Moot dispute

I was interested to read Tony Bingham's article on Orange EBS Ltd vs ABB Ltd (13 June, page 54). You may recall that the case concerned an issue of whether a dispute had arisen for the purposes of adjudication, in circumstances where the referring party submitted its final account on 2 December 2002 and gave its notice of adjudication on 6 January 2003. Tony suggested that the test for whether a dispute has arisen is "usefully neat and tidy". I respectfully disagree. The question of what is a dispute for the purposes of adjudication has developed into something of a problem area, as is well illustrated by Judge Kirkham's judgment in Orange.

At the moment there is no Court of Appeal authority as to the meaning of "dispute" in the context of the enforcement of an adjudicator's decision. The Court of Appeal did consider the meaning of that word in Halki Shipping Corporation vs Sopex Oils Ltd. Here, it was suggested by Lord Justice Swinton Thomas that "there is a dispute once money is claimed, unless and until the defendants admit that the sum is due and payable". This has been applied in a number of cases on the enforcement of adjudication decisions.

In Orange, Judge Kirkham referred to this definition of dispute as the "simple test in Halki". Halki certainly gives a straightforward definition of a dispute. What's more, it is a definition that lends itself rather well to adjudication enforcement – summary judgment proceedings – since it is unlikely to give rise to involved factual issues.

It is also a wide definition: contractor serves claim on Monday; there is a dispute on Tuesday if the employer has not admitted that the money is due. According to this simple definition, there is no requirement to give the paying party an opportunity to study the claim before a dispute arises, let alone make any kind of response to it.

The judge quoted this definition of dispute when deciding Orange's enforcement proceedings and duly applied it. Orange had submitted its claim on 2 December. The claim had not been admitted or paid at the time that Orange commenced the adjudication process after the Christmas break. On that basis a dispute had arisen by the time the adjudication started.

The adjudication process was therefore valid.

Shortly before Orange was decided, however, Judge Forbes gave judgment in Beck Peppiatt Ltd vs Norwest Holst Construction Ltd (20 March 2003). That case, like many recent adjudication enforcement cases, was also concerned with the question of whether a dispute had arisen prior to the adjudication. In considering the point, Judge Forbes cited a passage from a judgment of His Honour Judge Lloyd QC: "For there to be a dispute for the purposes of exercising the statutory right to adjudication, it must be clear that a point has emerged from the process of discussion or negotiation that has ended and that there is something that needs to be decided." Judge Forbes held that this statement of principle was entirely consistent with the approach taken by the Court of Appeal in Halki, although he also observed that each case must be determined on its facts.

I am not convinced that Judge Lloyd's analysis, now approved by Judge Forbes, is consistent with Halki, or in any event with the short passage from Halki that I have quoted and which Judge Kirkham applied when upholding Orange's claim. Judge Lloyd refers to a "process of discussion or negotiation" that must be concluded before a dispute can be said to have arisen. Elsewhere, Judge Lloyd has held that "a dispute", for the purposes of adjudication, is "not lightly to be inferred". On the "simple test in Halki" there is a dispute pretty much on receipt of the claim.

Having held that the Halki test was satisfied in Orange, Judge Kirkham went on to consider whether "the process of discussion or negotiation" had ended. She found that it had, in spite of ABB's request for a little more time, and in spite of the Christmas holiday period occurring between the claim and adjudication. It was that finding that troubled Tony Bingham. But implicit in Judge Kirkham's judgment is acknowledgement that these are actually two different tests of whether a dispute has arisen. If so, there will be cases where one test is satisfied and the other not.

Further clarification is sorely needed on how the word "dispute" should be interpreted for the purposes of adjudication.