Adjudication breached rules of natural justice

Posted: 21st September 2016

It is essential that contract adjudicators must not only act, but be seen to act, fairly. In one case involving a contract to install a £30 million airport baggage handling system, the High Court ruled that that requirement had not been met.

airport signThe main contractor, company A, had employed a subcontractor, company B, to perform the works. A number of disputes arose as to whether certain instructions given by company A amounted to compensation events. An adjudicator ruled in favour of company B, which launched proceedings to enforce his decision.

Company B was at the same time in dispute with a sub-subcontractor also engaged in the airport project, company C, and the same adjudicator was appointed to resolve that matter. The two adjudications commenced simultaneously but company A was entirely unaware of the proceedings between companies B and C.

In upholding company A’s arguments that there had been a breach of natural justice, the Court found that the cases advanced by company B in the two adjudications had been factually inconsistent. The existence of the other adjudication should have been revealed to company A and the adjudicator should have disclosed that he was acting in both matters. Company A would also have been entitled to seek disclosure of documents relating to the other adjudication.

The Court noted that the adjudicator had dealt with both disputes with evident care. When reaching a decision on each matter, he appeared to have confined himself to considering arguments that had been put before him. However, given the breach of natural justice, the Court declined to enforce his award.