In a recent NEC3 dispute over an airport hangar contract, a novel challenge to enforcement of an adjudicator’s award failed. Theresa Mohammed and Laura Lintott explain why
The recent ruling in the Prater v Sisk case, where several issues were in dispute, highlighted the steps a party must follow if it is unhappy with an adjudicator’s decision – and the consequences if it fails to do so.
Sisk engaged Prater for installation of cladding and roofing to a Gatwick Airport aircraft hangar for Boeing under an NEC3 Engineering and Construction Subcontract where Option W2 applied. Several disputes arose, which were referred to adjudication. In the fourth adjudication, Prater was awarded £1.76m (plus VAT).
The decision focused on enforcement proceedings, initiated by Prater after the fourth adjudication. Here, Sisk argued that the adjudicator lacked jurisdiction as he relied on the second adjudication award. According to Sisk, the adjudicator in the second award had also lacked jurisdiction as the referral dealt with several disputes.
“While the parties can agree, as a matter of principle, to refer multiple disputes to adjudication, this was not what the parties agreed in this case”
Veronique Buehrlen QC said Sisk’s point was “a novel argument” but that the contractor could not challenge the second adjudication decision – which was “binding and enforceable against Sisk” – in the context of the fourth one. The contractor should also have issued a notice of dissatisfaction and referred its challenge to tribunal or court, but it failed to do so.
The Technology and Construction Court (TCC) said it is a well-established principle that an earlier adjudication cannot be reopened in a subsequent adjudication, enforcing the fourth adjudication decision.
As for Sisk’s arguments, the TCC noted that the various issues forming the adjudication related to one single dispute: the sum due from Sisk to Prater. The other three issues – the correct subcontract completion date, the status of certain provisional sums and Sisk’s claim to be entitled to deduct certain indirect losses – were held to be part of the one overarching dispute.
It is not unusual for contractors and subcontractors to cherry-pick parts of a larger claim and refer them to several adjudications. It can be a way of pushing the other side into a settlement for the entire dispute.
The question is: whether section 108(1) of the Construction Act 1996 – which prevents more than one dispute from being referred to an adjudication – is an issue here. While the parties can agree, as a matter of principle, to refer multiple disputes to adjudication, this was not what the parties agreed in this case. The contract clause W2.1(1) was noted to reflect section 108(1) of the Construction Act 1996.
To be clear, an adjudication decision is binding, although not final if appealed and subsequently revised by the tribunal (or court). Multiple adjudications are not uncommon. While they mean that a party cherry-picks elements of a dispute that are likely to obtain a favourable adjudication decision, the other party can do the same in
return. The TCC is not opposed to this strategy.
In the context of NEC3 Engineering and Construction Contracts, where a party is unhappy with the adjudicator’s decision, it not only has to serve a notice of dissatisfaction but also challenge the decision before the tribunal. If, like Sisk, a party fails to take both of these steps, in adjudications that will follow, subsequent adjudicators will be bound by the earlier adjudication decision.
Theresa Mohammed is a partner and Laura Lintott is a senior associate at Trowers & Hamlins.