UK High Court reviews temporary binding effect of adjudicator's decision

A fundamental characteristic of adjudication as a form of ADR is that it is binding only until the dispute is finally decided through litigation or arbitration. Indeed, the UK Construction Act provides that adjudicator's decisions are binding on the parties until the dispute is finally determined by other proceedings or agreement. This precludes subsequent decisions by the same adjudicator on the same issues: Vertase v Squibb [2012] EWHC 3194 TCC (13 November 2012).

Facts

There had been two adjudications between the parties; one concerned with extensions of time and the other with V's entitlement to a sum of money for breach of contract and/or delay by S. In the second adjudication liquidated damages were claimed by V and the Adjudicator made an award in favour of V. The Adjudicator said that, although no loss had been demonstrated, he was persuaded by V's argument sufficiently to change the view he took in the first adjudication (where he had decided that V could not deduct liquidated damages without demonstrating an equivalent loss through the main contract).  V issued court proceedings to enforce the liquidated damages award which S refused to pay.

Decision

The Court decided that the Adjudicator was not entitled to change his mind about a finding made in his first decision as this initial finding was final and binding on the parties until finally determined by litigation or arbitration. It did not matter whether the original decision was right or wrong since it remained binding on the parties in any event. 

Comment

This decision draws on earlier authority and confirms that an Adjudicator's decision cannot be reopened  by him in subsequent adjudication proceedings, even if the general ambit of the disputes referred to him in the second adjudication may be different. This is because he will lack jurisdiction to revisit the issues.

This case builds upon an emerging body of case law regarding the jurisdiction of adjudicators and the severability of their awards. In this case only the liquidated damages aspect of the adjudicator's decision in the second adjudication was referred to the court. Had the entirety of the award been challenged, it is unclear whether the court would have severed the unenforceable part. In light of recent cases (see our posts here), the court would likely have shown willingness to isolate the offending part of the decision and uphold the remainder.