Adjudication: A New Way Of Preventing Enforcement

If an adjudicator has made a mistake (even a serious one) in his decision, the error will not invalidate the decision. Given the time limits involved, adjudication is an inherently "rough and ready" process, and the courts have emphasised that any mistakes should be dealt with by way of final determination by the courts or arbitration. "Pay now, argue later" is the credo. But a recent case highlights how if a final decision is obtained from a court or tribunal, declaring the adjudicator to have made an error, that can be used as a basis for the court not enforcing the adjudicator's decision.

Background

Atkins Rail Ltd ("ARL") was employed by Network Rail as the main contractor for the design and construction of signalling works. ARL sub-contracted the civils works to Geoffrey Osborne Ltd ("GOL"). ARL and GOL fell into dispute, which was subsequently referred to adjudication. The adjudicator made a significant error in his decision in that he failed to take into account certain sums that had been certified and paid by ARL to GOL. If his decision had been followed, it would have resulted in ARL having made on overpayment of more than £900K.

The Court was asked to deal with two applications simultaneously. GOL sought enforcement of the adjudicator's decision by way of summary judgment, whilst ARL sought declarations that (a) the adjudicator lacked jurisdiction and (b) that the decision was wrong as a matter of fact and/or law and should not be enforced.

The judgment

The judge held:

The courts have the power to make a declaration which results in a final determination on a question decided by an adjudicator, provided that the question does not involve any substantial dispute of fact, and that the court can finally determine the issue on the basis of the material in front of it. If there is part of an adjudicator's decision that can be isolated and finally determined by the court, then the court is at liberty to make a final determination pertaining to that part of the matter. It is not necessary that the court be in a position to determine the whole of the dispute. ARL was not entitled to a declaration that the adjudicator had no jurisdiction, but was entitled to a declaration that the adjudicator had erred in fact and/or law. GOL was therefore not entitled to enforce the bulk of the adjudicator's decision. GOL was only entitled to summary judgment insofar as it related to the adjudicator's award in respect of costs and fees. Implications

This...