Adjudication – the 2 disputes rule

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Facts

Beck was a main contractor on a project in London and employed Deluxe as a sub-contractor.  There were a series of adjudications.  Beck brought an adjudication in which it sought an extension of time and payment in compensation for prolongation.

During the currency of that adjudication the Claimant applied to the same adjudication nominating body for the appointment of an adjudicator on a separate claim, about the failure of Beck to pay one half of the retention following practical completion. The same adjudicator was appointed.  This meant that one adjudicator was conducting two disputes at the same time.  Despite Beck’s objections the adjudicator found against it on both adjudications firstly ordering £120,000 for prolongation and secondly ordering payment of £38,000 as retention.  Beck refused to pay on the basis that one adjudicator should not rule on 2 disputes.

Held:

  1. An adjudicator only has jurisdiction to deal with one single dispute at any one time even if he deals with them in separate adjudication procedures.
  2. The Adjudicator was validly appointed on the earlier adjudication but the later adjudication was not valid or lawful because it represented an attempt to involve the same adjudicator in a second adjudication before the first one was concluded. Consequently the first adjudication Decision was upheld but the second was ruled to be unenforceable.

Comment

Unfortunately, the procedural law governing adjudication continues to get ever more complicated.  The Statutory Scheme for Construction Contracts at paragraph 8(1) provides that an adjudicator may adjudicate at the same time on more than one dispute under the same contract if and only if he has the consent of all parties.

Where there is a contractual adjudication clause, or a different set of rules apply (for example the Construction Industry Council Adjudication Rules) then it might be possible for an adjudicator, conducting 2 separate adjudications, to deal with 2 separate disputes relating to the same contract.

There is therefore real danger to a claimant who wishes to pursue a second adjudication before the first one is finished – he should firstly study the applicable Rules very carefully; and if possible make sure he gets 2 separate adjudicators appointed.

N.B. This relatively straightforward application to the TCC was supported by 6 lever arch files of evidence, most all of which was irrelevant. The Judge warned that in future the Court may well “simply refuse to hear cases with such “promiscuous and unnecessary bundling”.

For more information, contact Robert Langley on 0191 211 7957 or at [email protected].