Construction adjudicators must disclose their involvement in simultaneous disputes or risk their decisions being overturned. The Technology and Construction Court recently ruled that an adjudicator’s failure to disclose his involvement in two linked claims breached the rules of natural justice and meant that one of the adjudications was unenforceable.
The parties had been involved in a substantial development at Gatwick Airport. Vinci Construction, had been selected as the main contractor and appointed Beumer Group as a sub-contractor to work on the baggage handling system. In turn Beumer employed Daifuku Logan as a sub-sub-contractor. Two disputes arose involving Beumer Group. The first concerned Vinci Construction’s instructions to Beumer and the second Daifuku’s failure to complete its work on time.
Beumer took the claims to arbitration and Dr Cyril Chern was appointed to decide both cases. Neither Beumer nor Dr Chern told Vinci that he had been appointed in the dispute between Beumer and Daifuku as well as the dispute between Vinci and Beumer.
Dr Chern found in favour of Beumer in its dispute with Vinci and ordered it to pay Beumer’s fees. Vinci refused to pay and enforcement proceedings were started. Vinci argued that there had been a breach of the rules of natural justice on two grounds. First, Dr Chern had gained background knowledge of Vinci’s claim due to his involvement in the dispute between Beumer and Daifuku. As Vinci was unaware of this adjudication it was unable to make submissions about it. Second, Beumer should have disclosed information to Vinci about its dispute with Daifuku which was relevant to the Vinci case. The central problem was that Beumer gave both adjudications inconsistent information about the completion dates for works.
The judge agreed with Vinci that the Dr Chen’s failure to reveal his involvement in both cases was a breach of natural justice. He ruled that Beumer’s claim against Vinci was unenforceable. “It is very difficult, if not in my judgment impossible, for an adjudicator to be permitted to conduct another adjudication involving one of the same parties at the same time without disclosing that to the other party,” said Mr Justice Fraser.
“Disputes on major construction projects are not uncommon and adjudication is a relatively quick and cost effective way to settle them.” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks. “This judgement demonstrates that adjudicators need to be really careful to inform all parties if they are involved in adjudications involving the same construction project, if their decisions are to stand up to court scrutiny. Parties to adjudications may wish to ensure that the adjudicator has done so.”
Reports on the case have been published by law firm Eversheds and Thomson Reuters’ Practical Law Construction Blog.
