UK: further case on enforcement and severability of adjudicator's decision

In its third judgment on severability in 2012 (see earlier cases Working Environments Ltd v Greencoat Construction [2012] EWHC 1039 and Beck v UK Flooring [2012] EWHC 1808 (TCC)) the English High Court has ruled that an adjudicator's decision can be enforced in part only, severing the part reached without jurisdiction. However, where (as here) only one issue is decided by the adjudicator, severance will only be possible where the reasoning of that section is not integral to the remainder of the decision: Lidl UK GmbH v R G Carter Colchester Ltd [2012] EWHC 3138 (TCC).

Facts

There were two applications in this case. The successful party (the Employer) in an adjudication sought to enforce it and the unsuccessful party (the Contractor) claimed the adjudicator exceeded his jurisdiction. The Employer accepted that the adjudicator had decided one question that was not referred to him but submitted that this part of the decision could be severed from the remainder of the decision. The Contractor submitted that there was only one dispute put to the adjudicator and his decision was therefore not severable. 

Decision

The Court first had to determine what was referred to the adjudicator.  The reference had sought a determination in relation to "pro rata liquidated damages…as claimed in the [Employer's] letter…or otherwise/at all".  The Court took the view that this widened the issue from simply being one of entitlement to one of both entitlement and amount.  The adjudicator could therefore determine both issues.  However both parties accepted that he had also decided that the Employer was entitled to £125,000 in liquidated damages, a question which had not been referred to him.

The court held that the adjudicator had exceeded his jurisdiction. It went on to consider Cantillon [2008], which decided that if more than one dispute is referred to an adjudicator, a successful jurisdictional challenge to one part  did not undermine the enforceability of the other. Previously, if an adjudicator was in breach of the rules of natural justice or exceeded his jurisdiction, his decision would be unenforceable in its entirety.

The interesting aspect of the current case is that the court found that only one question was referred to the adjudicator but it was still possible to sever the "additional questions" provided they "did not form an integral part of the decision as a whole". On the facts, the question the £125,000 entitlement was separate.

Comment

This case shows the gradual widening of the severability principle within adjudication. Working Environment  and Beck both severed those parts of the adjudicators' decisions which had not crystalised at the time of referral to adjudication. In Lidl the adjudicator considered an issue which had not been referred to him and he therefore exceeded his jurisdiction in that way.

It is likely that this area of law will further develop and it is possible that, by analogy, these developments will be applied in other contexts. 

It will be interesting to see whether payment of the adjudicators' fees in relation to determining the £125,000 liquidated damages point will be resisted, relying on the very recent case of  PC Harrington Contractors Ltd v. Systech International Ltd [2012] EWCA Civ 1371 (see here).