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Adjudication loophole left open following latest judgement

Galliford Try Infrastructure is facing mounting legal costs in a case that could leave construction firms able to pick their own adjudicators.

In the latest judgement handed down last week, GTI’s legal opponent Lanes Group won its argument that an earlier £1.36 million award against it should not be enforced and that the larger firm should pay the substantial legal bill for an earlier adjudication.

Hearing rival claims from the firms, Mr Justice Waksman found in favour of Lanes on the point of bias in the adjudication.

Adjudicator Daniel Atkinson had issued his preliminary views of the case before receiving submissions from Lanes, Mr Waksman said.

“Given that on its face [his views] looked like a draft judgment, and one made before any response from the other party, it does indeed appear as if the author has made up his mind,” he said.

The decision means the adjudication will not now be enforced and GTI must pay the legal costs associated with it.

But the judge rejected Lane’s argument that because GTI refused to work with the initial adjudicator appointed, the claim should be thrown out.

A High Court ruling from 19 April found that although there was a breach of contract, Lanes Group had failed to prove GTI was in repudiatory breach in challenging the appointment of an adjudicator by refusing to serve referral documents after he was appointed.

A repudiatory breach allows the innocent party to terminate the contract.

Legal experts warned at the time the decision paved the way for contractors to abuse the dispute resolution process by refusing to deal with adjudicators they do not like.

Following the latest hearing Lanes Group commercial director Scott Norris said: “It remains a serious and unhealthy concern that a referring party can ask a nominating body to appoint an adjudicator and then can deliberately choose not to serve the referral documents and go off and have the nominating body appoint another adjudicator. There is no limit to this.”

CMS Cameron McKenna solicitor advocate Adrian Bell said: “Although the case didn’t turn on the issue in the end, the recent comments from Mr Waksman suggest the practice of successive pre-referral appointments will be allowed to continue.

“The decision is likely to lead to uncertainty and could result in forum shopping - although the judge observed that there was no evidence of many serious incidents of this.”

Mr Waksman has also granted Lanes Group leave to appeal the earlier judgement which found against its claim for a repudiatory breach.

Lanes’ solicitor Bill Barton said the decision was “equally important for the construction industry”, citing Lord Justice Aikens’ view that “this case potentially raises fundamental issues about the juridical basis for ‘adjudication’.”

“I believe the grounds of appeal all have a reasonable prospect of success,” Mr Barton added.

ICE dispute resolution manager Brendan von Rooyen said while the refusal to serve referral documents after asking for an adjudicator to be appointed had “always been technically possible”, it was “not something we have seen people abuse”.

He said the ICE and other nominating bodies could consider changing their terms and conditions if the practice became more common.

 

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