The basic facts are that Whitefriars engaged Amec by a letter of intent in October 2000.
Work on site commenced in May 2001 and three months later, when the parties could not agree on a second stage tender, Whitefriars determined the letter of intent. Amec had then been paid £204,000 and invoiced for a further £500,000, which had not been paid. On the face of it, it is disputes of this size and type that adjudication was designed to resolve.
Nearly three years after its on site works ended, Amec has mounted two adjudications, won both and then lost both on enforcement (the latest by judgment given on 27 February 2004). It has incurred a cost bill and liability in the order of £250,000.
The first adjudication went in Amec's favour but was then found to be unenforceable. It turned out that the named adjudicator in the contract had not been appointed, and that a nominating body had instead appointed a Mr Biscoe. Since the adjudicator was not validly appointed, he could not make a valid award and so it was unenforceable.
After that decision, Amec tried to appoint the named adjudicator. It was only then that the name of the adjudicator in the contract was revealed to be misspelled, and to add to the confusion, the adjudicator whom the parties had intended to name had sadly passed away. Amec decided to go back to the nominating body and they asked for Mr Biscoe to be appointed again. He was duly appointed, although in the face of some criticism by Whitefriars. Notwithstanding Whitefriars' objections the second adjudication proceeded and Amec won. Amec went off to have another go at enforcing its award.
To add to the confusion, the adjudicator whom the parties had intended to name had sadly passed away
Whitefriars resisted enforcement on three grounds. Two of Whitefriars' three arguments failed. Whitefriars' third argument, which was adjudicator bias and breach of natural justice, succeeded. In fact, this subdivided into a number of arguments. One issue was whether the adjudicator simply made the same decision in the second adjudication as he made in the first. The court found that the awards were different and the adjudicator had not simply conducted a rubber stamping exercise.
On the second issue, however, it appeared that the adjudicator did rely on legal advice on his jurisdiction in the first adjudication. Indeed, he further relied on that advice to decide to continue the appointment as adjudicator before disclosing the advice to the parties for comment. The court noted that adjudicators should always take care to ensure that the material they rely on when making a decision is clearly conveyed to the parties before the decision is made.
Issue three centred on the adjudicator having a telephone conversation with the solicitor acting for Amec, which "went beyond what appears to have been the original enquiry as to where the papers were to be sent" according to the court. However, the court concluded that on its own the "conversation might not have warranted the conclusion of a real possibility of bias".
However, the conclusion reached by the court was that the totality of the actions of the adjudicator – taking legal advice from one adjudication into another, relying on the advice for a decision before disclosing it and the conversation with one party's adviser amounted to a "real possibility that the adjudicator was biased" in the mind of the fair minded and informed observer.
James Bessey is a partner specialising in construction dispute resolution at Hammonds, Birmingham.