Challenging adjudicators' decisions

In a recent case (Prater Limited v John Sisk & Son (Holdings) Limited), the unsuccessful party in an adjudication challenged the validity of the decision, on the basis that (i) the adjudicator had considered that an earlier adjudication decision was binding on the adjudicator, and (ii) the earlier adjudication decision was invalid, because multiple disputes had been referred to the adjudicator within that earlier adjudication.

The challenge was unsuccessful. The court found that, unless and until the earlier decision was actually determined to be invalid (by a court or in arbitration), it would be binding on adjudicators in subsequent disputes.

The court also stated that multiple disputes had not been referred in the earlier adjudication – instead, the issues referred were merely parts of an overall dispute (in this case, the true value of an interim payment).

A useful reminder

We often see parties adopting a tactic of breaking down a dispute into parts, and then referring the parts to adjudication on a step-by-step basis. This can be a sensible and cost-efficient approach where, for example, resolution of a matter of principle might unlock a settlement, without having to have every detail determined.

In this context, this case is a useful reminder that:

• it is not sufficient for a party to merely note their dissatisfaction with an adjudication decision – adjudicators of later disputes will have no choice but to apply the earlier findings, unless a court or arbitral tribunal has actually decided that the earlier decision was invalid. Jurisdictional challenges to the validity of a decision should also be made directly, rather than as part of a challenge to a later decision; and
• although it remains the case that (subject to agreement otherwise) only single disputes can be referred to adjudication (as was re-confirmed by the Court in this case), the courts are willing to define a ‘single dispute’ widely, and are open to parties referring elements of that dispute on a piecemeal basis.

Comment

Of course, almost all disputes between parties could be framed as, ultimately, parts of an overall dispute as to what the final account should be. It is, therefore, hard to see how a party could successfully challenge an adjudicator’s jurisdiction, on the basis of a breach of the "single dispute" rule.

It is also clear that successfully challenging the enforceability of an earlier adjudication decision would not necessarily affect the validity of a later decision that was based on a finding in that earlier adjudication. Dissatisfied parties should, therefore, consider bringing any enforcement challenges against an adjudicator’s decision to court quickly if it might have wider consequences in subsequent adjudications.