Sometimes adjudicators make mistakes. Unless the adjudicator has acted unfairly or exceeded its jurisdiction, the court will enforce the decision. But if you act quickly enough, you may be able to stop part or all of a decision being enforced due to a adjudicator's mistake on a short and self-contained point, including:
- incorrect interpretation of a contractual clause
- incorrect calculations
- incorrect categorisation of a document (such as an invalid payment notice).
In June 2019, the Technology and Construction Court in Willow v MTD Construction followed these principles in a dispute arising from the construction of a 150 bed hotel in Shoreditch. The project value was £33.5 million and it was procured under a JCT 2011 design and build contract.
What was the original dispute?
The project itself was delayed. The hotel owner and building contractor made a supplementary agreement which provided a revised date for Practical Completion, but the contractor failed to complete the project by the revised date. The hotel owner started an adjudication to levy liquidated damages and recover other loss from the contractor.
Based on the supplementary agreement, the adjudicator decided the hotel owner was not entitled to liquidated damages for delay arising after the revised completion date and, after deducting sums for defects, professional fees and loss of profits, still owed the contractor money.
What happened after the adjudicator's decision?
The hotel owner refused to follow the decision. It applied to court for a declaration that the adjudicator had interpreted the supplementary agreement incorrectly. The contractor applied to enforce the decision. The court heard the applications together.
The court acknowledged that adjudications are "pay now, argue later" and should usually be enforced on principle, unless the adjudicator has acted unfairly or exceeded its jurisdiction. However, the court agreed to consider the interpretation of the supplementary agreement because it was a short and self-contained point which could be addressed at a short hearing without oral evidence.
The court decided that the adjudicator had mistakenly interpreted the supplementary agreement. After applying the criteria in Arnold v Britton [2015] UKSC 36, the court held the supplementary agreement meant the adjudicator should not have dismissed the hotel owner's claim for liquidated damages.
Importantly, the court also decided that despite this mistake, it would enforce the rest of the decision which dealt with other losses. It did this because severing the flawed parts, provided it did not harm the 'core nucleus' of the reasoning, supported the statutory aim of enforcing adjudication decisions. If the mistake had infected the entire decision, it would have declined to enforce it at all.
What should I do if the adjudicator makes a mistake?
Even after enforcement, although you will need to comply with the judgment, you can challenge a decision at court or arbitration in a final determination, or otherwise settle it with your opponent.
To challenge an incorrect decision before it is enforced:
- Check calculations and facts as soon as possible - the adjudicator can correct clerical and typographical errors, and their consequences, if raised within days of the decision.
- Consider whether the adjudicator conducted the adjudication unfairly or lacked jurisdiction – this sort of error will usually undermine the entire decision and stop enforcement.
- Identify mistakes based on short and self-contained points, such as wrongful interpretation of a clause or error in law – you may be able to pick these off before enforcement if you act quickly.
Get in touch with your usual Taylor Wessing contact if you'd like advice on adjudication or enforcement of adjudicator's decisions.
