The recent Jacobs v Skanska case at the TCC highlighted the issue of stopping and restarting adjudications. Can the referring party withdraw and restart as often as it wants, regardless of the impact on the responding party? Stuart Thwaites explains.
It is not uncommon for a referring party to withdraw an adjudication which it has started, and then restart that same adjudication by serving what is essentially the same notice.
This approach can put the responding party to additional costs. In the courts stopping and restarting litigation would not be permitted and would generally be regarded as an abuse of the court process. But is there any limit on what a referring party can do in adjudication? Can it withdraw and restart as often as it wants?
This issue came to a head in the judgment of the Technology and Construction Court in Jacobs UK v Skanska Construction UK , released on 29 September 2017. In this case, Jacobs sought an injunction to stop Skanska from proceeding with an adjudication it had restarted – after Skanska had withdrawn from an earlier adjudication on essentially the same dispute.
When Skanska commenced the first adjudication, Jacobs raised a number of jurisdictional challenges. These were resolved by an agreement between the parties as to the procedural rules and timetable to be adopted for that adjudication.
The adjudication proceeded. The referral and response documents were served. However, when it came to the time for its reply, Skanska ran into problems, because its barrister was not available. Unable to obtain an extension to the agreed timetable, Skanska withdrew its reference to adjudication and asked the adjudicator to resign, which he did.
Fresh notice of intention
Approximately two months later, Skanska served a fresh notice of intention to refer the dispute to adjudication. There were some changes to the claim that was originally put forward, but essentially it was the same dispute that was referred to adjudication.
Jacobs was unhappy with this, having incurred significant costs in the first aborted adjudication. So it began court proceedings, seeking an order to prevent Skanska from continuing with the second adjudication, and for its costs from the first adjudication. It wanted the court to protect Jacobs’ right to a process that was “not unreasonable and oppressive”. Skanska said that, unlike in court proceedings, there is no concept of “abuse of process” in adjudication.
The judge looked at the Construction Act and the Scheme for Construction Contracts. She recognised that a referring party has a clear advantage, in that it can select the timing and scope of the dispute to be referred to adjudication. The inherent unfairness of the adjudication process, she explained, was justified by the relative speed and efficiency of obtaining an adjudicator’s decision, and that the decision was only of temporary effect.
The judge also found that there is nothing in the Construction Act or the Scheme to prevent a party from withdrawing a dispute which it has referred to adjudication, and starting a new adjudication on that same dispute at some later point, for whatever reason. She also confirmed that the concept of abuse of process does not apply to adjudication.
Not unreasonable and oppressive
At this point readers may understandably think that the court was creating a charter for parties to act without restraint.
However, the judge made the point that the courts do have the power, under the Senior Courts Act 1981, to grant an injunction to prevent a party from commencing or continuing an adjudication that is “unreasonable and oppressive”. Starting and stopping serial adjudications in respect of the same claim and requiring the responding party to incur irrecoverable costs could, the judge said, amount to unreasonable and oppressive behaviour.
On the facts of the case, the judge found that although Skanska’s conduct was unreasonable, it was not unreasonable and oppressive. As a result no injunction was granted. The judge gave examples of scenarios in which the power will be exercised to prevent an adjudication, such as where a second adjudication is commenced where the dispute has been decided in an earlier adjudication, or where the referring party has failed to comply with an adjudication agreement.
So the answer to the question in the title is a caveated “yes”. You can stop and restart an adjudication at will, but if you push it too far you risk an application to the court for an injunction, which is an expensive process.
Stuart Thwaites is legal director with Wright Hassall