PC Harrington Contractors Ltd v Systech International Ltd

The Court of Appeal in England has overturned the recent Technology and Construction Court (TCC) decision in relation to adjudicator's fees and held that adjudicators are not entitled to be paid their fees in circumstances where their decision is unenforceable.

TCC decision

Mr Justice Akenhead, in the TCC, had reasoned that an adjudicator's role was wider than simply producing a decision. Even where that decision is unenforceable, save for instances of bad faith, there was nevertheless part performance by the adjudicator and an entitlement to be paid.

Appeal decision

In overturning that judgment, the Court of Appeal set out its reasoning - with specific reference to the Housing Grants, Construction and Regeneration Act 1996, as amended - and pointed to, among other things, the lack of any provisions entitling an adjudicator to be paid by reference to the completion of discrete parts of his/her engagement. The Court also reasoned that what was being bargained for by the parties was a decision, which at least, ad interim, settles the dispute, and consequently an unenforceable decision was of no value to the parties.

Commentary

In the absence of any contract terms to the contrary, the default position will be that an adjudicator is not entitled to be paid their fees in the event their decision is unenforceable. Parties who engage in adjudication should be alerted to the fact that adjudicators may begin to attempt to insert specific provisions within adjudication agreements to govern the basis upon which they are entitled to be paid to address the consequences of this decision.

The full text of the Court's decision can be found here.