UK: Adjudicating Multiple Disputes

Last Updated: 6 April 2016
Article by Alexander Kingston-Splatt

By its nature, adjudication is a rapid process. However, the need to run multiple adjudications in tandem often arises.

The recent case of Deluxe Art & Theme Limited v. Beck Interiors Limited [2016] EWHC 238 (TCC) has clarified whether, in the context of adjudications under the Scheme for Construction Contracts, the same adjudicator may simultaneously be the arbiter of several disputes.

In early 2014, Beck Interiors Limited (Beck) appointed Deluxe Art & Theme Limited (Deluxe) as one of its subcontractors on a project for the refurbishment of the Lanesborough Hotel in Hyde Park, London. Beck had been employed as main contractor for the project, and Deluxe was appointed to undertake joinery work.

The parties' relationship later soured and three separate adjudications followed, all of which were commenced by Deluxe. The first resulted in a decision in favour of Deluxe, with which Beck complied. The second adjudication comprised a claim for an extension of time, and for loss and expense. The third was started whilst the decision in the second adjudication was pending. It advanced a claim concerning an alleged failure by Beck to reduce the rate of retention when practical completion of the subcontract works had been achieved.

In common with other nominating bodies, the RICS's policy is to appoint the same person to deal with different disputes under the same contract. Therefore the same adjudicator was nominated for all three adjudications, all of which fell to be decided under the Scheme for Construction Contracts. Beck objected to this on the basis that the adjudicator would effectively be dealing with two disputes simultaneously, which it said was impermissible under the Scheme for Construction Contracts. Nevertheless, the adjudicator pressed ahead, and gave a decision favourable to Deluxe in the third adjudication.

Deluxe then applied to court to enforce decisions two and three by way of summary judgment. Beck's defence was that both decisions were unenforceable, on account of the fact that the adjudicator improperly handled them concurrently. In making that argument, it relied on paragraph 8(1) of the Scheme, which provides that:

"The adjudicator may, with the consent of all the parties to those disputes, adjudicate at the same time on more than one dispute under the same contract."

Beck argued that because it had given no such consent (in fact, it had objected), it must follow that the adjudicator lacked the jurisdiction to deal with the two disputes simultaneously.

Hearing the application, Mr Justice Coulson held that the first issue to consider is whether, in fact, the two adjudications encompassed a single, overarching dispute between the parties, or whether on analysis they were separate. If the former, no issue would arise because the adjudicator would not, in substance, have been dealing with more than one dispute at all. However, on the facts he held that it was clear that each of the adjudications in question comprised separate disputes, not least because each of the two matters referred to adjudication could be decided without consideration of the other, and so in that way were self-contained.

The judge held that the wording of paragraph 8(1) is clear in limiting an adjudicator's ability to deal with more than one dispute under the Scheme to circumstances where the parties give him consent to do so. Beck argued that this requirement of the Scheme should be read as applying only to the situation where a number of different disputes are referred in the same notice of adjudication, and not where they are referred in separate notices. The judge rejected this contention, on the basis that nothing in paragraph 8(1) suggests that this should be the case. He accordingly found that the second decision was enforceable, but that the third was not.

It is important to keep in mind that this decision only concerns adjudications under the Scheme. However, many standard form contracts (such as those produced by the JCT) adopt the rules of the Scheme in relation to adjudications arising under them. Therefore this decision is likely in practice to affect many contracts and disputes arising out of them. Those nominating bodies with the practice of selecting the same adjudicator to handle any number of disputes regarding the same contract are likely to need to revise their practice accordingly.

The decision may also have a depressing influence on the phenomenon of counter-adjudicating, whereby a party in receipt of a notice of adjudication in response serves another notice of adjudication, in an attempt to broaden the nature of the dispute beyond the issues outlined in the first notice. Where, in substance, those two notices deal with separate disputes, the unsuccessful party who did not consent to that course of action may have scope to challenge any enforcement of the decision, on the basis that the adjudicator did not have jurisdiction to hear both matters at once.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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