| Date | 15 September 2004 |
|
|
| Judgment | McAlpine PPS Pipeline Systems Joint Venture v Transco plc, QBD 12 May 2004 |
|
|
| The Issue | Grounds for challenging the enforcement of an adjudicator’s decision. |
|
|
| Implication |
In examining his jurisdiction, the adjudicator must not only establish the existence of a dispute, but must ask questions relating to the background of the dispute to determine properly the matters in issue. |
print|
In the recent case of McAlpine PPS Pipeline Systems v Transco plc, the judge gave a very helpful list of questions which should be borne in mind by adjudicators when their jurisdiction is challenged. Transco had employed McAlpine to carry out works in relation to the construction of 37 kilometres of steel pipeline in Kent. The contract between the parties incorporated the Engineering and Construction Contract Option A. A dispute arose between the parties concerning payment and McAlpine referred the matter to adjudication. In its referral notice, McAlpine stated that the dispute concerned Transco’s failure to certify the amount due by the contract assessment date, or Transco correcting amounts under valued in previous certificates. According to McAlpine, both these failings gave rise to an entitlement to interest under the contract. Included with the referral was a schedule of compensation events, the late assessment or under valuation of which was said McAlpine to give rise to the claim for interest. Also included was a narrative for three of the compensation events which McAlpine stated were being provided solely by way of example. Transco immediately objected to these submissions, complaining that it had received no factual submissions with regard to the remainder of the compensation events identified by McAlpine. Transco argued that it had not been given the opportunity to consider properly the whole of the claim that was being brought against them. What was not clear at this point was whether McAlpine was asserting an automatic entitlement to be paid interest in circumstances where the assessment of a compensation event had been made late or had subsequently altered, or whether the resolution of the dispute required a more extensive enquiry into each compensation event to determine the underlying reasons for the delay or undervaluation. On the assumption that the dispute concerned the latter, the adjudicator decided that the Scheme for Construction Contracts gave him the power to investigate the underlying reasons and accordingly he ordered that McAlpine should provide evidence on six further compensation events. McAlpine responded to this request by submitting documents which it described as ‘rather bulky’ and which ran to 500 pages. McAlpine asserted these documents would give background to specific compensation events which would account for 85% of the total amount claimed. Transco immediately registered its objection to this evidence. Despite this, the adjudicator permitted McAlpine to provide further information on six additional compensation events which amounted to another 1,000 pages. Transco protested that it was now being forced to consider a claim that had not previously been properly articulated by reference to the contractual provisions or submitted to the project manager under the terms of the contract. Ignoring these protestations the adjudicator issued his decision that Transco should pay McAlpine approximately £45,000. Transco failed to comply with that order and McAlpine brought proceedings to enforce the decision. Judge Toulmin was perfectly clear that he should refuse enforcement. It was one thing for the adjudicator to use his powers to investigate the facts and the law concerning a dispute referred to him. It was quite another thing for the adjudicator to vary the basis upon which the reference was made. Judge Toulmin concluded that the adjudicator had no basis for embarking on a consideration of what he regarded as the real dispute. The evidence submitted during the course of the adjudication was new evidence in support of a new case and Transco could readily show that it had not been afforded a fair opportunity to respond to this material, which had been served at such a late stage. Judge Toulmin commented that the problem in adjudication cases is often not whether there is a dispute, the point considered by the Court of Appeal in Halki Shipping Corporation v Sopex Oils, but determining the nature of the dispute or difference referred to the adjudicator. In order to focus on the issues which are referred to adjudication, Judge Toulmin helpfully set out a series of questions which would provide pointers to adjudicators facing challenge to their jurisdiction. These were as follows: (1) What issues were referred at any meeting between the parties before service of the referral to adjudication? (2) What is the dispute that was referred to the adjudicator after the defendant had had an opportunity to respond to the claims put forward by the claimant? (3) What was the basis on which the dispute was referred; was it (a) general and/or (b) by reference to specific issues? (4) Was the adjudicator’s decision responsive to the issues referred? (5) Were new issues raised during the course of the adjudication? (6) If so, were the new issues objected to by the other party? (7) Is any such objection one which goes to the fundamental nature of the dispute referred? (8) If so, does the objection go to the fairness of the procedure? (9) If there was a breach of the procedure, does it significantly affect the fairness of the decision? The answers to those questions indicated that the adjudicator had admitted new evidence in support of a new case and that Transco had not been afforded a fair opportunity to respond to that evidence, which had been served at a late stage. Judge Toulmin declined to order enforcement of the adjudicator’s decision.
CJ-0437
|
|||
|
© Brewer Consulting |
|||
 |
|||