The second adjudication in HG vs Ashwell demonstrates exactly what’s wrong with adjudication: the people who dispense it must be better regulated.
Dominic Helps wrote about “the immortal phrase temporary finality” in the light of HG Construction vs Ashwell Homes (16 March, page 65). But temporary finality in adjudicators’ decisions should not cause the difficulties it seems to.
The real issue is this: if a decision that an adjudicator is asked to make is substantially the same as a decision that has already been made by another adjudicator in relation to the same contract, the second adjudicator should decline to act.
The contract (and failing that the Construction Act) says the first decision is binding, and that’s that. The HG Construction case boiled down to this simple question: are the following decisions on substantially the same issue?
- That the liquidated damages provisions are enforceable
- The same provisions are unenforceable
Adjudicators don’t like to decline appointments: they put food on the table. In other walks of life we call this a conflict of interest
The answer is that the second adjudicator in the case, Mr Riches, had failed to spot that he had no jurisdiction and then decided substantially the same issue in a completely different way to the first adjudicator.
He perhaps ought to have had regard to the terms of the contract – which made the first adjudicator’s decision binding – and declined to act. But he didn’t, and the reader can guess how much the adjudication and legal bills were after four adjudications and two sets of court proceedings (complete with two silks).
The trouble is, adjudication has become something of an industry and a not very well regulated one. Adjudicators don’t like to decline appointments because appointments put food on the table. In other walks of life we call this a conflict of interest, but because adjudicators are quasi-judicial and often nominated by august institutions such as the RIBA, Institution of Civil engineers (ICE) and the RICS, people dare not suggest it.
The fact that adjudicators cannot be held liable for what they do unless it is done in bad faith adds to the problem. There must be a temptation, even if it is only a teensy one, for adjudicators to accept nominations where in truth they should not. Here adjudicators might put their hands up and complain that by law they don’t even have power to decide whether they have jurisdiction, so it’s a bit much for us to expect them to get this sort of thing right. It’s not a perfect system, but imperfections are inherent in quick-fix dispute resolution. Adjudication is not there to produce riches for adjudicators.
Adjudicators who’ve got it wrong can be found on the panels of any nominating body. The bodies must do more to help us here
The only real drawback for adjudicators is that if they err more than once in a blue moon, they will get a reputation, at least among those who read the law reports. The nominating bodies also run schemes to ensure the quality of adjudicators.
To get on the RIBA’s list, adjudicators need to take a written test and be interviewed. Whether these schemes do what they say they do is another matter. The RICS is advertising a training programme for adjudicators whose sponsors are the Association of Independent Construction Adjudicators, the Chartered Institute of Arbitrators, the ICE, RIBA and RICS. The programme involves a two-day industry-accredited course, described on the RICS website as “in a sense, one training course, five certificates”. What confidence can we have in that?
None of this prevents nominating bodies putting forward bad adjudicators. Adjudicators who have got it wrong can be spotted on the panels of any nominating body. The bodies must do more to help us here.
If the second adjudicator in the HG case had spotted that he was being asked to decide something that had already been decided, he could have helped to keep the case out of court. It was not like an extension of time claim, where completely different evidence was being advanced (as described by Tony Bingham, 26 January). He was being asked to answer the same question by reference to a different argument.
While nominating bodies could do more to help, thanks to Mr Justice Ramsey’s decision in HG Construction, the likelihood of Dominic being proved right is rather lower than it was.
Nick Lane is a construction lawyer at Olswang. Contact him at email@example.com
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