UK: Can Adjudicators Get Involved?

Last Updated: 12 November 2001

One of the most obvious temptations for anyone practical and fair-minded who comes across a stubborn and deeply-entrenched dispute is to try to "sort it out". Secure in the knowledge that, personally, they would never be so unreasonable, and often sure of their expertise and insight, professionals can underestimate the difficulties. Certain professionals make a living "sorting out" inchoate or incipient discord anyway – quantity surveyors for instance. When they come across a fully-fledged dispute the instinct may be simply to approach it as a commercial problem.

This can be a dangerous way to proceed if you are a statutory adjudicator under the Housing Grants Construction and Regeneration Act 1996 ("the Construction Act"), as a recent case shows only too clearly. The risk is that the impartiality required of all adjudicators may be undermined or removed, which leads to the eventual decision being of no use to anyone. It may involve extra delay and expense for all parties and a not inconsiderable risk of being involved (as a witness) in subsequent litigation. In Glencot Development and Design Co. Limited v. Ben Barrett & Son Contractors Limited (Action HT-00-401) the result was High Court proceedings.

The facts were essentially simple. The parties had met (as planned) with the Adjudicator for an adjudication hearing at a hotel. Before the adjudication hearing began, the parties negotiated and (so they thought) reached substantial agreement on a figure. They told the adjudicator about their agreement. They then discovered that they had not agreed one further issue, which was whether a discount should be applied to the figure. They both asked the adjudicator to mediate between them. He yielded to the temptation to "sort it out" and agreed to mediate, adding that if negotiations broke down he would resume his role as adjudicator. He then presided over six hours of talks, which failed to bring about an agreed resolution of the dispute. He later attempted to resume the adjudication and purported to give a decision. Ben Barrett & Son resisted enforcement of that purported decision on the ground that, as a matter of law, the adjudicator could not after having acted as mediator in the interim I, act "impartially" as required by the contract in conformity with the Act (S. 108 (2) (e)). There was no criticism of the adjudicator personally – the Court found that he had done as he had been asked by the parties and acted with propriety and concern for the best interests of the parties. The question was much more abstract – was he capable as a matter of law of acting "impartially" as required by the terms of the contract between the parties implied by the Act? Was he capable as a matter of law of acting "impartially" as required by the terms of his own engagement, which (the Court found) would contain an implied term of impartiality because the contract between the parties did? This was a case involving a question of "apparent bias" rather than one of "actual bias".

So, we already have our first answer to the question in the title of this article. Because the requirement of impartiality is only an implied contractual term – although it is implied both into the basic construction contract between the parties and into the contract of retainer of the adjudicator – it can be waived by a party, and/or varied or modified by the parties. This is clear from HHJ Lloyd QC’s remarks in Glencot, although strictly it was not what happened in that case.

It is also in accordance with principle – why should the parties not ask someone adjudicating for them to abandon that role and decide their dispute as, for example, an arbitrator on the one hand or an expert determiner or valuer on the other? However, the principal question in each case is whether, having made that change, the parties are entitled to press ahead on the basis that the statutory consequences attaching to adjudication are still attached to their procedure as varied. It is still open to doubt that any procedure where impartiality was by consensus of the parties removed could remain an adjudication as such.

Returning to the issues in Glencot’s case, the key issue in that case was not whether the parties asked the adjudicator to mediate – it was accepted that they could and did – but whether after doing that one of them could again ask him to adjudicate over the objections of the other. There was no pre-existing case on the issue in relation to statutory adjudication.

HH Judge Humphrey Lloyd QC decided that the issue of impartiality in relation to judges and arbitrators had recently been authoritatively re-stated by the House of Lords in Director General of Fair Trading v. Proprietary Association of Great Britain [2000] All ER (D) 2425 HL, (esp. at para. 86) following in part the decision of the High Court of Australia in Webb v. The Queen (1994) 181 CLR 41. The Fair Trading case re-examined earlier authorities such as R. v. Gough [1993] AC 646 HL and Locabail (UK) Ltd v. Bayfield Properties Ltd [2000] QB 451 CA and took into account the Human Rights Act 1998 bringing the European Convention on Human Rights into domestic English Law. The principle in the Fair Trading case, distilled to its essence, was that a court confronted with an allegation of apparent bias should:

  1. Ascertain all the relevant circumstances; and
  2. Ask whether a "fair-minded and informed observer" would conclude that there was a "real possibility or real danger" (the two being the same test) of bias.
  3. Any explanation given by the tribunal accused of bias can be taken into account, and if the party alleging bias accepts it, it can be assumed to be true.
  4. If not, it becomes another matter to be considered from the point of view of a fair-minded observer.

In Glencot’s case HH Judge Humphrey Lloyd QC decided that the words "impartial" and "impartially" in section 108 of the Housing Grants Regeneration and Construction Act 1996 and in the Scheme for Construction Contracts are to be given the same meaning as in the context dealt with in the Fair Trading case – in other words a statutory adjudicator under the Act may not be a classic judicial tribunal but the rules applicable to such tribunals apply to such adjudicators. This was by no means a necessary conclusion – it would have been possible to argue that Parliament instituted the adjudication precisely to be a "quick and dirty" dispute resolution mechanism and that the appropriate remedy in Ben Barrett & Son’s position was to attempt to reverse or overturn the adjudicator’s substantive decision by litigation rather than to impugn the manner of the making of the adjudicator’s decision.

The reasons HH Judge Humphrey Lloyd QC gave for his decision were that:

  1. In practice an adjudication will be closer to an arbitration than an expert determination (this appears to have been the Court taking judicial notice of current practice – no evidence was adduced on this issue);
  2. Although not in public, and reversible by subsequent litigation or arbitration, the decisions of an adjudicator nonetheless have immediate practical and potentially far-reaching effect.
  3. Not uncontroversially, the Court assumed that the adjudicator was subject to the rules of natural justice or fairness (citing the recent TCC first instance decision in Discain Project Services Ltd v. Opecprime Development Ltd [2000] BLR 402, which decision gives no reasons for its conclusion).
  4. The words in s. 108 of the Construction Act were intended to bear their ordinary meaning – which would be fixed by the decision in the Fair Trading case.
  5. There was no reason to suppose that words in the contract between the parties in Glencot’s case should bear any other than that same ordinary meaning.
  6. Insofar as the Human Rights Act 1998 applied – something which the Court did not examine – the meaning that that Act gave to the word "impartiality" should apply and this meaning was fixed by the Fair Trading case.

Having decided the law, applying it to the facts in Glencot’s case the Court decided that in effect the adjudicator’s conduct was such that there was a danger of apparent bias and accordingly the adjudicator’s decision could not stand. This was because the adjudicator could have heard facts and matters in his role as mediator that would not have been appropriate for him to know as adjudicator – whether or not he did was not necessary to decide, although he probably did in relation to the issue of a discount referred to above. Since the decision was on application for summary judgment to enforce the adjudicator’s decision, it is not necessarily the case that the same result would occur on a full trial of the issue of apparent bias, even on identical facts. However, such a full trial is very unlikely since it will almost always be a better use of the Court’s time to turn to an investigation of the actual facts of the substantive dispute.

The result, in Glencot’s case, of a commendable flexibility and commercial approach on the part of the skilled and experienced adjudicator, was significant delay and extra expense for the parties. It is possible that the parties could have avoided this by formalising an agreement that the adjudicator would mediate, but then reassume his role as adjudicator, but the Court left this issue open.

 

"© Herbert Smith 2002

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us."

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions