Some contracts have picked up on this idea and put a time frame around the whole process, notably the construction contracts used by the Ministry of Defence. They require the arbitrator to fix a timetable for the proceedings at their first meeting with the parties which is not to exceed six months from the date of the preliminary meeting, unless the parties agree otherwise. The arbitrator is then obliged to issue their award within a further three months.
So what happens when a contractor submits an £80m claim which is going to take longer than six months to deal with? This was the scenario facing the judge in the recent case of John Mowlem Construction plc vs Secretary of State for Defence (CILL 2000 at P1655). The MoD was arguing that because of the six-month clause referred to above, the scope of any arbitration was restricted to disputes capable of being resolved within six months. Any other dispute would fall outside the arbitration clause and would have to be dealt with in some other way, possibly in court or perhaps by splitting up the dispute into a number of separate arbitrations with separate arbitrators. The MoD sought a declaration from the court to that effect.
Mr Justice Steel refused to give such a declaration, reasoning that the contractor's arbitration notice was valid even though the dispute would go beyond the six-month time limit. The "relief valve" of section 79 of the Arbitration Act could come to the arbitrator's rescue. Under this provision, either of the parties or the arbitrator could ask the court to extend the time for taking any step in the proceedings in order to avoid injustice. So if the parties did not agree to extend the six-month period in the contract, the arbitrator would be able to go to court for the appropriate "relief".
What would have happened if the contractor had decided that, instead of going to arbitration, it would resort to its statutory right to adjudicate? This is not just an academic question. Adjudication is being used increasingly to deal with complicated matters, not just rights to interim payments (and set offs) but final accounts, extensions of time and defects claims. The boundaries are being constantly pushed out and the demands made on adjudicators are becoming increasingly severe.
Loosen up the process and adjudication may thrive; keep it as it and the risks of serious miscarriages of justice increase
The Construction Act has, of course, no equivalent to section 79 of the Arbitration Act, so there is no relief valve available to an adjudicator and, as far as we can see from the recent CIB report, there is little likelihood of one being introduced by amending legislation.
This is surely a pity. Of course, an adjudicator has some ability to influence the parties to see sense and extend the statutory period where appropriate, and the "sanction" of resignation may well be available as a last resort. But this is all surely rather second best.
The appropriate solution for adjudicators would be to give them the statutory right to extend time limits if substantial injustice might otherwise occur. The problem about adjudication has never been that it has to be done and dusted within 28 (or up to 42) days. It is that it has to be done within that period by a process of applying English law to established facts. If the process is to be used in the future for even more substantial claims, then a relief valve is going to be necessary, unless of course adjudicators are to be allowed to make their decision on equitable or commercial principles.
Postscript
Tony Blackler is a partner in solicitor Macfarlanes.
