Speak to our friendly staff directly  +44 (0)20 7242 2523

A leading set specialising in commercial, construction, insurance and property law

This document is from our archive and no action should be taken in reliance on it without specific legal advice.

High street gloom, adjudication boom

Forum shopping is an ill against which the courts are always vigilant to guard. Adjudication is a process that, naturally, is vulnerable to forum shopping because the parties have control over the selection of the tribunal that is to decide the dispute, which is unlike anything that would occur in the ordinary run of litigation.

The issue of forum shopping was aired in the recent Court of Appeal decision of Lanes Group Plc v Galliford Try Infrastructure Limited t/a Galliford Try Rail [2011] EWCA Civ 1617

Galliford served an adjudication notice on Lanes in March 2011 and consequently applied to the ICE, the contractually agreed nominating body, to appoint an adjudicator. A Mr Klein was appointed, but Galliford, not enamoured with this appointment, chose not to take the next step and did not provide a referral notice. Galliford acted in this way because it held, as was perhaps rather generously characterised by Jackson LJ as, a “mistaken but honest” belief that Mr Klein was or appeared to be biased because of previous robust clashes with Galliford on previous adjudications.

Galliford then applied again to the ICE, who appointed Mr Atkinson as a new adjudicator. This appointment was more acceptable to Galliford, who then served their referral notice on Mr Atkinson.

In the absence of a Response from Lanes, who disputed Mr Atkinson’s jurisdiction, on the grounds that Mr Klein was the only adjudicator in fact appointed to resolve the dispute, Mr Atkinson went on to produce a suitably caveated document entitled “Preliminary Views and Findings of Fact”.

Lanes then provided their comments on the Preliminary View, after which Mr. Atkinson issued a final decision, largely in line with his Preliminary View, ordering Lanes to pay Galliford £1,360,145.28 plus adjudicator’s fees.

Lanes was aggrieved by this decision and commenced a second action in the TCC to challenge the validity of Mr Atkinson’s findings, or in the alternative, that he had shown bias or apparent bias in that he reached firm conclusions in his Preliminary Views before considering Lanes’ submissions. 

Galliford cross-claimed to enforce Mr Atkinson’s adjudication award and both actions came before His Honour Judge Waksman QC, who dismissed Lanes’ challenge to Mr Atkinson’s jurisdiction but found that his adjudication was a nullity on the grounds of apparent bias.

The two questions for the Court of Appeal were, therefore, (i) whether Mr Atkinson had jurisdiction as Adjudicator and (ii) whether his decision was tainted by apparent bias.

Jackson LJ dismissed the first question in relatively short order, and found that Galliford’s conduct was not expressly prohibited by the contract or by the 1996 Act. He was fortified in his conclusion by the fact that (i) the adjudicator has no jurisdiction until a referral notice had been served1and (ii) even after there has been a referral, the right of a claimant to drop one head of claim and to reserve it for later adjudication was recognised in Midland Expressway Ltd v Carillion Construction Ltd (No. 3)2.

The reasoning seems to be that there is nothing that says referral of a dispute is done on a “once and for all basis” in every occasion, as soon as an adjudication notice is served or an adjudicator is requested.

Jackson LJ then went on to make even shorter work of the second question, saying that Mr Atkinson’s Preliminary View was very simply that “disclosed for the assistance of the parties, not as a final determination reached before Mr Atkinson had considered Lanes’ submissions and evidence”. He, therefore, found that Mr Atkinson’s award was enforceable and should be enforced.

Discussion

Although Jackson LJ’s reasoning in relation to the issue of bias does not require particular examination, his determination of the question about jurisdiction does merit closer consideration. It is apparent that Jackson LJ was astute to the fact that this was a clear case of forum shopping and made clear that, in coming to his judgment, he had had to abandon his preliminary view that “Galliford could not be permitted simply to drop the first adjudication and then adjudicate before a different adjudicator whom it preferred”.

Furthermore, he explained that although it had been raised in argument as to whether Galliford’s conduct could be characterised as an abuse of process, he accept the argument that abuse of process has no place in adjudication, based on Dyson LJ’s reasoning in Connex South Eastern Ltd v MJ Building Services Group plc [2005] EWCA Civ 1933.

However, it is arguable that Dyson LJ ’s reasoning fell into the same trap that Jackson LJ fell into in Lanes. The basis of the Court’s reasoning in Connex was that “neither the Act nor the Scheme for Construction Contracts (England and Wales) Regulations (SI 1998/649) gives an adjudicator the power to strike out or stay an adjudication for abuse of process”. 

Indeed, Dyson LJ was considering the question of whether the adjudicator himself has the power to strike out a claim for abuse of process. He found that “in my judgment, the only question is whether there is any limit on the time within which a party may refer a dispute to adjudication. The answer to that question depends on a proper interpretation of section 108(2) of the Act, and not on an application of the principles developed by the courts to control their own process so as to prevent abuse”.

However, it is clear that non-statutory concepts such as validity of jurisdiction and natural justice can easily be imported into judicial examinations of the adjudication process, as indeed occurred in the present case in relation to the issue of bias.

Therefore, it is odd to say that abuse of process simply has no place in adjudication.

It seems that Jackson LJ focussed too much on the Act and statutory interpretation and not enough on the court’s inherent jurisdiction to prevent abuse of process wherever that might arise. It is clear that adjudication is supposed to provide a rough and ready method of dispute resolution but, if so, then it seems logical that that principle should apply equally to the selection and appointment of adjudicators. 

In the context of Lanes, the Court essentially closed its mind to the fact that forum shopping should be all the more unpalatable where the adjudication is based on an underlying contractual agreement, made between parties acting at arm’s length, who can in any event choose an actual adjudicator to resolve the dispute or, as in this case, chose the nominating body who will choose the adjudicator.

The courts are no stranger to the idea that the intentionally rough and ready nature of adjudication can on occasion lead to injustice and a “sorry-but-you’re-stuck-with-it” decision. For instance, the recent Scottish case of Highlands and Islands Airports Limited v Shetland Islands Council [2012] CSOH 12 confirmed that elements of a single dispute are not severable where only one element of the adjudicator’s decision is contaminated, even though the claim for past losses in that case was eminently severable, in that it had been specifically quantified and was unaffected by the adjudicator’s breach of natural justice.

It is clear that there will be times when a party is genuinely unable to meet the timetable for referral, for instance where a Managing Director falls ill and is unable to get his referral documents together within the specified time. However, such a situation would not, in any event, be properly characterised as an abuse of process.

Therefore, the Court should be cautious about simply excluding the concept of abuse of process from adjudication, because it allows flagrant forum shopping to occur unchecked, when justice rather requires that the parties should be stuck with the adjudicator that is appointed, whether they like him or not unless there is a good reason to determine otherwise.

1. Hart Investments Limited v Fidler [2007] BLR 30 – per Jackson LJ at para 40
2. [2006] BLR 325
3. The question in that case was whether it was an abuse of process for a party to start adjudication proceedings a very long time after it purported to accept a repudiation of the contract.