Poking the paymaster

Without fear or favour, blind to all blandishments and valiant for truth, an adjudicator must severely upset a party they're relying on for their daily bread. Hmmmm

“If there is a hint of self-interest bearing on an adjudicator, you have lost objectivity, lost independence, lost impartiality and the award is hopeless”

I bet you try hard not to upset your customers. You want to keep them sweet. After all, if the customer is fed up with you, they won't pay up, will they? So, what's to be done about people whose job is more or less bound to upset the customers, and these customers have yet to pay for the privilege.

Here is a job advertisement: "Ambitious, motivated self-starter with in-depth knowledge of construction wanted. Must not mind upsetting people. Pay variable depending on whether client ever coughs up. Title: Construction contract adjudicator".

Now, let me tell you what I'm on about. There are quite a lot of adjudicators up and down the land who have had to fight for their fees. This is not surprising. It is plain that when an adjudicator or arbitrator or judge decides a case, one party at least will be upset. The difference between adjudicators and the other two is that judges don't depend on those disappointed parties to pay their mortgage – the state does that. As for arbitrators, they are accustomed to asking for their fees before they reveal their decisions. They issue a nifty letter saying "My award is ready for taking up; pay the enclosed fee note first". And folk do. But just try that as an adjudicator.

The day after the adjudicator was selected for a dispute between St Andrews Bay Developments and HBG Management (4 April 2003) a letter went to them both saying, here are my fee rates, payable within seven days of invoice; they are to be paid prior to my decision being released by first-class post. The adjudication proceeded and in due course the adjudicator wrote out the decision. HBG phoned up and was told that as soon as the adjudicator's fees were paid, the result would be published. HBG paid up. Deal done. HBG was awarded a lot of money. The employer, St Andrews, now had to fork out. It wouldn't. It argued that the adjudicator's decision was ineffective and void. Why? Because it was delivered out of time. In other words, the delay while waiting for the fees to arrive pushed the delivery of the decision over its deadline. So, said St Andrews, we will ask the Scottish High Court to declare the whole exercise a nullity and we get to keep the money a bit longer.

The judge said that a decision delivered out of time was not a proper decision. There was a duty to meet the statutory rules of the Construction Act and the rules in the JCT contract. "If the adjudicator wishes to impose such an arrangement on parties, then it is [the adjudicator's] responsibility to see that the arrangement is accommodated within the statutory or contractual time limits. I can find no reason why the payment of the [adjudicator's fees] should be allowed to impede the statutory process, or justify a failure to observe its requirements." Oh dear.

I confess to being very perplexed by all this. What I know is that HBG and St Andrews expressly agreed in writing that the adjudicator's decision would and could be held back until the the fees were fully paid. There is no hint of this in the judgment. And even if there was no express agreement, the adjudicator is entitled to be told by return that their terms are not on. They can then decide to go on or stop.

The other worry is the effect on the mind of an adjudicator if they know that at least one party will be upset and that they will have to fight them for the money. It doesn't take a psychoanalyst to fathom that the adjudicator might unwittingly make "kinder" decisions. Keeping people sweet avoids problems in the long term. And if there is a hint of self-interest bearing on the pocket of a judicial decision-maker, you have lost objectivity, lost independence, lost impartiality and the award is hopeless. Adjudicators must be able to secure their fees. It is a most dangerous route to have a system where the tribunal has one eye on the parties and one eye on its own well-being. Adjudicators must be allowed to follow the example of arbitrators: no money, no award.

By the way, the judge ordered St Andrews to pay up anyway...

Readers are invited to forward recent judgments for reporting in this column (with full acknowledgement) to: Tony Bingham, 3 Paper Buildings, Temple, London EC4Y 7EU. DX:007I LDE

Top