Playing for both sides

guidance in the case Glencot Development & Design Co Ltd vs Ben Barrett & Son (Contractors) Ltd considered the potential hazards of an appointed adjudicator, who is asked by both parties to become a mediator and then resumes the role of adjudicator. In other words, a so-called "swapping of hats". It is case 49 in our adjudication series.

Ben Barrett, one of the big-league brickwork contractors, was working for Sir Robert McAlpine on the ExCel building in London Docklands.

A major subcontract had been placed with Glencot. Then, the two fell out over sums due. Glencot called for the adjudicator, who scheduled a meeting for 29 September.

Just before then, the chiefs of the two companies agreed on a settlement of £390K and happily informed the adjudicator. However, the chiefs argued over discounts and the negotiations failed. So, the adjudicator agreed to become a mediator, on the basis that he would resume his old role if the process broke down.

After six hours, the (now) mediator coaxed the parties into agreeing on a settlement of £384K. But still there were points outstanding and a legally drawn up settlement was required.

The mediator confirmed his understanding of what he had been elected to do: "assist the negotiations", and any information provided in those negotiations "would not be taken into consideration in my role as adjudicator".

He requested that, if either party considered impartiality had been compromised by his presence at the negotiations, they should inform him so that he could withdraw.

Neither objected, and four days later, he met with Glencot in the morning and Barrett in the afternoon. At this point, Barrett stated that his position as adjudicator was compromised and he was to stop. He decided to take advice. He told both parties that since they had accepted the process, they had elected to proceed on that basis. Moreover, he had questioned whether his knowledge of negotiations could result in prejudice and as he detected no prejudice, he announced he would complete the adjudication.

He concluded that Barrett was to pay £160K. Barrett refused. So Glencot started enforcement proceedings and sought instant (summary) judgment. Whether Barrett had a chance of succeeding at a trial was dependent on whether the adjudicator's conduct meant in law that he was no longer impartial and therefore the decision on the £160K was enforceable or, if so, had the conduct of Barrett nevertheless prevented it from so arguing? The Construction Act requires an adjudicator to act impartially. But the two parties can abandon or delete that right. On the first issue of bias, the judge examined the cases and concluded that in law it was possible to argue objectively that the adjudicator had failed the test. Barrett had a real prospect of being able to show that at a trial. It didn't matter about the adjudicator's actual state of mind. It was a question of how an outsider would view his position. That said, had Barrett and Glencot not agreed to this process? And in any case, had Barrett not lost any right to object when it failed to "immediately inform the adjudicator in order that I may withdraw". The judge thought that this was firmer ground for Glencot, but concluded that failure to reply immediately could be considered insufficient to deprive a party of its right to say that the adjudicator was no longer able to carry out his duties impartially, as impartiality is an essential part of authority confirmed on the adjudicator to make a decision and underpins his jurisdiction.

However, Barrett's failure to immediately respond was to be taken into account. The adjudicator and Glencot thought the adjudication had begun again. Thus it goes against the grain that Barrett's participation should leave Glencot with nothing at this stage. The judge looked at the part of the dispute that might be affected by bias and made a conditional order for the other parts in favour of Glencot, pending a full trial on the issues of bias and possible loss of right by Barrett to complain. He ordered an interim payment to Glencot of £107K and a speedy trial about the possible balances of cash yet to be paid.