Mistakes in adjudication

Imagine a dispute where the adjudicator could have gone one way or another, or a situation where the adjudicator chose one version of the facts over another version of the facts. The rule the courts have applied in these cases is that, if the adjudicator decided something he or she had been properly asked to decide, then (whatever the court might think of the decision) the adjudicator’s decision is binding.

This would remain the case unless or until the issue is decided otherwise in litigation or arbitration. If the adjudicator decides something that he or she was not asked to decide, or was improperly asked to decide, his or her decision is of no effect.

The question is – was the issue within the adjudicator’s jurisdiction?

Where adjudicators make mistakes

Suppose instead that there is a simple mistake such as an obvious oversight, or a mistaken calculation, which someone looking at the case from the outside can readily identify as such. What can you do about it? The answer seems to be, with very limited exceptions, not much.

What happened in Bouygues versus Dahl-Jensen was that the adjudicator had to consider claims for various sums by Bouygues against Dahl-Jensen and claims by Dahl-Jensen against Bouygues for various sums. Dahl-Jensen was subcontracted to Bouygues, and did not apply for release of any retention sums.

The adjudicator in this case decided that parts of various claims by both parties were payable. So he had to calculate a net payment to be made. Having done so he decided that Dahl-Jensen was entitled to payment of £207 000 by Bouygues.

Unfortunately, in carrying out this calculation, the adjudicator took a gross sum including a 5% retention, and deducted from it sums which had been paid during the subcontract which excluded the retention. The adjudicator did not say that Dahl-Jensen was entitled to the release of the retention. This was not surprising, since Dahl-Jensen had not asked for it.

If the adjudicator had (correctly) deducted the 5% retention from the sums to which he found Dahl-Jensen to be entitled, the net effect would have been that Bouygues was entitled to receive £141 000 from Dahl-Jensen.

Two days after delivery of the adjudicator’s decision, the solicitors acting for Bouygues wrote to the adjudicator pointing out this error, and inviting him to put it right. Dahl-Jensen’s solicitors concluded that the adjudicator had no jurisdiction to do so. The adjudicator said that the calculations correctly reflected his intentions.

Dahl-Jensen then applied for payment in accordance with the adjudicator’s decision. Bouygues decided to resist on the ground that the adjudicator had decided a question outside his jurisdiction, namely the release of the retention.

Dahl-Jensen did not admit that there had been a mistake, but said that, in any case, the calculations by the adjudicator were in respect of disputes which were referred to the adjudicator, and therefore that the decision should be enforced.

The judge’s verdict

The judge was in no doubt about the calculations; he said that the adjudicator had “plainly made a mistake”. However, it was a mistake on a question which had been referred to the adjudicator, and therefore Dahl-Jensen should succeed in its application to enforce the mistaken decision. The judge gave judgement in favour of Dahl-Jensen.

By the time judgement was entered, Dahl-Jensen had gone into liquidation. Bouygues appealed to the Court of Appeal. The Court of Appeal decided that the judge had been right to find that the mistaken decision of the adjudicator was within the adjudicator’s jurisdiction, and binding.

The court noted that the liquidation of Dahl-Jensen had not been drawn to the judge’s attention, nor had the point been taken in the appeal. If it had been, then it should have been considered by the judge and/or the Court of Appeal, and, because of provisions in the law relating to insolvency, probably would have led to a different order. However, the point had not been raised. The appeal was dismissed.

So one possible exception to enforcement of an adjudicator’s decision is if the successful party goes into liquidation (and the unsuccessful party has genuine claims against the successful party), and this is pointed out to any court asked to enforce the decision.

There seems to be at least one other possible exception. What if the adjudicator makes a mistake, recognises it, and tries to correct it? Is the correction effective or does the original and wrong decision stand?

Correcting adjudication errors

In Bloor Construction (UK) versus Bowman and Kirkland (London), a judge decided that an adjudicator could correct certain mistakes, within a reasonable time of giving the decision. The adjudicator here had failed to allow in his decision for payments on account.

The losing party pointed this out immediately, and within three hours of his original decision the adjudicator issued a revised decision. The successful party attempted to enforce the first, wrong, decision. The judge said that it could not; the adjudicator had been entitled to correct his decision (as a judge can correct his or her own mistakes under what is known as the ‘slip rule’).

This power for an adjudicator to correct a mistake is not unlimited – any correction must be sought within a reasonable time (whatever that may be), and the adjudicator must accept that a mistake has been made.

Despite these two exceptions, however, generally speaking the rule remains: right or wrong, an adjudicator’s decision will be enforced by the courts, unless the adjudicator has ruled on matters which were not properly the subject of the adjudication.