03/11/2014
Although, the adjudication system introduced by the Housing Grants, Construction and Regeneration Act 1996 (“the Act”) is generally a robust and successful process, there are occasions where the system falters. If you believe your adjudication hearing was unfair or biased, or if you do not think adjudication was the correct avenue at all, you may be able bring a challenge on one of a limited number of grounds.
Grounds for challenge
There are two main grounds for challenging an adjudicator’s decision: jurisdiction and natural justice. Jurisdictional challenges can be brought on the basis that the adjudicator was not entitled to make the decision (i.e. they did not have the jurisdiction). Alternatively, an adjudicator’s decision can be challenged on the basis that the rules of natural justice were breached (e.g. the parties did not receive a fair hearing).
Jurisdictional challenges
Section 108 of the Act provides the right for parties to a construction contract to refer disputes to an adjudicator. Therefore, a decision can be challenged on a technical legal basis (e.g. the contract was not a construction contract, or there was no dispute). The Act also requires that any contract is made in writing, allowing a further potential challenge.
One example of a successful jurisdictional challenge was in Lidl UK GmbH -v- R G Carter Colchester Ltd, where the court held that part of the adjudicator’s decision was unenforceable since the particular aspect of the dispute in question had not, in fact, been referred to the adjudicator by the parties.
However, these jurisdictional grounds will generally become apparent before the adjudication process and, therefore, rarely give rise to a successful challenge. But other grounds will only arise after the adjudication hearing.
Natural justice challenges
The rules of natural justice are entrenched in the common law (i.e. case law). They state that (1) all parties have the right to a fair hearing, and (2) all parties have the right to an unbiased tribunal. These rules may be breached in a multitude of different ways, but the leading case of Cantillon Ltd -v- Urvasco Ltd lays down some guidance.
In Cantillon, the court held that, when considering breaches of natural justice in adjudication cases, the breach must be material (i.e. more than peripheral). The court continued, stating that breaches will be material where the adjudicator fails to bring a decisive issue to the attention of the parties, or decides the case on a basis that has not been put forward by either of the parties without given them opportunity to comment.
One example of a successful challenge on the grounds of natural justice is the recent case of ABB Ltd -v- Bam Nuttall Ltd, where the court held that the parties had not received a fair hearing as the adjudicator made his decision on the basis of a particular clause of the contract that was not referred to during the hearing.
Fisher Scoggins Waters is a leading construction, engineering and manufacturing litigation firm, specialising in disputes and disasters. For further information on this article or any of our litigation services, please contact us on: +44 (0) 207 993 6960.