The Facts
Aecom Design Build Ltd (“Aecom”) terminated its subcontract with Staptina Engineering Services Ltd (“Staptina”), stating that the termination did not affect Staptina’s ongoing obligation to correct defects. Staptina issued a payment application for the amount due on termination. This was disputed and Staptina commenced adjudication, claiming that on a proper assessment of the amount due, Aecom was not entitled to deductions for the cost of defects or for any other reason.
This was the parties’ third adjudication on this same project.
The Adjudicator decided that Aecom was, in principle, entitled to make deductions, but that the deductions must be confined to what it would have cost Staptina to remedy the relevant defect, either before the works were completed or during the defect correction period.
Aecom brought a Part 8 claim, arguing that the Adjudicator only had jurisdiction to consider whether or not the deductions could be made and that the Adjudicator did not have jurisdiction to deal with the quantum of those deductions.
Aecom argued that the Adjudicator had exceeded her jurisdiction and that there had been a breach of natural justice because (so Aecom argued) the parties did not have a chance to make submissions concerning how, in principle, the deductions were to be quantified.
Staptina argued that the dispute was a “wide point of principle” which could not be answered so restrictively.
Decision
The TCC decided that the Adjudicator had acted within her jurisdiction. A dispute is defined by the matters in the various documents – not by the dispute’s potential answers. The notice of adjudication and referral notice expressly defined the dispute by reference to how, in principle, the deductions were to be performed. Although the quantum of the deductions was not expressly referred to in the documents, the drafting of the notice of adjudication and referral notice was wide enough to imply that quantum should also be decided.
The TCC said that there was no breach of natural justice because the Adjudicator had decided a point of importance on the basis of the material before her. The parties were aware of all relevant material, all of those documents were before the Adjudicator, and each party provided submissions in relation to them. The Adjudicator was not bound to accept only one of the two alternatives put to her. Choosing a different answer, and failing to notify the parties, is not a breach of natural justice because questions of contractual interpretation will often be capable of having more than two possible answers.
The Judge also criticised Aecom for proceeding with a fourth adjudication as though the decision in the third adjudication was not binding.
Comment
This case is a reminder that although parties may challenge the enforcement of an Adjudicator’s decision, the decision will bind the parties, and should be complied with, until it is overturned by a court or in arbitration.
The party referring a dispute to adjudication should ensure that the notice of adjudication and referral notice is clearly worded so as to avoid scope for confusion as to the precise parameters of the dispute to be decided by the Adjudicator.
(Walker Morris represented the Defendant in these proceedings, Staptina Engineering Services Limited).

A Slip-Up when using the Slip Rule
Dawnus Construction Holdings Ltd v Marsh Life Ltd [2017] EWHC 1066 (TCC) (11 May 2017) […]
Dawnus Construction Holdings Ltd v Marsh Life Ltd [2017] EWHC 1066 (TCC) (11 May 2017)
The TCC has confirmed that in the absence of an express reservation of rights, a party is not entitled to argue that an Adjudicator’s decision is a breach of the rules of natural justice, where that party has previously treated the decision as being valid.
The Housing Grants Construction and Regeneration Act 1996 provides that a construction contract must include a written provision giving the Adjudicator the power to correct clerical and typographical errors in his decision. This is known as the slip rule.
Marsh Life Ltd (“Marsh Life”) had previously invited the Adjudicator, under the slip rule, to make corrections to its award that Marsh Life had to pay sums to Dawnus Construction Holdings Ltd (“Dawnus”). The Adjudicator declined to make such corrections.
Dawnus sought summary judgment against Marsh Life after it refused to pay the sums awarded. The TCC found that Marsh Life was not entitled to resist enforcement of the Adjudicator decision on the grounds that the Adjudicator’s decision was invalid, when Marsh Life had previously accepted the decision as binding by requesting the corrections under the slip rule.
The Judge held that there was little distinction between a claim of breach of the rules of natural justice and a claim that an Adjudicator had acted in excess of his jurisdiction. As such, claiming the Adjudicator’s decision is a breach of natural justice is effectively claiming that the decision is invalid.
As Marsh Life had previously invited the Adjudicator to amend his decision under the slip rule, it had recognised and accepted the decision as being valid.
Unless Marsh Life had expressly reserved its rights to the contrary, it had waived its right to bring a challenge on the ground that the decision was invalid.
Comment
The case highlights the importance of careful consideration of all the options available to a party upon an Adjudicator making its decision. Whenever there is the potential that enforcement of the decision will be challenged on the grounds of validity, a party should make expressly clear in its correspondence with the Adjudicator and the other party that such rights are being reserved.