Raising one issue at a time in serial adjudications can lead to confusion all round - everything should be decided together

ian yule

The Construction Act was amended last year, so imminent changes in the law are unlikely. However, next time parliament reviews things, it could look at the position on serial adjudications, especially post-completion ones (adjudications on interim valuations and decisions during the course of the works are perhaps different, being part of what adjudication was originally meant for).

In a case that came to the courts years ago - JPA Design and Build Ltd vs Sentosa (UK) Ltd - the parties were disputing just about everything they could: defects, delays, valuations and termination. This was done via successive adjudications.

The judge ended his judgment with the words: “I do not consider that serial (and nakedly tactical) adjudications are the best method of achieving a comprehensive and binding resolution of the disputes between the parties.”

The case started when the contractor referred a dispute about an advance payment and an interim valuation to an adjudicator. It won on the first point and lost on the second. It then began a separate adjudication to resolve issues of delay. This was dealt with by a different adjudicator. He awarded some, but not all, of the extension of time sought, and therefore confirmed that the employer was entitled to deduct some liquidated damages. The case came to court partly on the issue of whether the contractor could get its advance payment without paying out the liquidated damages (it couldn’t).

Apart from the cost, serial adjudications can create an almighty muddle. it is not always clear if what the adjudicator says is regarded as having resolved the dispute

The judge’s comments highlight a type of dispute - the sort that is made up of lots of mini-disputes, each requiring separate adjudications - that adjudication, as a procedure, struggles to cope with. One problem is cost. Running multiple adjudications on different issues costs money. Some savings can be made if the same adjudicator is re-appointed for successive disputes, but this does not always happen.

There are more fundamental difficulties. It is well known that you cannot refer to a second adjudicator a dispute that has already been decided by a first. But what is the “dispute” for these purposes?

In one case a contractor fought two adjudications. In the first, it lost on its argument about when practical completion had occurred. In the second, it lost on the issue of what liquidated damages were due. Undaunted, it then started a third adjudication, with a different adjudicator, arguing that partial possession had been taken. The court refused to enforce the decision. It said that the contractor should have raised the partial possession argument in one of the earlier adjudications, not held it back for later. The issue had already therefore been decided in adjudications one and two.

Conversely, in a Scottish case, a main contractor argued that a subcontract incorporated SMM7. The subcontractor went to court to ask for an order that the main contractor could not do this, as a previous adjudicator had already decided the opposite. The court’s response was that, although the adjudicator had indeed said that SMM7 did not apply, that was not part of her decision, and she had not been asked to decide that dispute. So the point could be re-argued.

And in another case, a finding by an adjudicator that a fixed contract fee could not be adjusted was held not to be part of the reasoning that was essential to the dispute referred to him. Again, a second adjudicator was free to review the point.

These cases show that, quite apart from the cost, serial adjudications frequently create an almighty muddle. It is not always clear if what an adjudicator says is to be regarded as deciding the dispute (therefore unchallengeable) or not deciding the dispute (therefore up for grabs again later).Nor is it clear when a party can be stopped from raising an argument on the basis that it should have raised it in an earlier adjudication.

In this area, litigation does the job better. Ever since the mid-19th century, it has been an established principle that if there is a dispute between two parties, they should bring to the court all the issues that belong there - and in one go, not piecemeal. The court can then see the big picture and decide everything together.

As a judge said in another case: “Allowing one party to raise one legal issue at a time, in serial adjudications extending over many months or even years, until that party achieved a result that it liked […] was not the purpose for which adjudication was designed.”

Ian Yule is a partner at Weightmans