The case is Karl Construction (Scotland) vs Sweeney Civil Engineering (Scotland) (number 90 in our adjudication series). I will give you the details in a moment. First, though, let me tell you why lawyers won't be surprised by Karl's solicitors taking this one up to appeal. Lawyers are not too put out when a judge or arbitrator puts up their own idea to the advocates on what the law is. The advocate's job is politely to put the judge or arbitrator right, if they can.
But no judge or arbitrator would dream of adopting his or her own bright idea without first putting it to the parties and giving them the chance to shoot it down. It would be as daft as having one of those two o'clock-in-the-morning brainwaves. "Eureka," shouts the judge, jumping out of bed and typing out his decision, bright idea and all. "I have thought of a bit of law that no one else has come up with." That sort of brainwave is a complete no-no unless you put it to the parties at nine o'clock. If you don't, then there's been a "breach of natural justice".
Not so in adjudication, said this heavyweight court. Karl's lawyers were wrong to think natural justice applied in that arena. How come? Let me put all this in context by telling you what happened in the Karl case.
The dispute referred was the one to decide; the task of applying the law could not be circumscribed by later agreement of the parties
The dispute, which came to adjudication, was the right, or otherwise, of Sweeney to be paid more cash under interim account No 5. Ordinary stuff. But in the toing and froing of the adjudication period, the dispute became differently identified. It seems that Sweeney now said that it agreed that the payment rules in the subcontract satisfied the need to provide "adequate machinery for determining what was due and when". So it was wrong of it previously to claim "the scheme" rules would apply. I think that Karl said "pay when certified" applied. The adjudicator, nevertheless, decided the rights of Sweeney to be paid by using "the scheme", which of course won't touch pay-when-certified with a bargepole. Karl argued in both first court and court of appeal that the adjudicator had no jurisdiction to answer the original question. But the court said that the dispute referred was the one to decide. The dispute could not be somehow defined by subsequent dialogue. Nor could the adjudicator's task of applying the law be in some way circumscribed by later agreement of the parties. An adjudicator must apply the law to the dispute referred. His or her job is to ascertain the law and then apply it. If the adjudicator was bound to apply the law as both parties saw it, this would, for example, enable the parties in effect to contract out of the mandatory provisions of the 1996 act. So, if parties come to adjudication with a question and indicate what the law is, it appears open to the adjudicator to take a different view altogether. Moreover, it is that different view that will apply. So, if you have invented an adjudication clause that the adjudicator decides is non-compliant with the act, your homemade footwork may be unilaterally ousted by the adjudicator.
What really surprises me is that this high-level court says that if I, as adjudicator, leap out of bed at 2am and decide that the parties are wrong about the law, I needn't bother to tell them. I can keep my thoughts to myself until published in the decision. That is how it can be said "natural justice" does not apply to adjudication.
If that is correct about fathoming "the law", does it also apply to fathoming the facts? Can I, as an expert adjudicator plasterer take evidence from myself as to the state of the plaster and keep it to myself until published in my decision? Seems so. And if I take evidence from one party, do I have to make it available to the other party? Under the scheme, yes. But if there is no express rule saying so, I might not have to.
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or email him on email@example.com.