Hands off our law

As a result of a spate of recent court decisions, at least two of which appear to be heading for the Court of Appeal, it seems clear that adjudication is at a crossroads. Indeed, for one man, Mr David Richards, it must feel as if he is stuck in the middle of the junction watching the juggernauts thundering past in every direction.

The last couple of months have been hectic for Mr Richards, even by the standards of an adjudicator. Within the space of three weeks, Mr Richards' activities have been the subject of close scrutiny by no fewer than three judges of the Technology and Construction Court. In one case, his decision was set aside by the court as having been made without jurisdiction. Then, in the same case, one of the parties applied unsuccessfully to the court to revoke Mr Richards' nomination by the RICS as adjudicator in subsequent proceedings on the grounds of apparent bias. Finally, in a different case altogether, another of his decisions was set aside because the judge considered that, in reaching it, he had acted in breach of the rules of natural justice.

What lies at the bottom of this flurry of activity, in my view, is a judicial backlash against the way in which the adjudication process has developed over the four years since the Construction Act.

It is no secret that a number of judges in the TCC have voiced growing concern about policy factors that, in their view, result in them having to rubber-stamp decisions even where they are plainly wrong in fact or which involve apparent procedural unfairness.

These concerns have been compounded by judicial recognition that adjudication has not been confined to the small "pay now, argue later" dispute it was intended for. Far from it – parties have been using adjudication as a means of resolving relatively complex disputes relating to extensions of time and compensation following practical completion of the project. Furthermore, only rarely have parties that have been through the adjudication process taken the dispute on to arbitration or litigation.

Judge Lloyd goes as far as to say ‘it may well be doubted whether adjudication was intended for such a situation’

Why has the judiciary reacted so vehemently against these developments? A number of judges have expressed concern about the substantial fees that adjudicators had charged in certain big cases. Others have expressed the opinion that the time and other constraints of the process mean it cannot always operate fairly in practice. Another factor that, in my view, weighs heavily with some of the judiciary is the fact that, whereas adjudication may be relatively efficient in buoyant economic conditions, there are serious inherent risks in the process, which are exacerbated in tougher economic conditions.

One can read some of this between the lines in the most recent decision, RG Carter vs Edmund Nuttall, reviewed by Tim Elliott on 12 April. In order to minimise the risk of "ambush" in the adjudication process, the judge has produced a definition of the word "dispute" that is already causing horrendous problems for adjudicators and parties alike and seems to apply to arbitration just as much as adjudication.

In the third of the cases involving Mr Richards, Balfour Beatty Construction vs London Borough of Lambeth, Judge Lloyd observed that this was "yet another case in which adjudication has been launched after completion of the works and in which the dispute … comprises a highly complex set of facts and issues relating to the performance of a contract carried out over many months". The judge then goes as far as to say that "it may well be doubted whether adjudication was intended for such a situation".

Surely, it is for parliament initially, and then construction itself – rather than the judiciary – to decide how adjudication can and should be used in practice. It is time that the judiciary reminds itself of the principles laid down by Judge Dyson in Macob, principles that have been upheld in dozens of cases and which, in my view at least, reflect the industry's preferences as far as the role of the courts is concerned.