Fraudulent Appointment of Adjudicator

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Eurocom v Siemens Plc (2014) CILL 3593.TCC. Ramsey

Facts

Eurocom had a sub-contract from Siemens to install communication systems.  The works were delayed and Eurocom applied by adjudication for a large payment.  The adjudicator was Mr Molloy who ruled in favour of Siemens.  A year later Eurocom, represented by Knowles Limited, applied again to the RICS for the second appointment of an adjudicator.  Knowles had filled in the RICS standard form naming a number of adjudicators as being barred for conflicts of interest, including Mr Molloy.

The adjudicator appointed on the second adjudication was Mr Bingham, who gave Eurocom an award of £1.6m.

Siemens had been surprised that Molloy had not been re-appointed and obtained copies of the papers from RICS.  They refused to pay and Eurocom applied to the TCC for summary enforcement.

Held

  1. Knowles/Eurocom had made a clear statement that the people named as “objected to” would have a conflict of interest, and so could not be appointed as adjudicator.
  2. There were no such conflicts of interest as regards Mr Molloy and various other potential candidates named.  The statement was wrong.
  3. There was ” a very strong prima facie case” that Knowles deliberately or recklessly answered the question falsely and therefore made a fraudulent representation to the RICS.  Therefore the second adjudication appointment was invalid, and through no fault of his own Mr Bingham did not have jurisdiction and therefore his award was not enforceable.

Comment

  1. The Judge was careful to say that this was an application for summary judgment, based upon evidence in witness statements, with no cross-examination.  Therefore it was not appropriate for the court to come to a firm view as to whether the person in Knowles had in fact acted fraudulently in making a false statement.  However the statement was false (incorrect) and there was a very strong prima facie case that the statement concerning conflicts of interest was made deliberately or recklessly.
  2. On that basis, the application for summary enforcement by Eurocom was refused. The matter would have to go forward to a full trial with cross-examination and evidence to establish whether or not there had actually been a fraud.
  3. There is no further report of this case.  It may have been settled.  If the court did decide that a fraud had actually occurred then this would invalidate the second adjudicator’s appointment and decision.
  4. The message of this case for claimants is to be very careful when raising objections to particular adjudicators.  For respondents, clearly the message is that, particularly where there is a second or third adjudication, and the ANB does not appoint their previous adjudicator, you should ask to see the nomination correspondence!

For more information, help or advice please contact Rob Langley on 0191 211 7975.