'Argue Now, Pay Later': An Adjudicator's Right To Payment

If an adjudicator renders a decision which is unenforceable because he has made a critical mistake, is the adjudicator entitled to be paid his fees and expenses? If the adjudicator has already been paid, can the parties (or a party) claim back those fees and expenses? A decision of the TCC, handed down today, suggests that adjudicators are entitled to payment even if they have made serious errors which invalidate their decisions.

Systech v PC Harrington

The relevant facts were as follows:

There was a dispute between a subcontractor and a sub-subcontractor concerning the Wembley stadium project. The dispute primarily concerned the return of retention money. The sub-subcontractor referred this dispute to adjudication. (There were disputes between the parties concerning other projects, but these need not be considered here). In the adjudication the subcontractor contended, in its defence, that it was not obliged to repay the retention money, and that it had in fact overpaid the sub-subcontractor. The adjudicator found in favour of the sub-subcontractor, and decided that the retention money claimed should be paid to it. In doing so, however, the adjudicator expressly disregarded the subcontractor's defence of overpayment, saying that it was a new dispute that he did not have jurisdiction to consider. The adjudicator also decided that the unsuccessful subcontractor should pay his fees, which were a little under £20K. The TCC subsequently decided that the adjudicator's decision was unenforceable, because he had failed to afford natural justice by refusing to consider the subcontractor's defence of overpayment. Notwithstanding the unenforceability of his decision, the adjudicator sued the subcontractor for his fees. The adjudicator relied upon his terms of engagement to act as adjudicator, to which both the subcontractor and the sub-subcontractor had agreed. Those terms and conditions made the parties jointly and severally liable for paying the adjudicator's fees, which were to be calculated on a time-charge basis for work performed. The subcontractor (who was unsuccessful in the adjudication, but successful in the TCC) said it should not have to pay a penny of his fees because his decision was unenforceable, and therefore essentially worthless. There had been a "total failure of consideration". Mr Justice Akenhead disagreed, and said that the adjudicator was entitled to be paid his fees by the subcontractor. He said that there was not a "total...