The Technology and Construction Court (TCC) has made clear in a recent decision that the Courts will, as a general rule, enforce a decision by an Adjudicator - CSK Electrical Contractors Limited v Kingwood Electrical Services Limited [11.03.15]
Further, although practitioners and participants conventionally address the jurisdiction of an Adjudicator at the outset of the process, the decision reinforces the belief that challenges must be both timely and focused, and parties must be selective in the issues they invite the Court to consider, during enforcement proceedings.
Whilst this decision of Mr Justice Coulson did not make new law per se, it is interesting to note the Court’s strict approach to Adjudication enforcement and the limited circumstances in which a challenge to the Adjudicator’s jurisdiction is likely to be successful.
This matter related to the carrying out of electrical works by CSK Electrical Contractors Ltd (“CSK) for Kingwood Electrical Services Ltd (“Kingwood”) in the Executive Boxes within the west stand of the RFU stadium at Twickenham.
When CSK chased for payment, Kingwood replied simply by issuing bare denials that any money was due.
CSK activated the Adjudication process and applied to Centre for Effective Dispute Resolution (CEDR) to appoint an Adjudicator. The application for appointment included the following submission: “It is preferred that any of the Adjudicators in the attached list is not appointed”. However, no list was attached. As is so often the case, the timing of the process coincided with a holiday period, in this case, Christmas 2014.
The Adjudicator found in favour of CSK and ordered Kingwood to make due payment. No payment was forthcoming, and so CSK brought enforcement proceedings against Kingwood in the TCC.
Kingwood challenged the Adjudicator’s Award on three grounds:
- The dispute had not crystallised before the reference to Adjudication
- The Adjudicator’s appointment was invalid
- The timetable had been too constrained.
Failure to crystallise
It is necessary for a dispute to have crystallised between the parties before it can be referred to Adjudication. Crystallisation of a dispute is a matter of assessing the facts of each case, but conventionally, it will be found to have occurred if one side asserts its claim and the other party denies, disputes or even ignores it.
In this case there was no doubt that the dispute between the parties had crystallised. Kingwood had failed to pay the invoices in accordance with the contract or to issue a valid pay less notice within the required time. Although they initially ignored the outstanding invoices, when they were specifically threatened with Adjudication they wrote to CSK to say that the claims were “unfounded and will be strenuously defended”. The Court said that for these reasons, the crystallisation challenge must fail.
Kingwood also sought to rely on the decision of Eurocom Limited v Siemens Plc , in which the Claimant’s representative had fraudulently misrepresented to the relevant appointing authority that a lengthy list of potential Adjudicators could not be appointed because they would each have had a conflict of interest.
In reality, there was no such conflict of interest and the ruse was designed by the Claimant simply to avoid the appointment of the Adjudicators named on the list. The Judge found that this irrevocably tainted the appointment of the Adjudicator, making the appointment invalid.
The Court in the present matter found that the type of fraud identified in the Eurocom case simply had not arisen. Distinguishing the current facts from those in Eurocom the Court concluded CSK’s reference to a list of Adjudicators was a mistake as no list was actually attached.
In the absence of a list, the TCC appears to have reached the view that no allegedly inappropriate Adjudicators had been identified and hence, the appointment made by CEDR was not tainted.
Kingwood asserted that the Adjudicator’s timetable had been excessively tight and put too great a strain on their resources, especially at the time of year.
The view of the TCC was that Adjudication is a rough and ready process intended by the legislature to be carried out within a very strict timetable. That often causes particular pressure for the responding party. Coulson J says “That I’m afraid, is a fact of Adjudication life and is inherent in the whole process.”
The Court noted that Kingwood could have asked the Adjudicator for more time and did not do so. It rejected Kingwood’s challenge.
Waiver of jurisdictional challenge
The Court also concluded that as Kingwood had not raised its jurisdictional challenges at the outset of the Adjudication, it had waived the right to rely on these matters in these later enforcement proceedings. Furthermore, Kingwood had paid the Adjudicators’ fees and had made a number of applications to the Adjudicator to make corrections to the Award. By these actions the Court found that Kingwood was confirming the legitimacy of the Adjudication Award (even if it disagreed with the substance) and had waived the right to contest its legitimacy at this late stage.
The Court acknowledged that the finding that the Adjudicator’s appointment in Eurocom was invalid had “shaken public confidence in the Adjudication process”. In the present matter Coulson J sought to redress the balance by reiterating that the Court will ordinarily enforce the decision of an Adjudicator.
The message to practitioners and participants alike appears to be:
- Ensure that challenges to an Adjudicator’s jurisdiction and the timetable, are both timely and focused.
- Be aware that a bare denial of claim, or a refusal to pay, is sufficient crystallisation of a dispute to validate any subsequent Adjudication process.
- Be selective in identifying relevant and cogent points to raise in enforcement proceedings.