Adjudication survives its first legal challenge
Since the hgcr Act came into force last May, we have speculated as to whether the courts would uphold adjudicators' decisions or seize upon the opportunity to unpick the hastily put-together legislation and throw it back in Parliament's face.
Mr Justice Dyson, the new head of the Technology and Construction Courts, was in favour of adjudication and indicated that he would be prepared to make bold decisions if necessary (People, aj 26.11.98). The new process was slow to get going, and the first challenges have only just been made. Now that the long months of speculation are over, does Mr Justice Dyson's judgment in Macob Civil Engineering v Morrison Construction live up to expectations?
Macob started off as a familiar dispute between a main contractor and its groundworks sub-contractor about payment. The adjudicator, Eric Mouzer frics fciArb, gave a decision in favour of the groundworkers, requiring the contractor to pay £300,000 odd, forthwith. He speeded things up by agreeing (despite the fact that no one asked him to) that the parties should apply to the court for enforcement. So why did the contractor not do as Mouzer said it should? The contractor had two arguments:
the decision was invalid because it had been made in breach of the rules of natural justice. The contractor had been prevented from making full representations and the adjudicator ought not to have invoked the enforcement procedure off his own bat.
the decision should be enforced in arbitration, not by the courts. The contract, like many construction contracts, contained an arbitration clause. Although the adjudicator's decision, if valid, was binding pending final resolution in arbitration, any argument about the validity of the decision should be decided before it was enforced. The contractor had referred this question to arbitration. The court proceedings, it said, should be stayed.
Dyson rejected both these arguments and went some way to living up to his press. He dismissed the contractor's complaint that it had not been allowed to have its say: 'I formed the strong provisional view that the challenge is hopeless.' He said that Parliament must be taken to have been aware that the very tight timetable for adjudication might be seen by some as likely to cause injustice. Parliament obviously intended that adjudication should be conducted in a manner which those familiar with the grinding detail of the traditional approach to the resolution of construction disputes would find difficult to accept. The Act was enacted to introduce a speedy mechanism for settling disputes on a provisional basis, requiring adjudicators' decisions to be enforced pending final determination by arbitration or litigation.
The judge described the contractor's second argument as 'ingenious' but he still rejected it. He found that the contractor was hoist by its own petard and, having decided to refer the disputed adjudicator's decision to arbitration, it could not argue that the decision was a nullity and unenforceable. If it was a decision for the purposes of arbitration, then it was a decision for the purposes of adjudication and should be enforced as such. And how should it be enforced? Well, good news here: the judge side-stepped the complexities of enforcement under the Scheme and the Arbitration Act in favour of the more familiar route for obtaining payment when there is no defence to a claim. He said there was no reason why the decision could not be enforced by summary judgment.