Legal update: new adjudication deadline ruling

This could be partly because it is being used for far more, and increasingly more complex, cases than those it was originally designed for. Nevertheless, its raison d’etre – to settle disputes within a strict timescale and get critical cashflow resumed as quickly as possible – has been put at risk as adjudicators strayed beyond the 28-daydeadline for decisions, onlyto find these are then contested in court.

Last month, the Government began consulting on legislation to tighten up aspects of the scheme. As it happened, adjudicators were given very clear instructions about timescales just two days later.

From the Inner House of the Court of Session, in the case of Ritchie Brothers (PWC) Ltd v David Philp (Commercials) Ltd, came the ruling that the 28-day deadline is mandatory, and decisions reached outside that time limit will be invalid. This clears up a period of uncertainty arising from other cases, where it appeared that an adjudicator’s decision, even if issued late, would nevertheless be valid and enforced by the courts.

The facts of the case were simple – the adjudicator miscalculated his deadline after the adjudication referral notice was delayed in the post. As a result, his application for an extension came after the deadline. In the meantime, Philp’s lawyers wrote to the adjudicator stating that any decision reached after the deadline would be invalid.

The Lord Justice Clerk’s view was that the 28-day deadline was a mandatory time limit which leads to certainty and allows all parties to know where they stand – a view that was shared by Lord Nimmo Smith.

The third of the Inner House judges, Lord Abernethy, had a different opinion. He felt the merits of the adjudication had not been disputed, and ruling the decision invalid would only mean time and money expended on the adjudication would be wasted, and payment to Ritchie would be delayed.

The Lord Justice Clerk, meanwhile, also served another unequivocal reminder to adjudicators. “An adjudicator should be able to assess the prospects of his reaching a decision within 28 days as soon as he receives the papers in the case. If he is in doubt he should at once seek the referring party’s consent… or if need be… the consent of all parties to an extension.”

So the ruling concludes, on a two-to-one majority, that adjudicators can continue to determine how long any given case will require – as long as they apply for any extension within the 28-day deadline.