Who's on your adjudicator shopping list?

Looking at the recent case of Lanes -v- Galliford Try Infrastructure, Nancy Hobbs examines adjudicator shopping, and the comments made on this subject by the head of the Technology and Construction Court, Mr Justice Akenhead. What are the potential advantages of naming an adjudicator in your contract?

Do you give much thought to the adjudication provisions in the construction contracts that you use? In particular whether or not there is an agreed, named, adjudicator? It would be fair to say that most adjudication provisions in construction contracts do not go as far as naming an agreed adjudicator.

Given the recent case of Lanes Group PLC v Galliford Try Infrastructure Limited [2011] EWHC 1035 (TCC) there might be merit in naming an agreed adjudicator in your construction contracts?

The  question arises  in light of the comment made by Mr Justice Akenhead in which he identified a “gap” in the Housing Grants Construction and Regeneration Act 1996 (the “Act”) and in many standard form contracts which would allow the referring party to effectively “shop around” for an adjudicator it “liked”, by withholding service of the referral documents following nomination of an adjudicator it “didn’t like” and then seeking a new nomination.

The dispute between Lanes and Galliford Try had some history but this case centred on the appointment of an adjudicator. Galliford Try asked the ICE to nominate and suggested an adjudicator who had acted previously. Lanes objected to him. The ICE appointed Mr Howard Klein. Galliford Try objected to him – their approach was simply not to serve a referral and then serve a fresh Notice of Adjudication and seek a fresh appointment. This time, Mr Daniel Atkinson was appointed by the ICE .

It was found in the above case that not serving the referral documents in this manner was a breach of contract (being a breach of the adjudication agreement), which may give rise to an entitlement to damages. Any damages in such circumstances are likely to be minimal which means that there really isn’t a significant deterrent to the referring party shopping around.

How would you feel if you were the responding party on the receiving end of a referring party who was effectively “shopping around” for an adjudicator that it “liked”? Especially if the adjudicator that was appointed  and accepted by the referring party was someone who you (as the responding party)” didn’t like”?

It may seem to the responding party in such a situation that the adjudication playing  field was no longer level. The parties had agreed upon the nominating body and it would therefore seem that they had agreed that any adjudicator appointed from that nominated body would be suitable. It would be reasonable to say that the parties had take a degree of comfort from the nomination process and that the appointment of the adjudicator would be in essence “random”, with neither party having any input or control as to who was selected as adjudicator by the nominated body.  

A referring party who chooses to embark on the course of action described above and “shop around” for an adjudicator it liked may  be able to take control of the appointment of the adjudicator. A responding party in those circumstances would be likely to feel that the adjudication playing field was no longer level.

So what could the responding party do to stop what they saw as an abuse of process by the referring party?

They tried to argue that Galliford Try had repudiated the adjudication agreement. The Court considered that this was inconsistent with the right given by Parliament to adjudicate at any time.  That right applied not only to any other disputes under the contract but to this dispute also.

It would seem from the comment of Mr Justice Akenhead that potentially an aggrieved party may be able to seek an injunction from the Court stopping the referring party from continuing with their adjudicator “shopping expedition”.

Although as no judgement was given on this issue, any case seeking such an injunction, possibly upon the grounds that that a dispute can only be referred to adjudication once (Mr Justice Akenhead commenting obiter that such an argument would be at least respectable), would be a test case. It would also be expensive and possibly extend further the time taken for a decision to be reached by the adjudicator appointed. Whether this is a concern for a responding party faced with what it feels may be an unfair dent in its cash flow remains to be seen. Both the additional cost and time would take away from the intention of adjudication that it should be a relatively quick and inexpensive dispute resolution procedure.

That takes us back to the original question regarding agreed named adjudicators in construction contracts.

While we await a decision which provides a solution to the “gap” allowing a referring party to “shop around” for an adjudicator that it “liked”, having a named agreed adjudicator in your construction contract may in the meantime be an alternative measure.  Doing that might, if a dispute arose,  prevent the referring party “shopping around” for an adjudicator which would  in turn save the time and expense that would have to be incurred to stop the referring party’s “shopping expedition”.

Clearly having one named adjudicator may not be suitable because of the different nature of disputes that may arise under a construction contract but having a panel of named adjudications (i.e. a QS and Solicitor etc) may be potential solution to the “gap” in the Act and many standard form contracts in the meantime.

If you have any queries about the issues discussed, please contact:

Nancy Hobbs
Solicitor
nancy.hobbs@hilldickinson.com
+44 (0)161 817 7346