Going legal

It is sometimes difficult to explain to a client why a judge will insist on enforcing an adjudicator’s decision that is based on an elementary mistake of law. If, for example, the adjudicator wrongly decides that a contractor is entitled to a large sum of money, basing his decision on a payment clause that did not form part of the contract, the decision will still be enforced. So long as the adjudicator addresses the right question, he can be as wrong as he likes in formulating the answer.

The curious situation therefore arises that although adjudicators know they are required to reach decisions in accordance with the law, they also know that if they get it wrong the decision is nonetheless effective. So is it tempting even for the most conscientious adjudicator to give less attention than he might to the niceties of the law in the knowledge that, in effect, it does not matter whether he is right or wrong?

There is no evidence to suggest this is the case but as adjudications increasingly deal with substantial disputes and substantial sums, it is obviously desirable for adjudicators to get their law right.

The question of whether or not a document forms part of the contract may be a relatively easy question to deal with compared with some legal issues that frequently arise.

Take, for example, the vexed question of global claims. Contractors will often put these forward on the grounds that it is impossible for them to prove the causal link the law requires between an event and the precise financial loss it causes. The English courts reluctantly permit such claims only when it is indeed an impossibility but the Scottish case of Laing vs Doyle in 2004 took a more sympathetic line. The court reasoned that if all the delaying events relied upon by the contractor were down to the client, why should it be necessary to split up the resulting costs and attribute a separate amount to each individual event?

It seems inevitable that the pressure on the institutions appointing adjudicators will increase to raise the bar as far as legal training is concerned

By the same token, if the employer could show that part of the delays was caused by, say, exceptional weather for which it bore no responsibility, the global claim would fail. So far, so good. But the court went on to say that even if the global claim fell away, it would still be possible to apportion the losses, in line with the evidence presented, and make a partial award in favour of the contractor.

Observers of the English scene were sceptical that this would be followed by the English courts but we now have the decision of Mr Justice Ramsey (LUL vs Citylink) that accepts the rationale of the Laing vs Doyle approach to global claims and supports the approach recommended by the Inner House when a global claim fails.

The judgment will be welcomed by those who favour a pragmatic rather than a legalistic approach. However, in the case of Petromec (decided by a commercial court judge within weeks of the Citylink decision), a contractor building an oil rig had made a global claim. The contractor argued that it was permitted by the contract to claim the total difference between the final cost incurred and the initial projected costs. It did not, however, argue that it was impossible to present its claim other than in a global form. The judge interpreted the contract as requiring proof of the relevant causal connection between each change in specification and the cost attributable to it – the traditional line. The judgment makes no mention of Laing vs Doyle. An adjudicator, faced with a legal argument about the permissibility of global claims in the present state of the law, might be forgiven for thinking that he had enough headaches without having to reconcile apparently conflicting decisions of the courts.

It seems inevitable as claims in adjudication become more weighty, adjudicators become more sophisticated and the law refuses to become simpler, that the pressure on the institutions appointing adjudicators will increase to raise the bar as far as legal training is concerned. And we have not yet seen the Construction Act amended to embrace oral contracts, a move that will accentuate these difficulties. Adjudicators who command ever higher fees and are being asked to give reasoned decisions will increasingly find themselves turning into lawyers, or turning to lawyers for help.