Arcadis UK Ltd v May and Baker Ltd (t/a Sanofi)

[2013] EWHC 87 (TCC)

Arcadis was employed by Sanofi to carry out “remediation” works at Sanofi’s site in Dagenham. The remediations included soil washing, chemical treatment and off-site disposal methods in order to allow future redevelopment and use of the land for industrial purposes. The Contract incorporated the NEC3 Engineering and Construction Contract June 2005, as amended. Disputes arose and there were two adjudications. Sanofi sought to challenge a decision made by the adjudicator in the second. It was particularly concerned that the second adjudicator had been given and considered the decision of the first adjudicator. Sanofi said that the adjudicator “took an erroneously restrictive view of his own jurisdiction, with the result that he decided that he was bound by Adjudication Decision 1 and by the first adjudicator’s reasoning in Adjudication Decision 1” and that Arcadis “brought about the adjudicator’s error by a misguided attempt to seek a tactical advantage or otherwise influence him”.

Mr Justice Akenhead had no hesitation in saying that it was neither improper nor contrary to the rules of natural justice for the decision in the first adjudication to be put before the second adjudicator. Arcadis had succeeded in the first adjudication in relation to very similar issues both in fact and in law. The first adjudicator’s findings on what the contract meant were at the very least germane and could well be thought to be persuasive. The Judge felt that adjudicators must be trusted, generally at least, to be able to reach honest and intelligible views as to the extent to which such earlier decisions are relevant or helpful or not.

Indeed, on the facts, it was clear that the second adjudicator had decided the issues on their own merits and not (only or at all) because he felt that he was bound by the first decision. Further the Judge did not think that it was improper or wrong for Arcadis to put the first decision forward. The Judge thought that it would be a “rare case” in which the adjudicator’s jurisdiction or conduct could be challenged in later enforcement proceedings because they looked at and considered any material put forward by either party.

It was also suggested that the adjudicator “went off on a frolic of his own” by “splitting the difference” on the quantum between an adjusted Arcadis forecast figure and the Project Manager’s adjusted forecast figure. The Judge did not think this was a case in which it could be said that there was any breach of the rules of natural justice. Arcadis argued that the proper approach to quantification (subject to liability) was, contractually, to be based on what it did (or what should or could reasonably have been) forecast, whilst Sanofi argued that the value needed to be determined by reference to the work actually done and the actual cost. Both arguments were respectable and it was clear that the adjudicator formed the view that the forecast basis, that is the basis advanced by Arcadis, was the right one. Remember that it was not the role of the court to consider whether the adjudicator was right to do this. Having therefore decided that the forecast approach was right, the adjudicator looked at the possible forecast figures and, ultimately, he was drawn to Arcadis’ figure and to the Project Manager’s figure. Whilst the Judge described the act of “splitting the difference” as Solomonlike in its simplicity, the adjudicator was effectively choosing between two figures, both of which had an evidential basis. Crucially, he did not come up with some basis of assessment upon which the parties had not had an opportunity to comment.