When can you be unfair?

Adjudicators who ignore the rules of natural justice in their conduct may not fall foul of the courts, but they should be given a damn good thrashing anyway

“Let’s put it commercially. Although the courts take a strict, legalistic, hands-off approach to natural justice, commercial reality does not”

I am just popping behind the judicial bike sheds to have a quiet word in Lord Justice Dyson’s ear about his judgment in Amec vs Whitefriars. It’s the bit where he explains that something called “natural justice” does not apply to one part – and a helluva important part – of adjudication. Specifically, adjudicators’ behaviour. I bet a pound to a pinch of snuff that a fair number of adjudicators out there will say of Lord Justice Dyson: “He says fairness doesn’t apply to this part of adjudication. Ergo, I can be unfair.” No, I know that’s not what the judgment says. I know that the judge has tried to give some guidance – the snag is, he hasn’t laid it on thick enough. I will.

Let me tell you the story. Amec was engaged by Whitefriars to carry out pre-construction works for its development in Tudor Street, central London. There was a claim for about £500,000, which came to adjudication. Straight away, Whitefriars’ solicitors informed the adjudicator he had not been appointed in accordance with the contract and therefore had no jurisdiction. But he pressed on. He awarded all the £500,000, plus interest, to Amec. Five months later, a judge in the High Court said that the fellow had no jurisdiction. Empty victory.

Meanwhile, the man who had been named in the contract as the adjudicator had died. So Amec began all over again. It asked the RIBA to reappoint the same bloke who adjudicated last time. It did. Happy Amec. Unhappy Whitefriars.

You might expect that Whitefriars would carefully tell the same adjudicator to go away again. It did. The adjudicator took legal advice, as he had a right to do. He was advised that his nomination this time was valid and he could proceed with the adjudication. Then he sent the legal advice to Whitefriars and Amec. Whitefriars took issue with the advice but the adjudicator had already pressed on and again decided that £500,000 plus interest was due to Amec.

Once more, Amec went to the High Court to enforce the adjudicator’s decision. “No, no,” said the judge. This time the adjudicator had fallen foul of the rules of natural justice. When an adjudicator seeks outside advice, he is obliged to tell the parties beforehand, then publish the advice he gets and allow them to comment before he reaches any decision. This fairness principle is twofold: first, the parties have the right to prior notice and an effective opportunity to make representations before a decision is made; second, there is a right to an unbiased tribunal. The adjudicator boobed by making his decision to continue before publishing the advice.

So Amec went to the Court of Appeal. This time the court decided that there was no breach of the fairness rules, explaining that questions of jurisdiction, being “non-binding decisions”, were not subject to the rules of natural justice. True the rules apply to any decision that affects the parties’ rights, but non-binding decisions don’t.

However, Lord Justice Dyson does give a helpful nudge to adjudicators, albeit in judicial language: “Adjudicators would be well advised to give parties the opportunity to make representations on an issue of jurisdiction. They may receive valuable assistance, which will help them to decide whether they should proceed with the adjudication.”

The lawyers will get that message. Now let’s put it commercially, shall we? Although the courts take a strict, legalistic, hands-off approach to this jurisdiction area, commercial reality does not. Any adjudicator who deals with these points in an arbitrary, offhand or – yes – unfair way in commercial terms brings adjudication into disrepute. We adjudicators don’t want fellow adjudicators who would make the ordinary construction man on the street say “That’s unfair”. Be plain boys: get shot of any adjudicator who does not fret like hell about being fair and open about jurisdictional challenges. Why? Because if he proceeds with an adjudication despite the presence of a question mark over the right to adjudicate, it costs thousands of pounds when the whole lot turns out to be a nullity.

The offhand, unfair adjudicator should be taken behind the back of those bike sheds and given a damn good hiding.

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: 37164 Biggleswade

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