Update On Natural Justice In Adjudication

• Published date: 30 November 2021
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Trials & Appeals & Compensation, Construction & Planning
• Law Firm: Fenwick Elliott LLP
• Author: Mr George Boddy

Construction practitioners will be well aware that there are two main grounds upon which it is possible to resist the enforcement of an adjudicator's decision: a jurisdictional challenge and a breach of the rules of natural justice. Indeed, it is rare for an adjudication to proceed without submissions being made on one or both of these issues. Most of the time, such arguments are speculative and unsuccessful as the courts have taken a robust approach to the enforcement of the decisions since adjudication was introduced. However, as George Boddy explains, in one of the first reported cases in the TCC of 2021, Global Switch Estates 1 Ltd v Sudlows Ltd¹, the Court refused to enforce the decision of an adjudicator because he breached the rules of natural justice, demonstrating that it is still worth running these arguments.

Recap on natural justice

There are two key underlying principles from which the case law on natural justice in the context of adjudication has developed:

(i) A party should be informed of the allegations that have been made against it and be given an opportunity to answer those allegations.

(ii) A party is entitled to have its case heard by an unbiased and impartial tribunal.

The Court of Appeal confirmed in the cases of Construction v Devonport Royal Dockyard² and Amec v Whitefriars³ that the rules of natural justice do apply to adjudicators and made a number of observations regarding natural justice in the context of adjudication. The Court of Appeal commented that there should be a limit to the requirements of natural justice in adjudication given that the procedure was designed to be speedy and that there is, therefore, an inbuilt unfairness in it. The fact that it is open to an unsuccessful party to attempt to overturn an adjudicator's decision by litigation or arbitration also justified imposing such limits. It would, therefore, only be in the case of serious breaches that the Court would intervene and refuse to enforce the decision of an Adjudicator.

The Court of Appeal's statements were later developed in the Technology and Construction Court in the case of Cantillon v Urvasco.⁴ In that case, Akenhead J set out the approach the Court should take when considering alleged breaches of natural justice in the context of challenges to the enforcement of adjudicators' decisions:

(i) The Court should not take an over-analytical approach to questions of natural justice in adjudications;

(ii) The challenge must be plain, clear and...