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What happens when the adjudicator’s decision is unsatisfactory?

What happens when the adjudicator gives reasons for his decision but they are not to the parties’ satisfaction either because the adjudicator “missed” a bit - or the reasons are just plain unsatisfactory? By Louise Shiels

These points were addressed in two recent cases, one before the Court of Session, CSC Braehead Leisure Ltd & Anor v Laing O’Rourke Scotland Ltd [2008] Scot CS CSOH 119, and the other in the TCC, Thermal Energy Construction Ltd v AE & E Lentjes UK Ltd (2009) EWHC 408 (TCC).

Both cases arose as a result of an application to the court to enforce an adjudicator’s decision.

In the second case the application was opposed on the basis that the adjudicator had failed to give reasons in respect of an issue which was a necessary element of his decision on the underlying dispute. It was alleged that the adjudicator had “missed” a bit.

The court held that: “an adjudicator is obliged to give reasons so as to make it clear that he has decided all essential issues… so that the parties can understand, in the context of the adjudication procedure, what it is the adjudicator decided and why.” 

In this case, it was unclear whether the adjudicator had in fact considered the defence, including the counterclaim. Therefore the defender had lost the opportunity of having the adjudicator deal with the defence and thus the opportunity to have the point decided in his favour.  As a result, the defendant suffered substantial injustice and the adjudicator’s decision was successfully challenged. 

By contrast, in the first case there was a challenge to the adequacy and intelligibility of the adjudicator’s reasons. The court held that this type of challenge can only succeed if his reasons were so incoherent that it was impossible for the reasonable reader to make sense of them.  In this case, although the adjudicator’s reasons “were at times briefly stated and opaque”, they were not “so incoherent that it was impossible for the reasonable reader to make sense of them”.  His reasons were sufficient to show that “he had considered the issues referred to him and given a decision on those issues”.

While both courts are reluctant to interfere with the adjudication process, the second case illustrates that there will always be a grey area where an adjudicator’s decision may fall at either side of the line.  Whether the TCC would have adopted the same position in the Braehead case as the Scottish court can only be a matter of conjecture.

Louise Shiels is an associate in the construction practice of UK law firm Dundas & Wilson.