Being presented with an adjudicator’s decision that finds against you is a daunting prospect for parties to construction contracts, however there are steps that a losing party can take to seek to prevent enforcement of the decision.
Although the Technology and Construction Court (TCC) is typically reluctant to go against an adjudicator’s decision, the court will do so if the party can clearly show that the adjudicator’s decision was made without jurisdiction or that there was a material breach of natural justice. The onus is therefore on the unsuccessful party to persuade the court that the adjudicator made an error in law, fact or procedure.
Have I reserved the right to bring a challenge?
To challenge an adjudicator’s decision on the grounds of a lack of jurisdiction, the unsuccessful party must have reserved its right to do so. This means that an objection must have been raised during the adjudication proceedings, whether this be on initial notice of the adjudication or later when the responding party realises that there are grounds to reserve its rights.
If the responding party must make payment as a result of the adjudicator’s decision, they should ensure that they state that such payment is without prejudice to its right to challenge the decision, as failure to do so will usually mean that the party will lose its entitlement to challenge the award.
Did the adjudicator have jurisdiction?
This is one of the most pertinent questions when considering whether there are grounds to challenge an adjudicator’s decision as a court will not enforce a decision that was made without jurisdiction. If any of the below apply to the adjudication, it may be possible to make a challenge to the adjudicator’s jurisdiction and the enforcement of any decision:
- The claims arise out of multiple contracts;
- The contract between the parties was not concluded;
- The adjudicator was not validly appointed;
- The contract had been novated prior to the adjudication proceedings;
- The dispute between the parties had not yet ‘crystallised’;
- The adjudicator answered a question that was not put to them;
- The adjudicator’s decision was not given in time;
- The dispute between the parties had settled prior to the adjudication proceedings; or
- The referring party did not have legal grounds to adjudicate (i.e. there was not a construction contract under the Housing Grants, Construction and Regeneration Act 1996).
Was there a material breach of the rules of natural justice?
This is another question that you should consider if you are looking to challenge the enforcement of an adjudicator’s award. If the adjudicator has breached the rules of natural justice, you may have grounds to challenge enforcement of the decision. Some examples of this include an adjudicator’s failure to:
- Provide a party with adequate time to respond to submissions;
- Take into account submissions from one party;
- Act impartially; or
- Provide reasons for the decision (if requested or required).
If the court can be persuaded that the adjudicator has acted in material breach of the rules of natural justice, the adjudicator’s decision will not be enforced.
Which proceedings should I use to challenge the decision?
The enforceability of an adjudicator’s decision can be challenged in the enforcement action itself, by defending the summary judgment application made by the claimant. For example, if the adjudicator lacked jurisdiction to decide the dispute referred to him, the defending party can put forward this argument in defence of the enforcement proceedings commenced by the successful party.
The Technology and Construction Court Guide (TCC Guide) also provides for the use of Part 8 Proceedings to challenge the validity of an adjudicator’s decision where the adjudicator has made clear error.
The Part 8 procedure may be used by the unsuccessful party if:
- there is a short self contained issue
- the issue requires no oral evidence
- the issue is one which it would be unconscionable to ignore if there were a summary judgment application
The outcome of a Part 8 claim, if successful, would be a finding from the court which supersedes (and potentially overrides) the adjudicator’s decision.