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Should an adjudicator disclose if he is simultaneously acting on another adjudication involving one of the same parties?

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18/10/2016

Beumer Group UK Ltd v Vinci Construction UK Ltd [2016] EWHC 2283 (TCC)

The TCC held in this case that the Adjudicator should have informed Vinci Construction UK Ltd (Vinci) that he was also at the same time acting as adjudicator on a separate adjudication which also involved Beumer Group UK Ltd (Beumer). The fact that the Adjudicator had not disclosed his involvement in the simultaneous adjudication gave rise to grounds of apparent bias and the court declined to enforce his decision.

Gatwick Airport employed Vinci to carry out works. Vinci entered into a sub-contract with Beumer, who then engaged Daifuku Logan Ltd (Logan) under a sub-subcontract.

Vinci issued three instructions to Beumer which Beumer alleged were Compensation Events under the subcontract. Vinci did not agree and Beumer commenced adjudication against Vinci seeking a declaration that the instructions were Compensation Events.

Around the same time, Beumer also commenced a separate adjudication against Logan, alleging that Logan had failed to complete its works by certain dates.

The Adjudicator was named as one of three potential adjudicators in the subcontract. The same adjudicator was appointed in both of Beumer’s adjudications. Neither the Adjudicator nor Beumer informed Vinci that the Adjudicator was also appointed in the adjudication between Beumer and Logan. In fact Vinci did not know anything about the adjudication between Beumer and Logan until several weeks after the adjudications had commenced.

The Adjudicator found that the instructions were Compensation Events and made certain declarations in Beumer’s favour to that effect. The Adjudicator ordered that Beumer pay his fees, and that Vinci should then reimburse these fees back to Beumer.

Vinci did not reimburse these fees to Beumer and Beumer commenced proceedings in the TCC to enforce the Adjudicator’s decision.

Vinci resisted the enforcement of the Adjudicator’s decision by arguing that there had been a breach of natural justice. Vinci said that the Adjudicator must have acquired background knowledge concerning the dispute between Vinci and Beumer, by virtue of his also being appointed as adjudicator on the dispute between Beumer and Logan. Vinci’s position was that it had had no opportunity to consider the information provided to the Adjudicator in the Logan adjudication and that it was unfair that no disclosure of the documents from the Logan adjudication had been made by Beumer. Vinci also complained that Beumer advanced factually inconsistent cases in the two adjudications. The TCC commented after hearing Vinci’s arguments that the Adjudicator would have known that Beumer’s position in the two adjudications was different, because he was conducting both adjudications.

The TCC commented that for breaches of natural justice to be sufficient to justify the court declining to order summary judgment enforcing an adjudicator’s decision, the adjudication proceedings must have been obviously unfair.

In this case, the TCC found that there had been a breach of natural justice because Beumer had advanced two conflicting cases in the two adjudications, and the Adjudicator should have drawn this conflict to the parties’ attention and allowed Vinci the opportunity to comment in respect of the same.

The Adjudicator should also have disclosed his involvement in both adjudications because adjudicators need to be seen to act openly and fairly to avoid any appearance of potential bias. If one party does not know the other adjudication is taking place then there is a risk that a fair-minded and informed observer would conclude that there was a real possibility of bias. This could be avoided by disclosing the existence of the appointment in both adjudications at the earliest opportunity.

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