Court of Appeal Rules on the Application of Rules of Natural Justice to Adjudication

Originally published November 2004

On 28 October 2004, the Court of Appeal, in its decision in AMEC Capital Projects Ltd v Whitefriars City Estates Ltd [2004] EWCA (Civ) 1418, overturned the decision of His Honour Judge Toulmin QC of 27 February [2004] EWHC 393 (TCC). The key message from the decision is that, if the purpose of adjudication under the HGCRA 1996 is to be fulfilled, it is only where a defendant has advanced a properly arguable objection based on apparent bias that he should be permitted to resist enforcement of an adjudicator's award on that ground. Further, the court has held that the rules of natural justice do not apply to decisions as to adjudicators' jurisdiction.

The issues

The Court of Appeal (Lord Justice Kennedy, Lord Justice Chadwick and Lord Justice Dyson) was faced with a Scheme adjudication where the same dispute had been referred to the same adjudicator for a second time, the first decision having been held to be invalid for want of substantive jurisdiction.

The court had, firstly, to decide whether the Scheme applied and, secondly, if it did, whether or not the adjudicator's decision should be declared invalid on the ground of apparent bias.

Factual background

The case concerned a two-stage tender for the construction of a complex office project in London, stage one being for the preconstruction services and procurement of the second stage tender for the construction phase. AMEC was appointed to carry out the stage one works under the terms of a letter of intent dated 18 October 2000, which incorporated the JCT Standard Form of Contract With Contractors Design 1998 Edition together with amendments agreed between the parties ("the contract").

The parties were unable to agree the price for the construction phase, so, on 31 July 2001, Whitefriars terminated the contract. In accordance with the terms of the contract, AMEC submitted its final account to Whitefriars's quantity surveyors for payment. No payment was forthcoming and AMEC commenced an adjudication under the contract. In June 2003, the adjudicator, Mr Biscoe, decided that AMEC was entitled to payment of the full amount claimed. On the enforcement hearing, His Honour Judge Humphrey LLoyd QC held that that decision was invalid for want of substantive jurisdiction.

AMEC sought to commence fresh adjudication proceedings in relation to the same dispute, but found that the adjudicator named in the version of contract, as decided by Judge LLoyd, had died in October 2003. Therefore, as the mechanism under the contract was unworkable, AMEC commenced a Scheme adjudication. In the interests of saving time and costs, AMEC requested that RIBA nominate Mr Biscoe again, which it duly did.

Mr Biscoe again decided the dispute in AMEC's favour. Both during the adjudication and in the subsequent enforcement proceedings, Whitefriars raised a number of jurisdictional challenges and allegations that the second decision of Mr Biscoe was made in breach of the rules of natural justice.

First instance

On the enforcement...

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