It is certainly true, as Tony asserts, that the "industry understands adjudication far better than the lawyers", but the Discain case brings complex legal concepts of "natural justice" crashing into the professional inquisitorial investigation that the industry understands by statutory adjudication.
His Honour Judge Bowsher in Discain stated that adjudication can be made to work in practice only if some breaches of the rules of natural justice "which have no demonstrable consequence" are disregarded, but found it "distasteful" to enforce a decision reached in breach of others. Tony summarises the rules of natural justice as simply requiring "fairness", but, although flexible, they are a bit more developed than this.
There is, for example, a rule against bias. There does not have to be actual bias but "a real danger" of bias. A classic example is the problem with Lord Hoffman's judgment against General Pinochet as a result of his connection with Amnesty International. It is not suggested that his views influenced his judgment, but, so that justice be seen to be done, it was found necessary to retry the case. The application of this to adjudication is obvious: if the adjudicator's firm has previously been engaged by one of the parties to the dispute, is there a real danger of bias? Or if the adjudicator has previously worked on another project as a member of the same team as one of the parties? The scope for attack is wide and ill-defined.
Discain was itself about the right to a fair hearing. It concerned telephone conversations with the adjudicator summarised in subsequent faxes copied to the other side, two of which were sent immediately and the third three days later.
As Dominic Helps states (6 October, page 88), Judge Bowsher "could not bring himself" to enforce a decision arrived at in this way. Judge Bowsher was relying on the principle that an individual must have notice of the case against them and reasonable time to prepare their defence. Other aspects of a fair hearing include:
- An opportunity to make representations.
- The right to an oral hearing – particularly where facts are in dispute.
I suspect that the experience of most of us with adjudication so far is that it has resulted in breaches of the rules of natural justice in many, many cases. Perhaps even most
- The obligation to give reasons for decisions.
Tony, given his experience and training, sees little difficulty with the need to ensure that his procedures are fair. But, as he himself acknowledges, the industry intended that adjudicators should be real practitioners and not lawyers. The rules of natural justice are not instinctive to those familiar with making decisions based on their own skill and expertise.
I suspect that the experience of most of us with adjudication so far is that the timescales and procedures have resulted in breaches of the rules of natural justice in many, many cases. Perhaps even most.
Common examples include the type of phone calls to the adjudicator described in Discain, but also site visits where the adjudicator is accompanied by one party but not the other, conversations over lunch and so on. The act requires that the contract impose a duty on the adjudicator to act impartially and he may indeed have done so, but he may nevertheless infringe the rules of natural justice.
It seems inevitable to us "headless chickens" – in which category I am pleased to see I am joined by Dominic Helps (13 October) – that Discain will spawn a host of further challenges to adjudication: first, to establish which breaches of the rules of natural justice have no "demonstrable consequence" and, hence, can be disregarded. It is, in this context, difficult to see the basis in law for the test put forward by Judge Bowsher. If natural justice applies to adjudication, an adjudicator's decision made in breach of the rules of natural justice should be void. Second, because the rules are routinely broken.
The issue is, of course, whether it is appropriate that the rules of natural justice apply at all. If adjudication is regarded as an inquisitorial "expert determination", the rules of natural justice do not apply. The difficulties are arising because adjudication is being treated as some sort of "halfway house". But as Mr Justice Dyson said in Macob, "the timetable for adjudication is very tight, many would say unreasonably tight, and likely to result in injustice. Parliament must be taken to have been aware of this." This would tend to exclude the rules of natural justice.
Postscript
Ann Minogue is a partner in solicitor CMS Cameron McKenna.
