UK: Third Time Lucky?

In an adjudication, it is not unusual for a party who is unhappy with the nominated adjudicator to allow the time to lodge a Referral to expire, then to re-issue the Notice of Adjudication and seek appointment of an alternative person. The question as to whether a party can legally go ahead with another reference for the same dispute was addressed in the recent decision of Lanes Group plc v Galliford Try Infrastructure Limited (April 2011). 

The Facts

Galliford Try Infrastructure (GTI) was the main contractor engaged to carry out refurbishment works at Inverness Train Maintenance Depot. GTI engaged Lanes as a sub-contractor for roofing and glazing works. Disputes arose between them. The sub-contract was a standard form which referred to the ICE adjudication procedure. The sub-contract required the Referring Party, within two days of the appointment of an Adjudicator, to send the Adjudicator the Referral Notice. 

In March 2011, GTI served on Lanes a Notice of Adjudication and sent an application to the ICE for the appointment of an Adjudicator.  GTI suggested that the Adjudicator who had acted in a previous dispute be appointed. Lanes' claim consultants objected on the basis that the previous adjudication was not handled to Lanes' satisfaction. Accordingly, the ICE appointed a second Adjudicator. This time GTI's solicitors objected. They considered it would be difficult for the new Adjudicator to be seen to be impartial in these proceedings due to a history of dealings between GTI's solicitors and the Adjudicator. They did not issue the Referral to that Adjudicator but instead served a new Notice of Adjudication and sought an appointment of a third Adjudicator. The ICE appointed a new Adjudicator even though the other Adjudicator had not yet resigned from his position. 

On 1 April 2011, Lanes sought an injunction to prevent GTI from "continuing or making further applications to adjudicate a particular dispute". Lanes contended that GTI's conduct was "unfair, unreasonable and oppressive and amounts to a breach of the adjudication agreement and/or is an abusive process which ought properly to be restrained by the court". 

The Arguments

Lanes argued that there was a breach of the adjudication agreement in that there was a "deliberate and conscious" refusal on the part of GTI to serve the Referral within the agreed time period such that the adjudication could not proceed. GTI argued that this concept of breach has no place in the context of adjudication agreements in circumstances where the 1996 Act applies to the construction contract, on the basis that if the adjudication agreement is unenforceable the statutory scheme replaces it.

The Decision

Mr Justice Akenhead agreed with GTI.  He held that a party cannot lose its right to adjudicate by in some way breaching an adjudication agreement. The concept of breach does not apply to statutory rights. 

The Judge did accept that there could be a breach of the adjudication agreement by either party (by not serving the Referral documentation), and that might result in damages. However, such damages would be small and possibly non-existent. 

Key Point

The key point here is that parties who decide (for whatever reason) not to serve a Referral following a Notice of Adjudication will not be prevented from issuing a further Notice of Adjudication.  Although there has been a technical breach of the adjudication agreement, the damages will be nominal. This suggests that "Adjudicator shopping" while not gaining a seal of approval from the court, will at least not be prevented by it.

© MacRoberts 2011

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The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.

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