This interactive session looked at developments in adjudication enforcement decisions, including a panel discussion / debate on: - Adjudication generally - The implications of the Human Rights Act

1. Adjudication Enforcement:
Time for a change?
Thursday 19 March 2015
At 39 Essex Chambers
By:
The Hon. Mr Justice Akenhead (Chair)
John Tackaberry QC
Hefin Rees QC
Karen Gough
Rachael O’Hagan
Rose Grogan
©

2. Outline
• Opening Remarks
• Adjudication: tracking through the years
• Is Adjudication still up to the job?
• Questions/Discussion
• Do construction lawyers need to worry about Human
Rights?
• Closing Remarks/Questions and Discussion

3. Adjudication: Tracking
Through The Years

4. A Brief History
• Predecessors of Adjudication
• Gilbert-Ash Northern v Modern Engineering (Bristol)
(1973) 1 BLR 73
• The Latham Report
• The HGCRA
• Macob Civil Engineering Ltd v Morrison Construction Ltd
[1999] BLR 93

5. Is Adjudication Still Up To The
Job?

6. Adjudication –
A success story?
I Don’t Think So!
Karen Gough

7. Quick and Dirty/Rough Justice
• Tell it to the clients as it is:
– It has an impossible timetable for anything
more than the most simple disputes;
– The scope for ambush is legendary – a tactic
frequently deployed;
– It is process driven, if you get it wrong, you
lose;
– The merits are frequently lost in translation.

8. Forum shopping/Adjudicator
appointment nightmares
• There are numerous examples of forum
shopping, either:
– In respect of the person nominated as adjudicator or
notice issues: e.g. University of Brighton v Dovehouse
Interiors [2014] EWHC 940 (TCC); or
– In relation to the tribunal most advantageous for the
particular aspect of the dispute; and
– Because the right to adjudicate at any time enables
parties to engage in a multiplicity of proceedings: e.g.
Lanes Group v Galliford Try Rail [2011] EWCA Civ
1617.

9. Jurisdiction issues/Kitchen sink
adjudications
• Reluctant Respondents take every conceivable
jurisdiction issue:
– No dispute or too many disputes, or more than one
contract: e.g. Viridis Uk Ltd v Mulalley & Co. Ltd
[2014] EWHC 268 (TCC);
• Ambitious Claimants, or Respondents looking to
derail the process:
– throw every possible aspect of a dispute into the
adjudication: also derail arbitration/ litigation on the
same disputes.

10. Costs horror stories
• The costs of the adjudication:
– No recovery of party costs – tactical use of
costs rules;
• Unnecessary escalation of costs of the
adjudication;
• Starving out of poorer parties;
– Adjudicator fees:
• Allied to the above, can become eye-watering;
• Separately: can be excessive.

11. Enforcement issues
• Just when you think it’s all over…
– Main obstacles to enforcement:
• Absence of jurisdiction or ability to make a binding decision
on jurisdiction: Air Design (Kent) Limited v. Deerglen (Jersey)
Limited [2008] EWHC 3047 (TCC);
• Breach of natural justice: Cantillon v Urvasco [2008] BLR
250;
– Stay of enforcement because:
• Administration, potential liquidation;
• Small company with the benefit of a substantial decision in its
favour might not be able to pay back the award if it is
subsequently overturned: fairness: Galliford Try Building v
Estura [2015] EWHC 412.

12. Conclusion
• Adjudication has strayed from its path.
• Has become a process of abuse/a weapon.
• Justice is very rough, often not quick, and if
wrong, difficult and costly to overturn.
• Often costs are wholly disproportionate to the
claim, and generally irrecoverable.
• Even if you win, you may not get paid.
39 Essex Chambers LLP is a governance and holding entity and a limited liability partnership registered in England and Wales (registered number 0C360005) with its registered
office at 39 Essex Street, London WC2R 3AT. 39 Essex Chambers‘ members provide legal and advocacy services as independent, self-employed barristers and no entity connected
with 39 Essex Chambers provides any legal services. 39 Essex Chambers (Services) Limited manages the administrative, operational and support functions of Chambers and is a
company incorporated in England and Wales (company number 7385894) with its registered office at 39 Essex Street, London WC2R 3AT

13. Adjudication –
A success story? Yes!
Hefin Rees QC

14. How did we get here?
• A radical idea when first introduced in HGCRA 1996; but now tried
and tested:
– Over 500 reported TCC cases on Adjudication. Milestone cases include:
• Macob Civil Engineering Ltd v Morrison Construction Ltd (1999) 64 Con LR 1;
• Bouygues UK Ltd v Dahl-Jensen UK Ltd [2001] 1 ALL ER (Comm) 1041;
• Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358
– Amendments made to Act in 2011 – wide consultation – people mostly happy
with system;
– Adopted in many countries around the world – recently Malaysia, Ireland;
– Training for Adjudicators improved over years – standard of decisions now
generally better.
• Adjudication system is not perfect, but probably best we can
achieve:
– generally fair;
– only temporary;
– worst examples of unfairness can be challenged on enforcement where
adjudicator is in excess of jurisdiction or in serious breach of rules of natural
justice.

15. The Economic Justification for Adjudication
• Construction industry contributes £92 billion p.a. to UK economy
(6%);
• Construction industry employs 2.1 million people in UK;
• Cash flow is the lifeblood of the industry;
• Industry needs a process for resolving disputes quickly and cost
effectively;
• Cannot return to the bad old days – industry choked - employers /
main contractors withholding payment from smaller sub-contractors
causing:
– serious cash flow problems;
– intense commercial pressure to settle for less than owed.

16. Cash Flow : Pay Now, Argue Later
• The incidence of disputes – the greatest threat to construction
projects;
• Adjudication keeps the wheels moving - enables project to continue
whilst decision pending;
• Need to get to the “right” answer is sub-ordinated by need to have
an answer quickly;
• In comparison: litigation / arbitration very lengthy / expensive / bad
for business;
• Need a quick, enforceable interim decision, lasting up to the end of
the contract;
• If not accepted, can be the subject-matter of subsequent litigation /
arbitration;
• The question is: who holds the money in the meantime?

17. Speed of Dispute Resolution
• On average, about 1,000 Adjudications in UK each year;
• Speed is the supreme virtue – not designed to be a perfect judicial
process;
• In Macob, Dyson J:
– “a speedy mechanism for settling disputes on a provisional interim basis … the
timetable is tight … and likely to result in injustice … parliament must be taken to
be aware of this … merely a provisional interim stage in the dispute resolution
process”
• Right of parties to refer dispute “at any time” – risk of ambush -v-
greater flexibility;
• Tight timetable:
– Within 7 days of Referral Notice – Adjudicator to be appointed;
– Within 28 days of appointment – decision (subject to limited extensions)
– TCC enforcement procedure – abridged timetable for enforcement hearings

18. Relatively low costs
• Relatively cheap in vast majority of cases;
– anecdotal evidence for large fees in exceptional cases, but these are
not the norm;
• Majority of disputes in UK within value range of £10k - £50k;
– System needs to cater for this / be proportionate;
• About 70% of adjudications dealt with by means of a documents-
only procedure;
• Parties generally bear their own costs in referring the dispute to
Adjudication, and so an incentive to keep costs low: but see The
Board of Trustees of National Museums and Galleries on
Merseyside v AEW Architects and Designers Ltd and Another [2013]
EWHC 2403 (TCC);
• Adjudication costs are a fraction of the cost of litigation / arbitration.

19. Adjudication Used in Other Jurisdictions
1998 England & Wales
1998 Scotland
1999 Northern Ireland
1999 New South Wales
2002 Victoria
2002 New Zealand
2004 Queensland
2004 Western Australia
2004 Singapore
2004 Northern Territory
2009
Australian Capital
Territory South
Australia
Tasmania
2012 Malaysia
?
Australia
Ireland

20. Recent cases on enforcement
• Eurocom Ltd v Siemens plc [2014] EWHC 3710 (TCC);
• University of Brighton v Dovehouse Interiors Limited [2014] EWHC
940 (TCC);
• Twintec Industrial Flooring Ltd v Volkerfitzpatrick Ltd [2014] EWHC
10 (TCC);
• Hurley Palmer Flatt Limited v Barclays Bank plc [2014] EWHC 3042
(TCC);
• Aspect Contracts (Asbestos) Ltd v Higgins Construction plc [2014] 1
WLR 1220;
• Walker Construction (UK) Ltd v Quayside Homes Ltd [2014] EWCA
Civ 93.

21. What’s the alternative to adjudication?
• Mediation? But need agreement of parties, which may not be
forthcoming;
• Expedited Arbitration? 100-day arbitration system;
• “Arbitration / Mediation / Arbitration” procedure, along the lines of the
new Singapore International Arbitration Centre (SIAC) and
Singapore International Mediation Centre (SIMC):
– New protocol provides, dispute referred to arbitration at SIAC is automatically
referred to mediation once a Response to Notice of Arbitration is provided, and
stayed for 8 weeks with a separate mediator. If no resolution, return to
arbitration.
• In conclusion, adjudication is the best system and should be
maintained in UK.

22. Overview/A Potpurri of Cases
• Complication and the Speedy Resolution of Disputes
– Herschel Engineering Ltd v Breen Property Ltd [2000] BLR 272
– CIB Properties Ltd v Birse Construction [2004] EWHC 2635 (TCC)
– John Roberts Architects Ltd. V Parkcare Homes [2005] EWHC 1637 and [2006] BLR 106
(CA)
– Eurocom Limited v Siemens plc [2014] EWHC 3710 (TCC)
• Ambush
– The Dorchester Hotel Limited v Vivid Interiors Limited [2009] EWHC 70 (TCC)
– Galliford Try Building Ltd. v Estura Ltd [2015] EWHC 412 (TCC)
• Scooping the Pool
– Galliford Try building Ltd v Estura Ltd [2015] EWHC 412 (TCC)
• Influencing the Choice of Tribunal and Forum Shopping
– Makers (UK) Ltd. v London Borough of Camden [2008] EWHC 1836 (TCC)
– Connex South Eastern Ltd. V MJ Building Services plc [2005] EWCA Civ 193
– Midland Expressway Ltd. v Carillion Construction Ltd. No. 3 [2006] EWHC 1505
– Lanes Group plc v Galliford Try Infrastructure Limitied t/a Galliford Try Rail [2011]
EWCA Civ 1617

23. Do construction lawyers need
to worry about Convention
Rights?

24. The Human Rights Act
• European Convention of Human Rights &
Human Rights Act 1998
• Courts have an obligation to interpret legislation
so far as it is possible consistently with
Convention Rights (s.3)
• Public Authorities, including Courts, have an
obligation to act compatibly with Human Rights
(s.6)

25. Convention Rights 1
Article 6
“In the determination of his civil rights and obligations or of any criminal
charge against him, everyone is entitled to a fair and public hearing
within a reasonable time by an independent and impartial tribunal
established by law. Judgment shall be pronounced publicly but the
press and public may be excluded from all or part of the trial in the
interests of morals, public order or national security in a democratic
society, where the interests of juveniles or the protection of the private
life of the parties so require, or to the extent strictly necessary in the
opinion of the court in special circumstances where publicity would
prejudice the interests of justice.”

26. Convention Rights 2
Article 1 of Protocol 1
“Every natural or legal person is entitled to the peaceful enjoyment of
his possessions. No one shall be deprived of his possessions except in
the public interest and subject to the conditions provided for by law and
by the general principles of international law. The preceding provisions
shall not, however, in any way impair the right of a State to enforce
such laws as it deems necessary to control the use of property in
accordance with the general interest or to secure the payment of taxes
or other contributions or penalties.”
• Is there a “possession”?
• Has there been an interference?
• Does the interference pursue a legitimate aim?
• Is it proportionate? (“sledgehammer to crack a nut”)
(Axa General Insurance Ltd [2011] UKSC 46)

27. Adjudication and Human Rights
• The courts have considered whether the adjudication regime as a
whole complies with the Human Rights Act and the right to a fair
trial.
• Elanay Contracts v The Vestry [2001] BLR 33 (TCC)
• Article 6 does not apply because decision is only temporary
• Rough and ready procedure is not a reason for not ordering summary
judgment
• Austin Hall Building Ltd v Buckland Securities Ltd [2001] EWHC 434
(TCC)
• Adjudication not subject to article 6
• Look at adjudication and court procedures for enforcement
• Natural justice rules are similar
• Some doubt cast by ECtHR case: Micallef v Malta ((2010) 50
E.H.R.R. 37)

28. Factual Scenario
• Employer leased premises on a long lease, which was due to expire in
2036. At that point, the Employer would have to hand the premises back to
the freeholder.
• Employer engaged consultant engineers in respect of works at the
premises, which was a bottling plant. The agreement contained a provision
for adjudication. In any event, HGCRA would have applied.
• In 2004 the Engineers designed the structure.
• The works to the hall were finished in about 2006.
• In about 2009 cracks appeared in the hall. The defects did not prevent use
of the premises. The Employer said that they were due to defective
foundations. The Employer was able to lease the premises to a third party.
• In about 2011, the Employer brought a professional negligence claim
against the Engineers.

29. • On 2 March 2012, the Employer commenced adjudication proceedings.
The adjudicator was a non-lawyer.
• The claim was a professional negligence action and the majority of the
claim was in respect of future remedial works and associated losses which
would be incurred just before the end of the lease in 2036.
• The Engineers’ defence in the adjudication was principally a causation
defence. The Engineers admitted that they had provided no piles in the
design but they argued that the piles were removed from the foundations
upon instructions from the Employer. Further, the Engineers argued that
had they provided for piles in their design, the Employer would have
instructed them to remove the same as part of a value engineering exercise.
• Following a site inspection and a hearing, on 9 April 2012, the Adjudicator
delivered his decision. The adjudicator found in favour of the Employer and
awarded nearly £3m to be paid by the Engineer “forthwith”. This was even
though his decision was that it would be many years before the Employer
was actually out of pocket.

30. • The Engineers challenged enforcement.
What grounds of challenge could be open
to the Engineers?

31. Whyte & Mackay v Blyth &
Blyth [2013] CSOH 54
• The Court did not enforce the decision.
• There were 2 questions for the Court to
decide:
– Whether enforcement would deprive the
Engineers of their possessions.
– Whether the interference was a breach of
A1P1.

32. • The Judge considered the public interest justifications which lie at
the heart of statutory adjudication.
• The Judge very much kept in mind that due to the nature of the
adjudication process there had been no identification of the parties’
true rights and obligations.
• At para 39 of the judgment, he said:
“The court’s power to refuse enforcement is an important part of the overall
scheme, though obviously one to be used sparingly, so as not to undermine
the intended benefits of compulsory adjudications in construction
contracts”.
• On the facts of the case, none of the public interest justifications
applied.

33. • Would slightly different facts have resulted
in a different outcome?

34. ARGUMENTS AGAINST LOOKING AT
CONVENTION RIGHTS
• Not a final decision
• Overall scheme serves a legitimate
purpose
• Inconsistent with right to adjudicate at any
time
• A1P1 rights do not add anything to
discretion to refuse summary judgment

35. ARGUMENTS IN SUPPORT OF LOOKING AT
CONVENTION RIGHTS
• Whyte & Mackay isn’t contrary to s. 108 of
the HGCRA and the right to refer an
adjudication “at any time”
• Time to re-visit Article 6 arguments?

36. Adjudication Enforcement:
Time for a change?
Thursday 19 March 2015
At 39 Essex Chambers
By:
The Hon. Mr Justice Akenhead (Chair)
John Tackaberry QC
Hefin Rees QC
Karen Gough
Rachael O’Hagan
Rose Grogan
©

37. 39 Essex Chambers LLP is a governance and holding entity and a limited liability partnership registered in England and Wales (registered number 0C360005) with its registered
office at 39 Essex Street, London WC2R 3AT. 39 Essex Chambers‘ members provide legal and advocacy services as independent, self-employed barristers and no entity connected
with 39 Essex Chambers provides any legal services. 39 Essex Chambers (Services) Limited manages the administrative, operational and support functions of Chambers and is a
company incorporated in England and Wales (company number 7385894) with its registered office at 39 Essex Street, London WC2R 3AT