A recent TCC decision has confirmed that cherry picking discrete elements of an existing dispute and submitting them to a single adjudication does not result in the referral of multiple disputes. This provides parties with greater flexibility in structuring adjudication proceedings where they are reluctant to refer a whole dispute to adjudication but wish to obtain a determination as to particular elements of it.

Prater Ltd v John Sisk & Son (Holdings) Ltd

Sisk was contracted by Boeing to construct an aircraft hangar at Gatwick Airport. Sisk appointed Prater as the cladding and roofing subcontractor, under an amended NEC Option A subcontract.

The subcontract works were subject to various changes and delays. As a result, a large dispute existed over the final account, including extension of time, prolongation costs and various Compensation Events. Shortly after completion, Prater submitted a payment application and received a payment certificate from Sisk certifying more than £7 million less than it had applied for.

Prater subsequently commenced an adjudication in relation to three discrete matters forming part of the final account dispute. These matters were:

  • The correct Subcontract Completion Date.

  • The status of provisional sums within the Subcontract.

  • Sisk’s entitlement to deduct certain indirect losses from any sums due to Prater.

Prater’s Referral Notice in the adjudication noted that it considered the whole final account dispute to be “too cumbersome to be decided appropriately within a single adjudication”. Only declarations were sought in relation to the above matters.

The adjudicator generally found in favour of Prater. As part of the enforcement of subsequent adjudications between the parties, Sisk argued that argued that Prater had referred multiple issues for determination in and as a result, the adjudicator lacked jurisdiction and his decision was unenforceable, not binding and a nullity.

Prater argued, amongst other things, that the Second Adjudication couldn’t be classed as containing multiple disputes. All the issues Prater had referred arose from Sisk’s assessment of Prater’s final payment application.

Two parts of the same dispute

Sisk’s challenge on this point was rejected by the TCC. The court held that the three issues referred to adjudication were all part of a larger dispute relating to Prater’s account and Sisk’s assessment of it. Deputy Judge Veronique Buehrlen QC concluded it would be:

“arbitrary to treat distinct issues forming part of a single dispute as each giving rise to a separate dispute because the whole of the dispute itself had not been raised in the context of a single adjudication or because there were other issues that also needed to be resolved to determine the real dispute. Clearly it would not be desirable for a party to be forced into raising the entirety of the dispute in a single adjudication when that might be oppressive or the entire dispute too complex and extensive to be dealt with in the context of a single adjudication”.

What is relevant “is whether or not the matters referred by Prater … were part of a larger dispute at the time of the referral”. In the context of Prater and Sisk, it was clear that the matters referred by Prater for resolution in the Second Adjudication formed a larger dispute and Prater had deliberately not referred the whole of the dispute to a single adjudication.

Implications and conclusion

This decision provides helpful clarification that the cherry picking of multiple parts of a single dispute can be adjudicated on without the risk of a multiple dispute objection. This appears to be the first time this particular point has been ruled upon by the TCC and provides welcome flexibility for Referring Parties, particularly in relation to final account disputes.

Prior to this decision, parties might have sought to avoid a multiple dispute objection by referring the valuation of an interim application to adjudication, with the Referring Party only claiming an increased valuation by reference to specific items considered suitable for adjudication. Other items were left to be adjudicated on in a subsequent payment cycle, but the Referring Party could be sure that only one dispute had been referred, being the valuation of the given application. However, this approach does not allow quantum issues to be excluded and could not be deployed in relation to a final account dispute (because there would be no subsequent payment cycle with which to pursue items not pursued in the initial adjudication). There is now no need for such an approach; Referring Parties can simply seek declarations on key aspects of a disputed account, with valuation of the overall application being left for a subsequent adjudication or adjudications.

References

Prater Limited v John Sisk & Son (Holdings) Limited [2021] EWHC 1113 (TCC).