The courts will enforce an adjudicator’s decision even if it is wrong, whether in relation to the facts or the law. As the courts have stated, “The task of the adjudicator is not to act as arbitrator or judge …. The need to have the “right” answer has been subordinated to the need to have an answer quickly”.
So, if you are on the receiving end of an adjudicator’s decision which you believe is wrong, what can you do?
Pay now, argue later...
The standard answer is to “pay now, argue later”. Comply with the decision and then commence litigation/arbitration to obtain a final resolution.
An alternative option is to issue court proceedings seeking a declaration (determination) from the court on the issues involved by what is known as the “Part 8” process. That will only be allowed where:
- There is a short and self-contained issue which arose in the adjudication that the defendant continues to contest.
- No oral evidence is needed and the matter can be dealt with in the time constraints of an enforcement-type hearing.
- The issues are those which are “unconscionable” for the court to ignore.
As the courts have previously noted, it is likely that only around 1 in 100 cases will be suitable for this process.
...or go to court
This was the approach taken by the losing party in the recent adjudication case of Willow Corp S.A.R.L. v MTD Contractors Limited.
MTD was engaged by Willow to build a hotel. The form of contract was the JCT D&B 2011 edition. Such standard form contracts do not define Practical Completion (“PC”). The parties varied the contract terms by the “June Agreement” which made certain provisions in relation to PC.
MTD did not complete by the revised PC date of 28 July 2017 and there was a dispute over payment to MTD. Willow said that it was entitled to levy liquidated damages (“LADs”) of £715,000.
MTD referred its claim to adjudication. One of the issues in the adjudication was the true meaning and effect of the June Agreement in relation to PC.
The adjudicator decided that the June Agreement did not require MTD to achieve PC by 28 July 2017; it was enough if the parties had agreed a list of outstanding works by that date. A list had been agreed - he found that Willow was not entitled to levy the LADs of £715,000 and awarded MTD circa £1.1 million.
Willow did not comply with the decision. It commenced court proceedings by the Part 8 process for a number of declarations, mainly that the decision by the adjudicator on the true meaning of the June Agreement was wrong and should not be enforced, and that PC had not been achieved by 28 July 2017.
MTD commenced its own court proceedings to enforce the adjudicator’s decision by seeking summary judgment and defended Willow’s own proceedings for the declarations.
Both Willow’s and MTD’s court proceedings were dealt with by the court at the same time.
Applying the above criteria for the Part 8 process, the judge found that only the issue of the true meaning and effect of the June Agreement was appropriate for this process, that is at the same time as MTD’s application for enforcement.
The judge found that the true meaning of the June Agreement was, contrary to the adjudicator’s decision, that MTD was required to achieve PC by 28 July 2017. The Agreement did not require Willow to accept that PC had been achieved simply upon the parties agreeing a list of outstanding works.
That decision of the judge was a final resolution of that particular issue. It followed that the adjudicator was wrong to dismiss Willow’s claim for the LADs.
The judge decided that the effect of his judgement on the LADs did not invalidate the rest of the adjudicator’s decision and therefore enforced the balance of the decision, after allowing for the LADs of £715,000.
This case provides helpful confirmation and guidance on the approach parties can take where they are dissatisfied with the decision of an adjudicator. It will only be in limited circumstances that parties can use the Part 8 process to prevent at least part of the adjudicator’s decision being enforced.