In one respect, though, adjudicators are mere mortals – they are worried about being paid. After all, it is a little annoying to find that nobody wants to pay your extremely reasonable fee after you have achieved the impossible and produced a decision, often complete with reasons, within four weeks.
Adjudicators are not alone in this concern. Arbitrators have a similar penchant for being paid, and usually they sort things out to ensure that there is no problem. Typically, arbitrators will require cash to be deposited with them or a third party as security for fees. They will politely explain that they do not propose to lift an arbitral finger until this has happened. That sum will then need supplementing as matters proceed, and if there is to be a final hearing, perhaps lasting several weeks, the sum can be substantial.
If this has not been achieved, all is not lost. The arbitrator has a lien over his award, provided by section 56 of the Arbitration Act 1996. In simple terms, they can hang on to their award until the fees are paid. They will write to the parties to give them the good news that the award is ready, but neither of them will get it until they pay.
Many adjudicators think that they can do the same, but they are usually wrong. There is no equivalent of section 56 to protect them. There is no right either to payments on account, or payment as a condition of release of the decision, unless the agreement between the parties appointing the adjudicator gives them such a right. Most such agreements say nothing of the sort.
Some adjudicators are appointed without the assistance of a nominating body. The parties agree that a specific person shall be appointed. They write to them and ask if they will accept appointment and they say that they would be delighted, providing the parties agree their terms. Those terms may provide for either method of securing fees, and if the parties agree those terms they are bound by them.
Most adjudications, however, involve an application to an adjudicator-nominating body, such as the RICS or the Technology and Construction Solicitors Association. That application is effectively a request by one party, as agent for both of them, to the institution to act as the parties’ agent. The institution then, on behalf of the parties, asks whether a particular person wishes to act. That request is what lawyers call an “invitation to treat”.
When the institution nominates, the adjudicator is on board. The deal is done, and if nobody has said anything about payments in advance or liens, it is too late to start now
The potential adjudicator responds that he would be delighted to do so – that is an offer to act as adjudicator on the basis of the information that they have been given. When the institution nominates, the offer is accepted on behalf of the parties, and the adjudicator is on board. He or she has a contract. The deal is done, and if nobody has said anything about payments in advance or liens, it is too late to start now.
One way in which the adjudicator’s position may have been protected is through the adjudication rules applicable to the relevant contract, which will be carried through to the adjudicator’s appointment. The model procedures published by the Construction Industry Council, CEDR and the Institution of Civil Engineers make various provisions to enable the adjudicator to withhold his decision pending payment, but most adjudications are not on those rules. Paragraph 19(3)of the Scheme for Construction Contracts states that “as soon as possible after he has reached a decision, the adjudicator shall deliver a copy of that decision to each of the parties to the contract”. That does not allow any hanging about while the adjudicator sorts out payment of fees. The JCT series of contracts and their associated subcontracts contain a similar provision, and the TeCSA Rules say that the adjudicator may not require any advance payment for security of his fees, which could hardly be clearer.
While it is all very well to decide that the adjudicator is not entitled to payment in advance, parties often wish to stay on his right side, at least for the first few days. Having an argument about fees does not seem to be the obvious way to go about it.
The adjudicator-nominating bodies could help us all by making the position entirely clear.
When asking a potential adjudicator whether he is available to accept an appointment, the institution should ask whether he will require fees on account, and if the answer is yes, the referring party should be consulted before the nomination is made. Even better, the institution should make it a condition of inclusion on its panel that fees on account will not be required.
Postscript
John Redmond is head of construction at solicitor Osborne Clarke OWA in Bristol.
