THE recent studies on adjudication by King’s College and the Adjudication Society show that its use is as popular as ever. The total annual number of received referrals for the nine responding adjudicator nominating bodies (ANBs) between May 2022 and April 2023 was 2,078. The most popular month for parties to launch an adjudication was in March 2023 where 229 disputes were referred to adjudication.
The two largest ANBs in the UK are now UK Adjudicators and the RICS. The RICS make more nominations currently than UK Adjudicators, however, UK Adjudicators has a number of advantages such as a large and diverse panel of adjudicators in the UK.
The two largest ANBs in the UK are now UK Adjudicators and the RICS. The RICS make more nominations currently than UK Adjudicators, however, UK Adjudicators has a number of advantages such as a large and diverse panel of adjudicators in the UK, as well as not charging a fee for making a nomination.
As well as not charging a fee for making a nomination, UK Adjudicators offer low cost adjudication schemes with its panel open to new applications to join. Another advantage for UK Adjudicators is that it has panel members from all of the other ANBs so there is a wide pool of adjudicators.
The fees charged by the ANBs vary from the free services offered by UK Adjudicators to those offered by RICS (£425) and TECSA (£450). While the most common range of values of disputes is between £75,000 and £500,000 with these accounting for most of the market, a further large percentage of the market falls in the range of £500,000 to £2m.
Lord Justice Coulson said in the case of John Doyle Construction Ltd (In Liquidation) v Erith Contractors Ltd, EWCA Civ 1452 (2021), Bus LR 1837 (2021), and WLR(D) 516 (2021):
“I rather cavil at the suggestion that construction adjudication is somehow ‘just a part of ADR’. In my view, which damns it with faint praise. In reality, it is the only system of compulsory dispute resolution of which I am aware which requires a decision by a specialist professional within 28 days, backed up by a specialist court enforcement scheme which (subject to jurisdiction and natural justice issues only) provides a judgment within weeks thereafter. It is not an alternative to anything; for most construction disputes, it is the only game in town.”
The leading causes of disputes is broken down in the King’s report and alarmingly the two largest causes were a lack of competence of project participants followed by inadequate contract administration. The report further confirms smash and grab adjudications are the most popular claim head in construction adjudications followed by true value final accounts and loss and expense for delay and disruption.
Given its success and popularity it is little surprise that the industries excluded due to the power, process and other exemptions as well as territorial application rules would also come to embrace adjudication as an attractive interim, binding process that can be used during the execution of a complex project by including suitable contractual provisions.
UK Adjudicators has seen a large rise in offshore construction contracts both in the offshore wind and oil industries that name it in their contracts and as a consequence the numbers of these type of adjudication nominations has rapidly increased. Unfortunately, the pool of adjudicators with offshore and marine experience is extremely low and is an area that needs training to make available sufficient adjudicators.
UK Adjudicators has a large multidisciplinary panel of adjudicators in the UK as well as a significant panel of international adjudication and dispute board members who range from:
UK Adjudicators dispute board member panel for experienced dispute board members includes adjudicators on the FIDIC presidential list, national lists of FIDIC member organisations, ICHEME and other bodies such as the ICC and LCIA is growing with members drawn from all continents of the globe.
UK Adjudicators is working to increase diversity on its panel and as one of the largest complaints made about other ANBs is they lack diversity is proud to continually strive to:
Members are also diverse and sit on other ANBs, such as:
UK Adjudicators dispute board member panel for experienced dispute board members includes adjudicators on the FIDIC presidential list, national lists of FIDIC member organisations, ICHEME and other bodies such as the ICC and LCIA is growing with members drawn from all continents of the globe.
• Construction Industry Council (CIC).
• Institute of Mechanical Engineers (IMECHE).
• Royal Institute of British Architects (RIBA).
• Centre for Effective Dispute Resolution (CEDR).
• Technology and Construction Solicitors Association (TECSA).
• Royal Institution of Chartered Surveyors (RICS).
• Chartered Institute of Arbitrators (Scottish Branch) (CIArb Scot).
• Scottish Building.
• Royal Incorporation of Architects in Scotland (RIAS).
• Royal Institution of Chartered Surveyors in Scotland (RICS Scot).
• Institution of Civil Engineers (ICE).
• Chartered Institute of Building (CIOB).
• Institution of Chemical Engineers (IChemE).
• Chartered Institute of Arbitrators Dispute Appointment Service (CIArb-DAS ).
• Technology and Construction Bar Association (TECBAR).
• UK Adjudicators.
• CLG/ConstructionAdjudicators.com (CLG).
• Law Society of Scotland.
• FIDIC President’s List Adjudicators.
• Minister’s Construction Contracts Adjudication Panel Ireland.
• Hong Kong International Arbitration Centre (HKIAC).
• London Court of International Arbitration (LCIA).
• International Chamber of Commerce (ICC).
• London Maritime Arbitrators Association (LMAA).
The UK has benefitted from extensive case law on adjudication and the courts support for it with swift enforcement.
For UK adjudications UK Adjudicators offer three schemes:
The values of the amount being claimed and the adjudicator’s total fee caps are set out below for the UKA capped fee scheme.
Claim value & fee cap (exclusive of VAT)
There is no nomination fee. However, in addition, there is a daily fee cap of £2,250 plus VAT as well as the total fee cap.
UK Adjudicators has also created bespoke services for users of ADR both in the UK and internationally which includes the nomination of early neutral evaluators, expert determiners, independent assessors as well as arbitrators.
During 2023 and 2024 there have been a number of UK court decisions which will be of interest to users of adjudication in the UK and internationally.
Case law update
The UK has benefitted from extensive case law on adjudication and the courts support for it with swift enforcement. This makes it extremely attractive to parties with large complex disputes who prefer adjudicating disputes rather using litigation or arbitration. During 2023 and 2024 there have been a number of UK court decisions which will be of interest to users of adjudication in the UK and internationally and are noted below.
AZ v BY (2023) EWHC 2388 (TCC)
The TCC considered whether an adjudicator’s decision was rendered unenforceable due to the consideration of without prejudice material. During the adjudication, AZ presented communications made by BY, at an earlier meeting, that were inconsistent with the contractual position BY were presenting at the adjudication.
The TCC granted BY’s declaration that the communications referred to were ‘without prejudice’. It held that the disclosure of the without prejudice material created an ‘inevitable question mark’ over whether the adjudicator was inadvertently or unconsciously biased. the TCC held that the resulting decision breached the rules of natural justice and could not be upheld.
The key issue was whether having seen the material, there was a real risk of a lack of impartiality on the part of the adjudicator. The decision did not need to be primarily founded upon the material for the decision to be rendered unenforceable.
Sudlows Limited v Global Switch Estates 1 Limited (2023) EWCA Civ 813
The Court of Appeal considered the binding nature of a previous adjudicator’s decision in this appeal from the TCC. The TCC had previously decided that the adjudicator in the sixth adjudication, was incorrect to consider himself bound by the decision of the previous adjudicator. The Court of Appeal held that the TCC had failed to apply the test of whether the disputes were the same, or substantially so, and was therefore incorrect in their determination.
The Court of Appeal commented that the disputes in the fifth and sixth adjudication both concerned who was contractually responsible for defective ductwork and were therefore, substantially the same. The court felt the TCC decision ignored the binding nature of an adjudicator’s decision as prescribed in section 108 of the Housing, Grants, Construction and Regeneration Act 1996.
Whether or not disputes are the same or substantially the same is a matter of ‘fact and degree’, with each case decided on its own facts.
Home Group Limited v MPS Housing Limited (2023) EWHC 1946 (TCC)
The TCC considered to what extent substantial quantities of evidence provided during an adjudication could amount to a breach of natural justice, preventing enforcement of an adjudicator’s decision. Enforcement of the award was challenged on the grounds there had been a breach of natural justice as it was argued there had been insufficient time to review the substantial materials provided with the referral and submit a response within 19 days.
The TCC held that the grounds for resistance were without merit as prior to the adjudication, Home Group submitted their expert report and invited the respondent to visit their offices to inspect some of the documents. The judge felt there was little excuse for declining Ghome Group’s offer to access the underlying material.
Alun Griffiths (Contractors) Ltd V Carmarthenshire County Council (2023) EWHC 2269 (TCC)
The TCC considered whether to enforce an adjudicator’s decision or grant a stay of execution, in circumstances where the council intended to pursue a true value adjudication. The adjudicator had awarded £3,317,487.55 which Griffiths sought to enforce. Carmarthenshire sought a stay based on the alleged insolvency of Griffiths and the inadequacy of Griffith’s parent company guarantee, from Tarmac Holdings Limited.
The court found that Tarmac had an overall healthy net-asset position, the judge went so far as to say it was ‘fanciful to suggest that the group would not support its cash requirements and that Tarmac will not be able to repay a judgment sum of circa £3m in the event that it is called upon to do so’. The decision was therefore enforced.
UK Grid Solutions Ltd and Amey Power Services Ltd v Scottish Hydro Electric Transmission Ltd (2024) CSOH 5
A joint venture (JV) entered into a contract with Scottish Hydro to build an electricity substation. There was a delay in delivering transformers and the JV sought additional payment for the increased cost. The adjudicator ruled in favour of the JV.
Scottish Hydro refused to pay, arguing that the adjudicator didn’t consider their defence (liquidated damages from the delay) and that the financial award wasn’t clear. The court disagreed. The judge found that the adjudicator considered the defence by implying that if the contract was followed, the delay damages wouldn’t have been applicable at the time of payment. The court also found that any reasonable reader would understand the amount and timeframe for payment despite some minor errors in the adjudicator’s decision.
Lord Richardson said that it was clear it was not necessary for an adjudicator to deal in the decision expressly with every argument made. That is, provided that the adjudicator deals with the arguments which are necessary and sufficient to establish the route by which it reached the decision. Here, it was possible to discern from the adjudicator’s decision, reasonably construed against the background of the submissions made... both what (the adjudicator) decided and the reasons for that decision.
Battersea Project Phase 2 Development Company Ltd v QFS Scaffolding Ltd (2024) EWHC 591 (TCC)
Whether or not disputes are the same or substantially the same is a matter of ‘fact and degree’, with each case decided on its own facts.This case clarifies how conclusive evidence clauses work in construction contracts, particularly when disputes arise during the final account process. Conclusive evidence clauses are clauses that aim to finalise the final account value by making the final payment notice a binding record.
In this matter if either party started legal proceedings (like adjudication) within 10 days of receiving the final payment notice, it wouldn’t be binding until the proceedings were concluded. A disagreement arose about the final payment amount, QFS initiated adjudication (adjudication 11) but missed the deadline to submit a formal referral notice. Battersea argued this made adjudication 11 null and the final payment notice binding.
The court ruled that adjudication 11 was a nullity due to the missed deadline, however, this didn’t mean the final account was settled. The ‘conclusion’ mentioned in the saving provision required a decision, award, judgement, or settlement on the original dispute itself (not just the null adjudication) QFS hadn’t abandoned their claim, Battersea couldn’t prove QFS abandoned the dispute despite the missed deadline and ongoing communication between both parties was evidence for the court of the ongoing dispute that both parties were aware of.
Engenda Group Ltd v Petroineos Manufacturing Scotland Ltd (2024) CSOH 36
Conclusive evidence clauses are clauses that aim to finalise the final account value by making the final payment notice a binding record.In construction disputes, an adjudicator cannot decide on a matter that was already decided in a previous adjudication, even if new evidence is presented.
This case involved two adjudications between Engenda and Petroineos. In the first, Petroineos’ claim for damages was denied. In the second, Petroineos used new evidence to try to claim damages again. The court ruled that the second adjudicator didn’t have jurisdiction because the underlying issue was the same.
The court clarified that even though Petroineos had new evidence, it couldn’t use adjudication to pursue its claim again. It would have to take it to litigation or arbitration.
McLaughlin & Harvey Ltd v LJJ Ltd (2024) EWHC 1032 (TCC)
This case involved a dispute between McLaughlin & Harvey Ltd (MHL) and LJJ Ltd (LJJ) in a construction contract. The adjudicator ruled in favour of MHL, but then issued a revised decision due to concerns about potential double payment. MHL sought to enforce the original decision, arguing that the adjudicator exceeded his jurisdiction by revising it.
The court found that the adjudicator’s revisions were not based on clerical or typographical errors, and thus the ‘slip rule’ did not apply. The court ruled in favour of MHL and enforced the original decision. This case clarifies the limited scope of the slip rule and emphasises the importance of adhering to it to avoid delays and costs.
Sean Sullivan Gibbs BSc LLB(Hon) PGDipArb PGDipBar LLM FCInstCES FRICS FCIOB FICE AFIChemE, Chief Executive Officer, Hanscomb Intercontinental
sean.gibbs@hanscombintercontinental.co.uk
@SGibbs121
Sean Gibbs is chair the of the CICES Contracts and Dispute Resolution Panel and is a committee member of CICES South West and South Wales.
Nomination forms can be downloaded from the website at www.ukadjudicators.co.uk. For further information about becoming an adjudicator or dispute board member panellist, email info@ukadjudicators.co.uk.