Sometimes we have cases where an adjudicator is appointed to make a decision on a matter of principle only, with no requirement to make a financial award. For example, the dispute might be about a right to an extension of time with the decision limited to the question of entitlement. A further adjudication might follow on a subsequent dispute about the financial claim arising from the extension. But is the second adjudicator bound by the first adjudicator’s decision about entitlement, assuming he is different?
This question was recently considered in the case of Arcadis UK Ltd v May and Baker Ltd. Whilst an adjudicator may legitimately consider himself bound by an earlier decision, this will not always be the case, and there is no legally binding rule requiring an adjudicator to follow an earlier decision. Arcadis involved a series of two adjudications for two related disputes arising under the same remediation works contract based on NEC3. The disputes related respectively to additional works instructed on two different areas of the site. On the first area the project manager initially found that a compensation event existed and certified an amount in favour of the contractor of £300,000. On the second the project manager initially instructed the contractor to carry out the work for a fixed sum less than the amount the contractor had estimated. The project manager subsequently purported to withdraw his instruction and other instructions related to the second area. He also purported to reverse his certification previously made for the first area.
A dispute arose about the first area which was referred to adjudication (the first adjudication) and the adjudicator found that the project manager was not empowered to reverse his decision if a compensation event existed. The first adjudication decision included a financial element which the employer accepted and paid.
Subsequently disputes arose about the second site; in particular the withdrawal of the instructions to execute the work, and these were referred to a second adjudication. The contractor argued that the second adjudicator was bound by the first adjudicator’s decision to the effect that a project manager’s decision, once made and issued, could not be withdrawn. The second adjudicator stated in his decision that he found himself bound by what the first adjudicator had ruled. However he decided that this did not prevent him from making his own assessment of the effect of the works in the second area.
On enforcement this decision was challenged by the employer, who argued that the second adjudicator had restricted his jurisdiction and breached the rules of natural justice by treating the earlier decision as binding upon him.
Akenhead J in the TCC found that there was nothing improper or contrary to natural justice in the second adjudicator finding that the earlier decision was germane and persuasive and it was legitimate for him to have regard to the previous decision. In fact the adjudicator had stated in terms that he was entitled to and did decide the issues on their own merits. For this and other reasons the employer’s arguments for resisting enforcement were rejected.
The judgement suggests that whilst adjudicators cannot be criticised for taking into account an earlier adjudicator’s decision in taking (to use the words of the Construction Act) 'the initiative in ascertaining the facts and the law', they need to be cautious about stating expressly that they are bound by a previous decision when in reality what they mean is that they agree with it. An adjudicator’s decision which would have been different had the adjudicator not felt constrained by the previous decision, might not sustain a jurisdictional challenge, if the TCC’s reasoning is to be followed. Equally the fact that an adjudicator may be permitted to adopt the approach shown in Arcadis does not mean that adjudicators are somehow legally bound by earlier decisions even though in some cases those decisions may temporarily bind the parties themselves.