If you lost, being told why has the obvious benefit of preventing the development of a morbid obsession with the potential reasons. Equally obviously, the adjudicator’s information may help you to improve your contract administration.
However, it has other benefits, too. Knowing the reasons for the adjudicator’s decision may allow the parties to explore routes of settlement. It may also give the parties an insight into how a court or arbitrator is likely to interpret the merits of each party's case.
Professional indemnity insurers often require that reasons to be given. Reasons may also be important in insolvency proceedings. Liquidators appear to be adopting the approach that an adjudication award is valid – unless subsequently overturned – when considering claims made on or by a company in liquidation. Accordingly, a reasoned decision might be useful for showing why a claim failed. The claim may well have been valid, but it may not have been within the adjudicator's jurisdiction or the scope of the referral notice. The evidence presented may have been limited and better evidence may now be available – or will be made available in later court proceedings or in arbitration: further documents or witness statement evidence are examples of such evidence.
The courts have also made clear in the past that decisions without reasons are difficult to challenge later. This may be a reason for or against seeking reasons – it depends on whether you expect to win. Of course, it may not be clear from a decision without reasons whether all of the issues referred to the adjudicator have been determined by the adjudicator.
An adjudicator’s reasons can help a party to improve its business, to fight more effectively in court, to deal with a liquidator, or to settle. Yes, but are reasons good for adjudication?
However, written reasons can have a negative impact. They may encourage a disappointed party to take further steps on the dispute resolution ladder. The danger here is that reasons allow a party aggrieved with a decision to “pick over the bones” and consider how they wish to dispute the adjudicator's decision in the future. Occurrences of that type would be unhelpful in ridding the industry of disputes but this has to be balanced against the genuine desire of a party to obtain a fair result. A party acting in that spirit might find written reasons useful when attacking the adjudicator’s decision in any subsequent arbitration or court proceedings.
A more definite disadvantage of seeking reasons is that it will increase your costs. The adjudicator will need to give time and thought to his or her written reasons. Whether it is appropriate to incur such costs may depend on the size of the claim and how much weight either of the parties puts on where they were right or wrong.
In that context, reasons could be considered a management tool. The giving of reasons also tends to act against the spirit of adjudication, as it formalises a process that was designed to be quick and cost effective. It may result in an adjudicator asking for more time to prepare and issue his decision and reasons.
James Bessey is a specialist in dispute resolution with solicitor edge ellison. He can be contacted on 0171-404 4701.