Part 8 applications: What kind of question is that?

It a was brilliant idea; it just didn’t work. Brilliant all the same. It was an attempt to take the adjudicator’s decisions on appeal. ISG Construction Ltd was awarded a £29m design and build office block in Lombard Street, London EC3. The design, supply and installation of the unitised curtain walling and stone cladding was subcontracted to English Architectural Glazing Ltd (EAG). Its contract said it would commence works on site on 20 March 2017 and finish on 11 September 2017. By coincidence the finish date became the eventual start date, and over a year later the subcontract was all but done. A highly promising circumstance for a dispute – and indeed, ISG said that EAG was not entitled to all that extension of time, and claimed £3,183,000 compensation. Big money.

The adjudicator barrister, Mr Peter Collie, is highly experienced in such matters. Far from awarding £3m-plus to ISG, he awarded £137,434.00 to EAG. ISG paid up; not with a smile, however. Its lawyer picked over the adjudicator’s award, and brought what I call an appeal. ISG issued something called a Part 8 application in the High Court in Manchester before Judge Stephen Davies. It was not challenging the enforcement of the adjudicator’s decisions; it had already paid up. Rather it was seeking announcements or declarations from the judge that certain parts of the decisions were wrong and also wanted to know from the judge the “ambit and effect” of certain decisions. Why? So that ISG could decide whether, and if so on what basis, it could seek to enforce its claim for loss and damage in any further adjudications. That seems some distance from where we began with adjudication 20 years ago. 

ISG could simply begin afresh in court with the same dispute, but this time litigate

In a beguiling opening statement by the barrister for ISG, he explained that the court should be particularly willing to make announcements as to the ambit (scope) and effect of a first adjudicator’s decision in advance of any further adjudications because “the reality is that disputes like this are almost always adjudicated as opposed to litigated or arbitrated, notwithstanding that in theory it is always open to a losing party in adjudication to have a dispute finally settled by the court or arbitrator”.

Now then, adjudicators’ decisions are binding until finally determined afresh by legal proceedings or by arbitration. In other words, ISG could simply begin afresh in court with the same dispute, but this time litigate. Witnesses are cross-examined, experts scrutinised in the witness box. Barristers argue the toss in depth. Believe me, it is drilling down to enormous depths compared with the high-speed rummaging in lever-arch files in adjudication. But here the idea of ISG’s lawyers was not only to pick out issues thought wrongly decided but also to ask the court to fathom the effect of this adjudication on future adjudicators.

This device called Part 8 triggers a discretionary power available to the court. It can give “relief” in the interests of justice and do so without a full trial, without having to consider facts via witnesses etc. A typical Part 8 application is where the respondent argues the adjudicator had “no jurisdiction” to adjudicate, or else might raise the issue of whether a previous adjudication binds in another adjudication or – most commonly – whether the decision of the adjudicator is enforceable. ISG here admitted the adjudication decision was enforceable but came to court for crystal ball answers.

The key issue in the ISG vs EAG dispute in court was about the extension of time decision by the adjudicator. He had given an extension of time (EOT), but ISG came to court saying he was wrong, and it should have been zero EOT. It must be right to be able to challenge that important decision on EOT; it has important knock-on effects. The Part 8 challenge was a technical one: that the contractual notices machinery for EOT, being warning letters, had not been complied with. ISG argue that no evidence was needed because no notices were given, which would form a knock-out answer to EOT. In that case, a claim by ISG for compensation would be good. 

Scrutinising the words used in the decision to forecast impact on future disputes is unfair on the adjudicator

Wrong. The issue of EOT notices was a mixed question of fact and law: and thus inherently unsuitable for determination in isolation under Part 8. In other words, it requires a trial on the topic of whether proper notices were given.

As to the notion of ambit and effect or the consequences of the adjudicator’s answers, this was also a no-go. The court said it was only concerned with the question as to what was referred, and the question of what was decided. The idea of scrutinising the words used in the decision to forecast impact on future disputes is unfair on the adjudicator, given the pressure of time under which he, like all adjudicators, had to operate. Reasons given in the decision need not be exhaustive; they are only required to be brief. And, said the judge, “this is not an appeal of process on the adjudicator”. Let me remind you, adjudication is not a trial, not a deep forensic investigation as happens in court. It is only a “rough and ready” decision as to who best shall hold the money in a typical construction industry dispute – precisely what ISG vs EAG was.

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple