In a judgment handed down yesterday in Lanes Group v Galliford Try the English Court of Appeal held that:
- A referring party in an adjudication may engage in "adjudicator shopping"; and
- Adjudicators may issue draft decisions to the parties before issuing final decisions.
Adjudicator Shopping
Adjudicator shopping can take a number of forms, the most overt
of which is a construction contract naming an adjudicator.
The more common form occurs where a contract names an adjudicator
nominating authority (e.g. the RICS) and a party applies to the
nominating authority for the nomination of an adjudicator. If
the nominated adjudicator is not (for whatever reason) regarded as
suitable or favourable to the referring party, the referring party
will then commence another adjudication (and abandon the nascent
one), in the hope that someone who is perceived as a favourable
adjudicator will be nominated. In the Lanes case the
referring party applied to the agreed adjudicator nominating
authority – the ICE – for the appointment of an
adjudicator. Adjudicator X was initially nominated by the
ICE, but following that nomination the referring party
intentionally abandoned its initial reference (because it did not
want adjudicator X) and issued a second notice of adjudication and
application for appointment to the ICE. The second time round
the ICE nominated adjudicator Y.
Opinions differ on whether adjudicator shopping is desirable and
whether it should be allowed to occur. The recent amendments
to the Construction Act did nothing to outlaw adjudicator shopping
and in the Lanes case the Court of Appeal held that there
was nothing in the Construction Act to prevent a party from
shopping for the "right" adjudicator. Although the
court said that shopping for adjudicators is "never
attractive", it upheld the right to engage in the
practice.
Adjudicator shopping will usually come at a price. First
there is the fee charged by the nominating body (up to a few
hundred pounds, although not all charge fees). It is
unlikely, though, that the responding party would recover his
wasted costs of an adjudication aborted before the referral is
given. Second, tactically there is the matter of how the
adjudicator who is finally appointed perceives and reacts to what
has happened (e.g. in treating the case of the referring party who
shops for an adjudicator with a degree of suspicion). Third,
not all nominating bodies can be expected to nominate a different
adjudicator when asked.
As a final point, although referring parties may engage in
adjudicator shopping, respondents may also do the same –
although it is potentially complicated and expensive to do
so. If a respondent believes that the person nominated as
adjudicator is likely to be unfavourable to it, the respondent can
(if it acts quickly enough) commence its own adjudication in
respect of the very same dispute referred to adjudication and seek
the nomination of a different adjudicator for that second, parallel
adjudication. This may well lead to two conflicting
adjudicators' decisions on the same dispute and issues over
which (if any) decision is enforceable. It may also be an
expensive way of obtaining the "right" adjudicator,
because it involves participating in two adjudications.
Nevertheless, adopting such a strategy is permitted.
Draft Decisions
Should an adjudicator be able to issue to the parties for
comment a draft or preliminary decision, with a final decision then
being issued once the parties have given their comments? The
potential problem with an adjudicator doing this is that the
perception could be taken that the draft or preliminary decision
really contains the adjudicator's actual decision, from which
the adjudicator is unlikely to deviate even if the parties are
given the chance to comment on it. Adjudicators, like
arbitrators and judges, are required to afford "natural
justice" to the parties, and this involves not reaching a
decision until the parties' respective submissions have been
made.
In the Lanes case, the adjudicator issued to the parties a
"preliminary view" document, that set out his preliminary
views on the dispute before him. The "preliminary
view" stated in terms that the opinions expressed there were
not intended to represent an actual "decision", although
in fact there was not a great deal of difference between the
adjudicator's "preliminary view" and his actual
decision. The argument, which succeeded at first instance,
was that by setting out his "preliminary" conclusions,
the adjudicator in fact disclosed what his decision would be on the
particular dispute, even though he stated expressly that he had not
made up his mind. The Court of Appeal disagreed with the
lower judge and said that the adjudicator was entitled to do what
he had done, namely issue a "preliminary view" on the
dispute, whilst hearing further submissions from the parties.
The court held:
"There is nothing objectionable in a judge [or adjudicator] setting out his or her provisional view at an early stage of proceedings, so that the parties have an opportunity to correct any errors in the judge's thinking or to concentrate on matters which appear to be influencing the judge. Of course, it is unacceptable if the judge reaches a final decision before he is in possession of all relevant evidence and arguments which the parties wish to put before him. There is, however, a clear distinction between (a) reaching a final decision prematurely and (b) reaching a provisional view which is disclosed for the assistance of the parties".
Prior to the first instance decision it was not unheard of for adjudicators to issue "draft" or "preliminary" decisions for comment. The practice (to the extent it exists) will almost certainly continue in light of the Court of Appeal's decision in the Lanes case. Adjudicators will need to take care, however, to make it clear to the parties that their decision is truly "draft" or "provisional", and that they will only reach a "final" decision once they have considered the full submissions of each party.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 22/12/2011.
