Arcadis UK Ltd v May and Baker Ltd [2013] EWHC 87 (TCC)
Once again, a recent jurisdictional challenge case shows the Courts' reluctance to interfere with an adjudicator's decision.
The Facts
May and Baker Ltd (trading as Sanofi-Aventis) engaged Arcadis UK Ltd to carry out works at its site in Dagenham, under an NEC3 Engineering and Construction contract. Additional works beyond both the northern and southern boundaries of the site were later instructed by the Project Manager who confirmed these as compensation events. Thereafter he sought to withdraw his confirmation. A dispute therefore arose over Arcadis' entitlement to claim for the two compensation events.
Arcadis commenced an adjudication in respect of the northern boundary works. Dr Derek Ross was appointed as the adjudicator and was asked to decide:
- If the Project Manger could reverse his decision regarding the compensation event.
- If he could, did a valid compensation event exist.
- The correct assessment of the compensation event.
He found that the Project Manager could not reverse his decision, and that a valid compensation event did exist giving rise to a change in the Prices and the Completion Date. Sanofi honoured the decision.
Arcadis promptly commenced a second (somewhat identical) adjudication, this time in relation to the southern boundary works. It sought to re-appoint Dr Ross, but Sanofi objected and instead Mr Rogers was appointed as the adjudicator. Arcadis submitted that because the same principles applied to the second adjudication as to the first, Mr Rogers was bound by Dr Ross' decision or at the very least he should adopt Dr Ross' reasoning. Sanofi disagreed but what did Mr Rogers think?
He agreed he would be bound by the decision of Dr Ross in certain circumstances: if he found that the southern boundary works had been properly implemented as a compensation event (as the northern boundary works had been). However, he went on to determine that the southern boundary works had not been properly implemented and decided the dispute on its own merits, not simply on the basis of Dr Ross' decision.
Based on the rules of natural justice, Sanofi resisted enforcement proceedings arguing, inter alia, that Mr Rogers had taken an erroneously restrictive view of his own jurisdiction in deciding he was bound by Dr Ross' decision.
The Decision
The Judge rejected all of Sanofi's arguments and held that there was nothing improper or contrary to the rules of natural justice in an adjudicator considering or having regard to the decision of a previous adjudicator. Courts look at previous decisions all the time. Dr Ross' findings on what the contract meant were "at the very least germane and...persuasive". Quite simply, the fact that Mr Rogers stated at one point in his decision that he happened to agree with Dr Ross on one particular point did not mean he was restricting his jurisdiction or acting otherwise unfairly. He did not say that he was bound by Dr Ross' decision in its entirety.
Commentary
This case is useful in setting the guidelines for when an adjudicator can safely consider whether or not he is allowed to look at and have regard to a previous decision. It does not, however, go as far as to say that the previous decision is binding. Adjudicators are still under an obligation to consider the case before them and make their own decision. Moreover, adjudicators should always remain cautious when parties are referring a number of disputes under the same contract. They must ensure that there is no element of the dispute, they are being asked to decide, that has already been agreed by a previous adjudicator.
Disclaimer
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.
