Adam Mathewson is a solicitor and Karen Morean is a partner at Devonshires
Statutory awarding has been a feature of the construction industry for 25 years. Its success and acceptance within the industry is perhaps best demonstrated by how few award decisions are challenged in the Technology and Construction Tribunal (TCC) in enforcement proceedings.
In 2022, the Award Society and King’s College reported that a quarter of respondents had never experienced a dispute resolved in litigation or arbitration, and that of 189 enforcement cases that year, the TCC declined enforcement on only 40 occasions.
This trend appears to have continued this year, and we discuss key points from recent enforcement decisions.
A little about the law
As a reminder, the limited grounds on which an adjudicator’s decision in enforcement can be challenged are: a breach of natural justice and the adjudicator’s lack of jurisdiction.
If a decision is enforceable, a party may nevertheless seek to suspend (stay) the enforcement of the decision. However, the reasons for obtaining a stay are limited to economic secondary school. In other words, the insolvency of the executor and the lack of other adequate security should be demonstrated.
Breach of natural justice
In Lidl Great Britain Ltd v Closed Circuit Cooling Ltd (2023), the judge noted that “any breach of the rules of natural justice must be more than peripheral; they must be material breaches”. It further stated that adjudicators should raise an issue or bring it to the attention of the parties to give them an opportunity to comment, only if it is of considerable potential importance to the outcome.
“The increase in insolvency in the construction sector will inevitably lead to an increasing number of attempts to maintain the execution of decisions of adjudicators.“
Since the parties made submissions on the whole of the contract at award, the successful bidder’s reliance on a clause to which neither party referred did not offend natural justice. It was part of what had to be decided by the successful tenderer and he had not been playing his “own game”.
The judge enforced the adjudicator’s decision, finding that Lidl’s arguments fell short of establishing a breach of natural justice, and that the breach would have been material.
Parties who allege that adjudicators did not consider their claims will face an uphill battle in resisting enforcement, as Bexhill Construction Ltd v Kingsmead Homes Ltd (2023) shows that. The Adjudicator expressly stated that he had taken all submissions into account in reaching his decision. A court will be slow, absent evidence to the contrary, to interfere with an adjudicator’s decision given these express words.
Similarly, parties who argue that the cases are too complex, or that they have not been given a fair opportunity to respond to the case before them, will have difficulty resisting enforcement. In Home Group Limited v MPS Housing Limited (2023), the judge enforced the adjudicator’s decision, finding that there was no breach of natural justice on these grounds.
In AZ vs. BY (2023), the judge considered that the circumstances of the case were “one of the few cases where a breach of natural justice, by reason of apparent partiality, dictates that the decision should not be enforced”.
This arose because AZ submitted without prejudice submissions to the awardee, intended to demonstrate that BY’s position in the award was contrary to the position taken in the without prejudice submissions.
The judge considered that there was a real possibility that the adjudicator was unconsciously biased by having seen that correspondence.
Suspension of execution
In Alun Griffiths (Contractors) Limited v Carmarthenshire County Council (2023), the council applied for a stay because the contractor was insolvent and its parent company’s guarantee was inadequate to safeguard the council’s position.
The judge considered that “there was no merit [the council’s] request for suspension of judgment”. He decided that the parent company’s guarantee was more than sufficient to protect the council’s position should it be successful in a subsequent “real value” award.
conclusion
The cases demonstrate the TCC’s robust and continued approach to the enforcement of award decisions. Parties seeking to challenge enforcement must think carefully about satisfying the materiality requirement, which case law shows is a high bar.
It remains the case that challenges based on bias are rare because they are based on a specific set of facts and adjudicators are on the lookout for potential problems. Parties are encouraged to raise any suspicions as early as possible in the adjudication process.
We are all aware of the worrying increase in insolvency in the construction sector. In our view, this will inevitably lead to an increasing number of attempts to maintain the enforcement of adjudicators’ decisions. The expert opinion of forensic accountants will be crucial in establishing or defending these applications. The initial position remains “pay now, argue later”.
