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Can justice be served at such a high speed?

IT/Law Report: The industry seems to like a quick fix in court, but is accuracy being sacrificed? Andrew Rawstron reports

IN THE past six months the courts have consistently shown a willingness to enforce adjudicators' decisions without delay.

Almost without exception, this has been favourably received by the construction industry

But what happens when an adjudicator gets it fundamentally wrong?

The resolution of complex disputes in 28 days is clearly onerous and carries a degree of risk for the parties concerned.

If mistakes are made in litigation or arbitration proceedings, that should come as no surprise - it would be naive to assume adjudicators are immune from making errors.

For this reason, an adjudicator is not liable for errors or mistakes unless as a result of bad faith But if it is essential to protect the adjudicator in this way, what can the victim of a mistake do to ensure that justice is done?

Mr Justice Dyson considered this issue in the case of Bouygues UK Ltd v Dahl-Jensen UK Ltd (November 17, 1999) By way of background, Bouygues is the main contractor for building works at King's College London; Dahl- Jensen was a domestic sub-contractor on the project and commenced work in April 1998.

On July 8 this year, Bouygues purported to determine (or terminate) the subcontract, whereupon Dahl-Jensen issued a Notice to Adjudicate seeking £2.9 million for breaches of contract, £2.1 million for additional works and £225,000 for wrongful determination.

Bouygues counterclaimed for alleged overpayments, liquidated damages for delay and damages for costs incurred as a result of the termination of Dahl-Jensen's employment Those claims exceeded £5 million.

From these details alone it is clear this was a major dispute There must have been significant issues of fact and law for the adjudicator to consider in reaching a decision on liability before turning to the quantification of the claims.

The adjudicator published his decision on October 5. In summary he found Dahl-Jensen was entitled to payment for additional works, and to damages for various breaches of contract prior to determination of the sub-contract.

However, he also held that Dahl-Jensen's employment had been validly determined and Bouygues was entitled to liquidated damages, costs relating to remedial works and damages in relation to additional costs for completing the sub-contract works When all of these issues were taken into account, he made a net award in favour of Dahl-Jensen in the sum of £207,741.46.

Unfortunately, the adjudicator made a fundamental error. In short, some of the figures which he used in calculating the sum which was due included retention monies while others did not The overall effect was that there should have been a net award of £141,254 in favour of Bouygues, rather than a net award of £207,741 in favour of Dahl-Jensen.

Bouygues drew the error to the adjudicator's attention and encouraged him to correct his decision under Section 57 of the Arbitration Act 1996. The adjudicator, however, held that the calculations correctly reflected his intention and refused to amend his decision.

Dahl-Jensen sought summary judgment of the sum which the adjudicator had awarded.

In defence, Bouygues argued the adjudicator had made a mistake and the effect of the decision was to award Dahl-Jensen the whole of the retention in circumstances where it was neither due nor claimed.

The contractor therefore submitted that the adjudicator had exceeded his jurisdiction and the decision should not be enforced.

While Dahl-Jensen did not accept that the adjudicator had made an error, Mr Justice Dyson concluded that he had plainly made a mistake.

Nevertheless, he went on to say that by simply making a mistake in calculating the sum which was due, the adjudicator had not exceeded his jurisdiction.

Bouygues submitted that to enforce a decision in these circumstances would bring adjudication into disrepute.

Mr Justice Dyson disagreed, referring to his earlier decision in the case of Macob (see Law Report February 25) and noted that the purpose of the Scheme for Construction Contracts was to provide a speedy mechanism for the settling of disputes in construction contracts on a 'provisional interim basis'.

With chilling simplicity he added: 'It is inherent in the scheme that injustices will occur because, from time to time, adjudicators will make mistakes.

Sometimes those mistakes will be glaringly obvious and disastrous in their consequences for the losing party.

'The victims of mistakes will usually be able to recoup their losses by subsequent arbitration or litigation, and possibly even by a subsequent adjudication. Sometimes, they will not...'

At the time of writing it is understood Dahl-Jensen has gone into liquidation.

The 'provisional interim' basis on which this dispute was resolved may now prove to be rather more permanent than the judge may have anticipated.

Andrew Rawstron is a senior lawyer in law firm Cameron McKenna's Construction Group. This and other articles can be found on Cameron McKenna's website at www.cmck.com.

Key points

Adjudicators are not liable for any errors or mistakes in a decision, unless they are a result of bad faith.

The courts are willing to enforce a decision even if there is a manifest error in it.

Substantial injustice is not on its own a defence to an application for summary enforcement of an adjudicator's decision.