Now consider the same situation with certain refinements. Again, the dispute involves issues you have already determined. However, in this case, your previous decision was made in an adjudication involving the referring party and a third party. The current respondent was not involved. Would you take the job?
These scenarios arose in two cases that came before the Technology and Construction Court last year. Both gave rise to judicial consideration of an increasingly central feature of adjudication: natural justice and the thorny question of apparent bias.
The first scenario arose in a case decided by Judge Bowsher, RG Carter Ltd vs Edmund Nuttall Ltd, in which the RICS appointed the same adjudicator even though he had determined substantially the same dispute between the parties in a decision later held to be invalid. No doubt the RICS's motive was in part that the adjudicator's knowledge of the case would mean the parties would benefit from reduced fees.
The claimant applied to the courts to have the adjudicator removed on natural justice grounds. How, it asked, could the adjudicator not be influenced by his previous decision? And how could it possibly have a fair hearing?
Judge Bowsher applied the appropriate test to determine whether the rules of natural justice had been breached: Would a fair-minded and informed observer conclude, on the facts, that the adjudicator could not reach an unbiased decision? In rejecting the claimant's application to prevent the adjudicator's appointment, the judge commented that, although unusual, the circumstances of the case did not give rise to legitimate grounds for questioning the adjudicator's impartiality.
The second scenario arose from a different case. This began with an adjudication involving an employer and a main contractor, as a result of which the contractor was held liable to the employer in damages. The main contractor was then successful in an adjudication in which it tried to pass on its liability to a particular subcontractor. When the subcontractor refused to comply with that decision, the main contractor commenced enforcement proceedings. The subcontractor had had no involvement in the previous adjudication.
The contractor was involved in each step of the dispute, whereas the subcontractor had not had that opportunity
During the enforcement proceedings, the subcontractor argued that the adjudicator had acted unfairly and that his conduct had crossed the "apparent bias" threshold. First, the adjudicator had become familiar with the site. Second, he had examined the work done. Finally, he had decided the amount that the main contractor was required to pay the employer. The main contractor had been involved in each step of dispute, whereas the subcontractor had not had that opportunity. It contended that this was an obvious disadvantage.
Judge Lloyd considered that there was sound justification to conclude that the adjudicator might be predisposed to a particular view on the amount of damages payable. Accordingly, he held the decision invalid and unenforceable.
Dominic Helps is a partner in Shadbolt & Co.