| Date | 25 May 2005 |
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| Judgment | Carillion Construction Ltd v Devonport Royal Dockyard, TCC 26 April 2005 |
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| The Issue | Principles underlying the enforcement of adjudicator's decisions. |
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| Implication |
The court has provided four principles which underpin any action for the enforcement of an adjudicator's decision. |
printDevonport Royal Dockyard refits and refuels warships and nuclear submarines for the Royal Navy. In early 1997, the dockyard was privatised and at that time it was decided that the existing facilities should be upgraded and new facilities provided. Part of the purpose of these works was to enable the dockyard to refit and refuel the most recent classes of submarines employed by the Royal Navy. The Ministry of Defence engaged Devonport to carry out these works under a cost reimbursable contract with a target cost mechanism. Devonport in turn engaged Carillion as subcontractor to carry out the upgrading of one of the docks, which included replacing the dock walls and base and constructing four new buildings. One of the new buildings was a decontamination building which would contain apparatus for removing nuclear contamination. The contract between Devonport and Carillion included an "Alliance Agreement" which supplemented the provisions of the subcontract in order to promote partnering and harmonious relations between the parties. The Alliance Agreement included a dispute resolution procedure which provided that disputes would first be referred to the "Alliance Board" and then to the incongruously named "Star Chamber". The original Star Chamber was an English court of law active in the Tudor and early Stuart periods which was abolished by parliament in the 1600's, by which time its name had become synonymous with secret and irresponsible court proceedings. Plainly neither the Alliance Agreement, the Alliance Board nor the Star Chamber proved up to the task of maintaining harmonious relations between the parties. The target cost, which was initially set at £56 million, rose by a series of steps contained in amendments to the contract to approximately £96 million. This was well below the figure of £114 million that Carillion was arguing for. In addition disputes existed concerning the reimbursable costs due under the contract, including claims for defective works presented in a sum upwards of some £21 million. With nowhere left to turn under the terms of the Alliance Agreement, Carillion served on Devonport a notice of adjudication in respect of these disputes. Faced with the unenviable task of resolving these differences within 42 days, the adjudicator wisely directed that the parties should provide written summaries of their cases limited to four pages in length. The remaining referral and response documents were considerably more extensive however. Each party served numerous witness statements, expert reports and supporting documentation which in all amounted to some 29 lever arch files. In the event, the adjudicator found substantially found in favour of Carillion and ordered an immediate payment to Carillion of a sum in excess of £10 million. Unsurprisingly, Devonport declined to pay the sum due under the adjudicator's decision. In order to justify their respective positions, both parties commenced proceedings in the Technology and Construction Court, Carillion claiming an order enforcing the adjudicator's decision and summary judgment on its claim and Devonport claiming declarations that the adjudicator's decision be regarded as invalid. The Honourable Mr Justice Jackson carried out a very careful review of recent case law and concluded by restating four simple principles which he considered applied to any consideration of the enforcement of an adjudicator's decision. 1. The adjudication procedure does not involve the final determination of anybody's rights, unless all parties so wish; 2. The Court of Appeal has repeatedly emphasised that the adjudicator's decisions must be enforced, even if they result from errors of procedure, fact or law; 3. Where an adjudicator has acted in excess of his jurisdiction or in serious breach of the rules of natural justice, the court will not enforce his decision; and 4. Judges must astutely examine technical defences with a degree of scepticism consonant with the policy of the HGCRA. Errors of law, fact or procedure by an adjudicator must be examined critically before the court accepts that such errors constitute excess of jurisdiction or serious breaches of the rules of natural justice. Based upon those four principles, Mr Justice Jackson dealt with each of the challenges put forward by Devonport to resist enforcement of the adjudicator's decision. Crucially, the fact that the adjudicator's approach to the assessment of target cost might have embodied errors of both fact and law was insufficient to be characterised as an excess of jurisdiction. The evidence showed that the adjudicator had not simply carried out a judgement of Solomon, but had reviewed the material put forward by both parties in a manner that was perfectly appropriate considering the constraints under which he was operating and the sheer volume of evidence and intricate submissions which were thrust upon him. Similarly, Mr Justice Jackson was satisfied that the adjudicator had properly considered and addressed Devonport's claims for defects and whether he was right or wrong in his decision, it could not be said that he had acted in disregard of the rules of natural justice. Finally, Mr Justice Jackson held that paragraph 20(c) of the Scheme for Construction Contracts provided a freestanding power to the adjudicator to award interest whether or not there was an express term contained within the contract for the payment of interest. In conclusion, Carillion obtained judgment in respect of the entirety of the adjudicator's decision.
CJ-0520
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