Unilateral Withdrawal of Adjudication

Can a party who has commenced adjudication proceedings later unilaterally withdraw them and commence a further adjudication in respect of the same, or substantially the same case? This question was answered in the recent case of Jacobs UK Ltd v Skanska Construction UK Ltd [2017] EWHC 2395 (TCC).

In Jacobs v Skanska the parties agreed to refer their dispute to adjudication. The timetable that would apply to the process was agreed through correspondence. Jacobs claimed that it incurred substantial costs in responding to Skanska’s adjudication. Before the deadline set on Skanska to serve a reply, it claimed its counsel became unavailable and requested an extension of time. This was rejected by the adjudicator and Skanska therefore proceeded to withdraw its reference to adjudication.

About two months later Skanska served a fresh notice of intention to refer the dispute to adjudication. Broadly speaking the claim was the same, with the methodology and quantum of the damages slightly revised. Skanska were in effect restarting the process of adjudication despite failing to meet the previous deadlines leading to the withdrawal of its first adjudication.

Jacobs made a court application to prevent the second adjudication, asserting that Skanska were acting unlawfully by first withdrawing and then starting another adjudication over principally the same issues. Jacobs asserted that they had a right to a process which was fair to both parties and did not give one party any advantage over the other, arguing that Skanska’s behaviour was clearly an abuse of process, as the parties had previously agreed a timetable.

Attempting to defeat this line of reason, Skanska stated that the parties to adjudication are free to gain any advantage they can and that withdrawing and restarting the adjudication was not an abuse of process. Skanska argued that the right of the referring party to start adjudication at any time under the Construction Act and adjudication scheme allowed them to withdraw and begin adjudications in respect of the same dispute.

The decision of Mrs Justice O’Farrell confirmed that a party to adjudication is free to unilaterally withdraw a dispute and later advance a further adjudication over substantially the same dispute. The decision had a legal basis; in Carillion Construction Ltd Jackson J stated that “…there is no express or implied restriction in the 1996 Act or the Scheme that precludes a party from withdrawing a disputed claim which has been referred to adjudication”. Additionally, Dyson LJ in Connex South Eastern Ltd stated that “…the principle of abuse of process does not apply to adjudication”.

However, this does not mean the court will never prevent a party from pursuing adjudication. Section 37 of the Senior Courts Act 1981 allows the High Court to grant an injunction where it is just and equitable to do so. Mrs Justice O’Farrell confirmed that the key test was whether Skanska’s behaviour was ‘unreasonable and oppressive’.

It was held that the withdrawal by Skanska was unreasonable, Mrs Justice O’Farrell stating in her judgment that ‘the unavailability of counsel is rarely a good excuse for failing to meet an agreed timetable, especially where the party in default is the referring party who controls the timing and scope of the reference’.

However, Jacobs had to also show it was ‘oppressive’ and the court held that it was not. Jacobs’ arguments in the second adjudication would largely be similar to the first, so the inconvenience and added costs were deemed not so severe as to warrant injunctive relief. Jacobs was however awarded wasted costs caused by Skanska’s failure to comply with the agreement between the parties.

In conclusion, a referring party can unilaterally withdraw and start a subsequent adjudication. The adjudication scheme does not prevent this. As long as their actions are not unreasonable and oppressive, the court is unlikely to provide injunctive relief.

It is not without risk though; the court will look into the reasons for it and there may be costs consequences where the reason for this is a failure to adhere to an agreed timetable. Parties should also take note of the comments of Mrs Justice O’Farrell that “subjecting a party to serial adjudications in respect of the same claim and requiring it to incur irrecoverable costs could amount to unreasonable and oppressive behaviour”. Each case will be decided on its merits.

 

Mark James, Partner – Dispute Resolution, Coffin Mew Solicitors

 

If you would like to read more articles like this then please click here

The post Unilateral Withdrawal of Adjudication appeared first on UK Construction Online.