This was a reclaiming motion from a decision of Lord Eassie of 14 April 2004. The pursuer was seeking to enforce an adjudicator’s decision. The enforcement was defended on the grounds that the adjudicator’s decision was “ultra vires” and should be set aside.
A referral notice was given to the adjudicator on 18 September 2003. The 28 day period within which to reach his decision should therefore have expired on 16 October. Due to postal error, the referral notice did not reach the adjudicator until 23 September. No decision was reached by 16 October and on 21 October the defender wrote asserting that the adjudicator no longer had power to reach a decision. On the same day the adjudicator faxed and posted a letter to the pursuer requesting consent to a postponement of his decision until at least 23 October. Consent was subsequently received. On 23 October the adjudicator intimated to the parties that he had made his decision. It was not until 27 October that he sent his decision, dated that day, to the parties.
The only issue for the appeal was whether the adjudicator’s jurisdiction expired on 16 October 2003 because the adjudicator had failed to reach his decision by that date, or whether his jurisdiction continued by virtue of subsequent consent to an extension of time.
Reference
The court considered it was not appropriate to refer to principles of arbitration, but instead “to go straight to the Scheme and construe it.” The pursuers argued that regardless of the time limit for the giving of an adjudicator’s decision, the adjudicator’s jurisdiction continued and was only brought to an end if one of the parties served a fresh notice of adjudication. The language in paragraph 19(i) and section 108(5) of the Act was clear in that it provided that the adjudicator “shall reach his decision” within 28 days. That language suggested that the time limit was mandatory. The adjudicator’s jurisdiction therefore ceased on the expiry of that time period.
The court considered that Judge Seymour’s consideration in Simon Construction Ltd vs Aardvark Developments Ltd [2004] BLR 117 of paragraph 19 of the Scheme (that the adjudicator’s jurisdiction continued until a fresh notice had been served) could only be arrived by way of a “contrived interpretation” (para 16). An adjudicator was therefore obliged to issue his decision within the time limit and had no power to issue it after the expiry of that time limit.
However, there was some latitude in the 28 day period (para 37) and it would seriously undermine the aim of providing a speedy resolution of disputes if the parties had to recommence the adjudication procedure (para 38). That approach would seriously undermine the effect of the adjudication, which this court was considering. The court therefore decided that paragraph 19(1)(a) of the Scheme was directory as to time rather than mandatory. Nonetheless adjudicators must issue their decisions within the time period.
*Full case details
24 March 2005, Second Division, Inner House, Court of Session, Clerk L.J, Abernethy, L Nimmo Smith L. [2005] CSIH 32
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Postscript
This case highlights the different approach of the Scottish courts to the English courts. The English court has held that the giving of an adjudicator’s decision after the expiry of the time period will not be fatal, unless a fresh notice of adjudication has been served. On the other hand, this case demonstrates that the Scottish approach is that the time for the giving of the decision is mandatory, but some latitude would be available in order to support the speedy resolution of disputes. Even so, an adjudicator in Scotland should therefore issue his or her decision on time.
