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Stop the adjudication… Now!

The use of injunctions to stop adjudications has been limited until recently. They can be useful, but there are several important requirements that first need to be met.

Injunctions are a powerful tool. They allow you to be proactive rather than reactive and can stop an adjudication before it’s even started.

They can be significantly quicker – and potentially cheaper – than fighting an adjudication and then resisting enforcement at a later date.

Their use in adjudications has been limited to date, but two cases have recently been reported in quick succession.

What is an injunction and how do I get it?

A prohibitory injunction is an order from the court that requires a party to abstain from carrying out a specific act.

Failure to comply can be contempt of court. In an adjudication, an injunction at the outset could prevent a party from proceeding with the adjudication at all.

An injunction must be applied for from the court, which has a discretion to grant it if certain requirements are met.

The threshold is high: you must show there is a serious issue to be tried; that damages would not be an adequate remedy for any loss you might suffer if the injunction is not granted; and that, balancing the loss and inconvenience each party could suffer if the injunction is, or is not, granted, the balance lies in granting the injunction.

Can an injunction stop an adjudication?

In the recent Scottish case of T Clarke (Scotland) Limited v MMAXX Underfloor Heating Limited [2014] CSOH 62, a subcontractor applied to the court for an injunction (known as an interdict in Scotland), to prevent a sub-subcontractor from raising any further adjudications.

There had been nine adjudications in the preceding nine months. Eight had been started by the sub-subcontractor; one by the subcontractor.

The subcontractor claimed the disputes were a “sham” and the sub-subcontractor was misusing the adjudication process.

“The court confirmed it was able to grant an injunction where it was “unreasonable and oppressive” to allow the adjudication to continue”

The court agreed that the sub-subcontractor’s actions meant “a cloud of suspicion hangs over its conduct”, but refused to grant the injunction.

This would have prevented the sub-subcontractor from raising any further adjudication, no matter how genuine, which the court considered went too far. 

This decision referred to the English case in January of Twintec Ltd v Volkerfitzpatrick Limited [2014] EWHC 10 (TCC). 

Here, the subcontractor applied for an injunction to prevent a main contractor from proceeding with an adjudication it had already started.

The adjudication was for £850,000, which formed a small part of a £170m multi-party litigation already under way in court. 

The subcontractor based its application on a number of grounds, including that the adjudicator was invalidly appointed and that it would be unreasonable and oppressive to allow the adjudication to continue.

“The courts have shown there are circumstances in which they will grant an injunction”

The timing of the adjudication would have placed significant pressure on the subcontractor and its advisers.

The court granted the injunction, on the basis the adjudicator was invalidly appointed.

As an aside, the court confirmed it was able to grant an injunction where it was “unreasonable and oppressive” to allow the adjudication to continue.

The court agreed that in this case, the subcontractor would have been placed under “great pressure”. However, this was not enough in itself to amount to unreasonable and oppressive behaviour. 

A future filled with injunctions?

The courts have therefore shown there are circumstances in which they will grant an injunction. This can be on jurisdictional grounds or if it is “unreasonable and oppressive” to allow the adjudication to proceed.

This very high threshold was met in Mentmore Towers Ltd v Packman Lucas [2010] EWHC 457 (TCC).

“Injunctions are an additional tool in the dispute resolution toolbox”

The court held it was unreasonable and oppressive to allow the adjudication, as the referring party had failed to honour previous adjudication decisions against it, despite enforcement proceedings in court.

Injunctions are therefore an additional tool in the dispute resolution toolbox. If you are faced with an adjudication, it is something you should consider using.

Their use has not featured prominently to date in the world of adjudication, but with two cases in the last three months, maybe that is changing.

Helen Pearce is a lawyer at CMS Cameron McKenna

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