The courts are pushing back against losers’ attempts to challenge arbitration rulings on dubious procedural grounds
The adjudicator came down on the side of Bilton & Johnson (Building) Ltd. He ordered Three Rivers Property Investments Ltd to repay £228,273.48 previously and wrongly deducted for liquidated damages for late completion. But it wouldn’t. So the builder asked the High Court to nudge it into paying. Very politely the judge said that Three Rivers’ refusal was “ill founded” – so pay up.
Two grounds were put up for not immediately honouring the adjudicator’s decision, according to the loser. First, “the adjudicator had acted in breach of natural justice by reaching a decision on a basis which had not been advanced by either party and on which Three Rivers had no opportunity to make representations.” Now then, adjudicators often do that. In this case the adjudicator had twigged that the contract at the outset was changed once the JCT document was issued and signed up to by both companies.
The cry, in court, was that the adjudicator hadn’t piped up on this. Why hadn’t he told them, so that they could have argued? If he had, then Three Rivers (so it said) would have given evidence that there was no contractual intention to replace the first contract with a second.
Very politely the learned judge in the High Court said “that submission served only to demonstrate that there was no unfairness in the adjudicator’s approach”. The judge said “if and to the extent that the defendant failed to lead evidence on absence of contractual intention to replace the original contract, that was its own doing; it was not taken by surprise and prevented from this course by the approach adopted by the adjudicator”.
Let us take it to be true that no one knew what the adjudicator had discovered and not told. So what? Was he unfair by not raising it? No, said the judge. I think he was saying, very politely, that the complaining party ought to have seen the point for itself and argued a way around it. There should be no surprise that the adjudicator saw it for himself, hence no unfairness.
Too many unsuccessful arbitration participants still see it as worth their while to ‘roll the dice’ by manufacturing a pathway to a court, where strained procedural unfairness arguments rise to the fore as something of a last refuge of the desperate
Mr Justice Kenneth Martin
The second ground for resisting enforcement was another familiar attack. Three Rivers claimed that the adjudicator “took a restricted view of jurisdiction”. Very politely (again) the judge said: “This complaint proceeds from an unpromising start.”
The adjudicator had announced in his award that on the case put to him he had no authority to amend or rectify the JCT contract. Then he decided that even if it were to be rectified to the claimed amount of liquidated damages per week, this would have amounted to a penalty and unlawful. Three Rivers complained that he had not alerted them to his reasoning. The judge said that the adjudicator had clearly considered everything put to him and therefore there was no unfairness. That’s why he ordered Three Rivers to pay up.
Have you noticed how very politely the judge in the London High Court explained why he gave no slack to Three Rivers? If it had been Mr Justice Kenneth Martin in the Supreme Court of Western Australia, he would have taken umbrage. He is calling time on those who try to torpedo arbitral and adjudicator awards by targeting the individual who decides the dispute.
Here is the way Mr Justice Kenneth Martin put it in a case called Venetian Nominees Pty Ltd vs Weatherford Australia Pty Ltd: “Linguistic camouflage aside, this is an attempted appeal by the plaintiff against a decision of an arbitrator delivered in a wholly private arbitration. There presents the problem. There is, by the clear words of the local arbitration statute, no appeal available against the adverse arbitral decision. No doubt by reason of that inconvenient obstacle, the present challenges directed against the arbitrator’s award decision have been grammatically cast as an alleged failure by the arbitrator to hear some of the plaintiff’s arguments and, alternatively the too frequently seen allegation of a denial of procedural fairness within the arbitration process.
“Curial challenges attempted against non‑appealable award decisions continue to bedevil and undermine legislative policy endeavours to entrench arbitration as a quick, relatively inexpensive and final medium for private dispute resolutions. Unfortunately, too many unsuccessful arbitration participants still see it as worth their while to ‘roll the dice’ by manufacturing a pathway to a court, where strained procedural unfairness arguments rise to the fore as something of a last refuge of the desperate. Here, such challenges have been productive of delay to the successful party enjoying the fruits of the award and have necessitated an allocation of resources – equivalent to what would otherwise have been devoted to the hearing of a full-blown appeal by way of a rehearing. This farcical position should no longer be entertained. Where the backdoor strategy is unsuccessfully deployed in future it should be met with a punitive costs sanction.”
Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple