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It is well established that the grounds for resisting enforcement of an adjudication decision are limited. A party must either persuade the court that:
(a) the adjudicator had no jurisdiction to determine the dispute; or
(b) the adjudicator has materially breached the rules of natural justice.
This has not stopped a variety of arguments being raised in the courts to resist enforcement, including arguments that the dispute is too complex and document-heavy for adjudication [1], or that enforcement should be stayed to allow the parties to mediate [2]. In the last month, the TCC has refused two further creative attempts to resist enforcement.
1 RESISTING ENFORCEMENT BECAUSE OF QUESTIONABLE FINANCIAL STANDING
WRB (NI) Ltd v Henry Construction Projects Ltd [2023] EWHC 278 (TCC) (10 February 2023) (bailii.org)
In an attempt to avoid payment, the defendant requested a stay in the enforcement of the adjudicator’s decision for reasons unrelated to the decision itself. Instead, the stay was requested in light of a concurrent cross-claim being brought by the defendant (also via adjudication) against the claimant for liquidated damages.
The defendant’s rationale for requesting the stay of enforcement proceedings during the cross-claim was that the claimant was a dormant company and was therefore of questionable financial standing. As such the defendant believed that the claimant was unlikely to repay any monies paid to it under the enforcement proceedings should the defendant subsequently be successful in its cross-claim.
The defendant in its submissions had acknowledged that the existence of a possible cross-claim was by no means a defence to enforcement and that it did not resist the judgment to enforce the adjudicator’s decision but instead sought a stay of the execution of the judgment. The judge (Mr Justice Pepperall) rejected this novel argument on the basis that:
(a) the defendant had known it was entering into a subcontract with a dormant company at the outset;
(b) the defendant had (possibly for its own tactical advantage) commenced the first adjudication against the claimant, and had contested a jurisdictional argument made by the claimant that it was not the true party to the contract; and
(c) in any event, the inadvertent delay to the judgment being handed down meant that the defendant would have had ample time to establish its entitlement in its cross-claims.
To put it plainly, Mr Justice Pepperall stated that, the defendant had “made its own bed” and it would have been “unfair and contrary to the spirit of the adjudication regime” to allow the defendant to escape liability in this manner. The adjudicator’s decision was enforced and the stay was refused.
2 ADJUDICATOR’S PERSISTENT AND TENACIOUS REQUESTS FOR PAYMENT
Similarly, in this recent case, the defendant’s attempts to avoid making payment focused not on the decision itself, but on a procedural point regarding the timing of the adjudicator’s demand for payment for his services.
The adjudicator’s clerk had requested payment from the parties four days before the decision was issued. The defendant’s position in the subsequent enforcement proceedings was that the adjudicator’s demand created a potential bias ahead of the decision being made, and was akin to a threat to exercise a lien.
Paragraph 12 of the Scheme for Construction Contracts (England and Wales) Regulations 1998 requires adjudicators to act impartially, and since Cubitt Building & Interiors Ltd v Fleetglade Ltd , adjudicators have been unable to claim a lien.
The judge did consider that the emails from the adjudicator’s clerk requesting payment to be particularly persistent and tenacious. Nonetheless, the judge was not persuaded that the payment requests constituted threats to impose a lien, or that the defendant's solicitors considered this to be a possibility at the time. This was on the basis that the defendant had openly reserved its rights in respect of jurisdictional challenges when making previous payments but had failed to raise any concerns or objections as to the requests for fees at the time.
Key takeaways
These recent cases highlight the well-established boundaries set by adjudicators and the courts when it comes to enforcing the decisions of adjudicators. Save for in extraordinary circumstances, the spirit of adjudication will prevail when seeking to impose a stay on the enforcement process, and there is value to be had in raising any jurisdictional issues as soon as they arise.
These cases serve as a caution to unsuccessful parties seeking to circumvent the well-trodden grounds for challenging an adjudicator’s decision and to highlight the court’s ongoing reluctance to interfere.
This post was written by Richard Adams, Andy Sheppard and Isabel Rawlings.
[1] Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358
[2] Balfour Beatty Construction Northern Ltd v Modus Corovest (Blackpool) Ltd [2008] EWHC 3029 (TCC)
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