| Date | 4 October 2006 |
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| Judgment | Midland Expressway Ltd v Carillion Construction Ltd & Others, TCC 13 June 2006 |
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| The Issue | Whether a referring party in adjudication can withdraw its claim bringing the adjudication to an end. |
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| Implication |
In the absence of jurisdictional issues, it may well be that a referring party cannot unilaterally withdraw from adjudication once it has made its referral. |
printIt will generally be agreed that if a responding party in an adjudication refuses to participate in the process or fails to submit a response, the adjudicator will nevertheless be obliged to continue to publish his decision, if necessary based solely upon his review of the referring party’s submissions. The referring party has a statutory or contractual right to have the dispute decided by an adjudicator and that right cannot be removed simply by the responding party refusing to cooperate. A more difficult question might arise when the referring party, having put forward its case in adjudication, decides it no longer wishes to proceed. Perhaps, having seen the response, the referring party recognises that it faces an adverse decision from the adjudicator and realises that it would be safer to withdraw. Can the responding party in this situation insist that the adjudicator must continue with the adjudication? This question has been examined in two cases. In John Roberts Architects v Parkcare Homes the referring party, Parkcare, withdrew its claim soon after submitting the referral. It realised that the adjudicator did not have jurisdiction to deal with all the matters referred and that it would be inappropriate for any further steps to be taken. The responding party then asked the adjudicator to give a decision in respect of its costs, arguing that the adjudication agreement between the parties gave the adjudicator jurisdiction to deal with these matters. The Court of Appeal accepted, as a general observation, that it was perfectly proper for the referring party to have withdrawn from the adjudication. Despite this however, the court decided that even though the adjudicator had not proceeded to a decision upon the substantive matters in dispute, he was obliged to make a decision on the parties’ costs. In the more recent case of Midland Expressway v Carillion Construction & Others, the referring party also sought to withdraw its claim. This case concerned the M6 toll road, which has thrown up a considerable number of contractual disputes between the parties which have become the subject of numerous adjudications and litigation proceedings. Midland held a concession agreement with the Secretary of State for Transport for the construction and operation of the toll road, and had entered into a construction contract with a JV contractor including Carillion. In November 2004, Carillion had submitted a global claim to Midland in the order of £56 million. By November of the following year, these claims had still not been resolved, despite numerous adjudications on individual parts of the claim. Eventually Midland commenced adjudication against the Secretary of State for Transport under the concession agreement in which it sought a decision upon the entirety of the contractor’s global claim. A few days later, Carillion gave notice that it would join in that adjudication as it was entitled to do under the terms of the construction contract and the concession agreement. Carillion quickly realised however that it was being sucked into an adjudication that it could not win. Previous exchanges and preliminary court decisions had made it clear that significant parts of its global claim, in particular concerning the calculation of indirect costs, could not succeed as they had been formulated, and that considerable effort would need to be made to turn those claims around. Accordingly, Carillion wrote to the adjudicator withdrawing those parts of its claim, arguing that the claim in that form had already been withdrawn from the employer Midland, and that therefore there was no current dispute between the parties with regard to the claim presented in that form. The adjudicator agreed and accepted that he should make no decision in respect of those components of the claimed sums. Both the Secretary of State and Midland disagreed. In their view, once Carillion had submitted its global claim in the adjudication, the adjudicator should have dealt with that claim and decided the matter accordingly. Moreover, Midland contended that an adverse adjudicator’s decision upon the claim would be binding against Carillion in the future, no matter how it might subsequently try to recast the claim presented. Mr Justice Jackson disagreed. At the point of referral there had been no dispute in relation to the indirect costs claimed by Carillion and Carillion was therefore entirely free to withdraw that element from the adjudication. Curiously, even if that was not the case, Justice Jackson observed that the contractor would have been entitled in any event to withdraw any part of its claim from the adjudication. There was nothing in the Act which suggested that any such restriction was intended. He observed that it would be contrary to the statutory purpose of the Act to prohibit a party from withdrawing from the adjudication process any claim which it did not wish to pursue. Justice Jackson commented that if there were such a restriction, it would have the bizarre consequence that parties would be forced to press on with bad claims in adjudication which would lead to a wastage of costs and resources on the part of all the parties. This decision may be taken by many observers as authority for the proposition that a referring party may withdraw its claim with impunity as soon as it realises that it is facing an adverse decision from the adjudicator. The circumstances surrounding this case are however extremely complex and not typical. Carillion was seeking to withdraw a part of its claim, not the entirety, and moreover it successfully argued that that part of the claim was not in dispute at the point of the referral. Without those ingredients, a referring party may discover that it is obliged to progress an adjudication to the bitter end, even where it discovers that its case is not as sound as it first thought.
CJ-0639
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