If a project involves two separate but related disputes, is it fair for one of the parties to send the second adjudicator the first one’s decision?

Tony Bingham

Sometimes you can feel the depth of belief – real concern – in an argument being run in court. This case is one such. The loser in the adjudication told the High Court that the other side “led the adjudicator into error by a misguided attempt to seek a tactical advantage or otherwise influence him”. That’s the High Church way to put it. Come to think of it, High Church thinking about legal formality, lawyer traditions, even ritual practices, collide head-on with those who take a secular view that adjudication is knock-about, rough-and-ready stuff. The lawyers in this case really did think that the adjudicator was led by the proverbial nose. Let me tell you the story.

Arcadis is one of the big boys in engineering, especially ground remediation. May & Baker, the chemical and pharmaceutical folk, gave it a £4.5m site development task. It was on an NEC 3 contract with scheme adjudication. Adjudication number one was a challenge to the NEC project manager, who was said by Arcadis to have gone wrong with fathoming the consequences of additional works on the site’s northern boundary. The result was a £500,000 award in favour of the remediation boys. No doubt buoyed, Arcadis came again. This time the dispute was about the southern boundary. Arcadis said it wanted the same adjudicator. They would, wouldn’t they? May & Baker objected, saying the first fellow was too expensive and had gone outside his jurisdiction. The nominating body took the purist view and appointed a new bloke. That is seen by some lawyers as wholly fair and gives a clean sheet. Others think it somewhat silly. By the way, another £500,000 turns on this second adjudication.

If it hadn’t been for what happened next it seems to me that nobody could possibly have become too concerned. Arcadis referral documents served on the other side and the adjudicator included a copy of the first adjudicator’s decision. The May & Baker lawyers said this was quite wrong. The idea, said Arcadis, was that the second adjudicator should adopt the thought processes and analyses of the first.

The nominating body took the purist view and appointed a new bloke. That is seen by some lawyers as wholly fair and gives a clean sheet. Others think it somewhat silly

That’s not the same as being bound by an earlier adjudicator’s decisions. Put this another way: in the first adjudication the only man on the pitch who was impartial was the referee. Arcadis wanted this independent thinking to plant itself in the second referee’s head. They were using him to influence the second ref. Now then, if you are strict about formal dispute machinery you would object to this use of the first referee being a sort of advocate in the second dispute. The objection is good because, at the very least, the thinking previously is irrelevant. If adjudication has that formalistic culture at base, the argument of irrelevance is right. Do you see what I mean by High Church? The previous award and its reasoning is inadmissible.

Wait, wait – if instead parliament and industry’s idea of adjudication was, and still is, that it be “conducted in a manner which those familiar with the grinding detail of the traditional approach to the resolution of construction disputes apparently find difficult to accept”, you will instantly see my point. And by the way, that is a quote from a leading adjudication case 14 years ago.

How did the judge approach this in Arcadis vs May & Baker? He wouldn’t accept that adjudicator number two was not allowed to look at number one’s reasoning. “I have no hesitation in saying that it was neither improper nor contrary to the rules of natural justice … The first adjudicator’s findings on what the contract meant were at very least germane and could well be thought to be persuasive.” And then he added: “Adjudicators must be trusted, generally at least, to be able to reach honest and intelligible views as to the extent to which such earlier decisions are relevant or helpful or not.”

The challenge by May & Baker’s lawyers can be regarded as novel. The point hasn’t been taken before. That’s the way things work in this law business. Adjudication began as a look, sniff, informal rummage by a QS or engineer brought in to give a rough idea of who has the cash until sorted out later. Some lawyers will attempt to shift the machinery into their norms. My plea is not to leave industry behind, please.

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple