Akin Akinbode and Tracey Summerell consider whether adjudicators should wear two hats

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Those drafting construction contracts can select from a range of established dispute resolution procedures to suit all projects and budgets. They might simply include a right to adjudicate or require parties to work through a sequence of resolution procedures. Some processes might be conducted simultaneously (say, mediation with litigation) – but they are rarely carried out by the same individual.  

The dispute resolution approach that cropped up in Beach Homes Ltd vs Hazell and Another [2018] EWHC 1847 (TCC) was therefore unusual. The adjudicator had accepted a reference that he interpreted as jurisdiction to act as both adjudicator and expert. On the facts, the judge agreed he had jurisdiction and enforced his decision. The interesting question is whether a similar dual-role approach will appeal to contract drafters or disputing parties.

The contractor (Beach) agreed to carry out residential construction works for Mr and Mrs Hazell (the owners). Their contract’s variation clause included this provision: “Should agreement not be possible at the final stage, the value of the variations to be ascertained by an independent quantity surveyor whose valuation shall be binding […] In the event of a dispute, it shall be agreed that it would be resolved through adjudication proceedings.”

Presumed jurisdiction

When a dispute arose, Beach served a notice of intention to refer the dispute to adjudication and Mr Judkins was appointed as adjudicator. This notice suggested the adjudication be conducted under the Scheme for Construction Contracts but did not mention expert determination. Mr Judkins proceeded on the basis that the variations clause gave him jurisdiction to deal with the variations dispute as an expert, and with certain other disputes between the parties as adjudicator.

He decided the Hazells owed money to Beach. They did not pay up, so Beach started enforcement proceedings and, when the Hazells did not acknowledge service, obtained judgment in default. The Hazells then applied to set judgment aside, arguing Mr Judkins had had no jurisdiction to act as expert and so his expert/adjudication decision was invalid. The judge disagreed and refused to set aside the judgment (on the basis that the Hazells were unlikely to be able to defend Beach’s enforcement claim successfully) and enforced Mr Judkins’ decision.

This decision indicates some judicial support for adjudicators acting as both expert and adjudicator in the same process. But, before you go tampering with dispute resolution provisions to give adjudicators this dual role, consider the following. Beach Homes involved a contract between a consumer employer and a building contractor and therefore came within the residential exception under section 106 of the Construction Act. Without the parties’ agreement to adjudicate in the variations clause, they would have had no right to adjudicate. On the facts, the judge agreed with Mr Judkins that the variations clause gave him jurisdiction to act as both expert and adjudicator. But note: the judge was bound to enforce Mr Judkins’ decision, whether his interpretation was right or wrong, unless he had acted outside his jurisdiction or fraudulently (applying the fundamental adjudication principle in Carillion vs Devonport Royal Dockyard). 

Further, the Hazells failed to reserve their right to object to Mr Judkins’ jurisdiction before proceeding with the process. The fact the referral notice did not reference the expert determination might well have undermined Mr Judkins’ jurisdiction to act as both expert and adjudicator. Had the Hazells made an appropriate reservation, the result might have been different, but by participating in the adjudication they in effect waived their right to question jurisdiction later. 

Dual role clauses

Giving adjudicators power to also act as experts requires careful drafting of dispute resolution clauses. In non-residential construction contracts, any such dual role clause must comply with the Construction Act. Non-compliance would trigger the application of the Scheme for Construction Contracts. 

Even if the contract successfully gives the adjudicator a dual role, care must be taken in drafting the referral notice to confer the required jurisdiction(s). It must state clearly which dispute is being referred, under what process, bearing in mind that the adjudication process is interim and expert determination is final and binding (save for manifest error). 

Drafting considerations apart, is there anything to be gained from this dual role approach? If resolution clauses are drafted suitably, adjudication and expert determination can work effectively side by side on the same project. Few would dispute the advantages of adjudication in resolving disputes quickly and keeping cash flowing. And, although underused, expert determination is a quick and cost-effective way of obtaining a binding decision on technical disputes.

Asking an adjudicator to combine these dispute resolution approaches, with their inherently different outcomes, in one process could bring unpredictable results that create cost- and time-wasting disputes about procedure and jurisdiction. For example, what is the status of an adjudicator/expert’s decision: is it final or interim?

Besides, would adjudicators even want to assess a technical dispute at the same time as handling submissions, given tight adjudication timetables? It might prove more effective to stick to what we know works: one process at a time.

Akin Akinbode is a partner and Tracey Summerell a managing practice development lawyer at Dentons