An issue that sometimes arises is, can a Referring Party unilaterally withdraw from an Adjudication?
It may be that during the course of the Adjudication, the Referring Party wishes for one reason or another to not proceed further with the Adjudication, and wishes to withdraw from the process, irrespective of whether or not the Responding Party agrees to such a cessation.
In such a situation, can the Referring Party, withdraw a dispute from Adjudication and subsequently refer the same, or substantially the same, dispute to a second Adjudication? Also, can the Responding Party seek an injunction to restrain the Referring Party from commencing a second Adjudication?
By way of background, it must first be noted that there is no express or implied restriction in the 1996 Construction Act or in the Scheme that prevents a party from withdrawing a disputed claim which has been referred to Adjudication. In Midland Expressway Ltd v Carillion Construction Ltd [2006], it was found that the entitlement of a Referring Party to withdraw a claim persists even after the Referral has been served, regardless of the motive for the withdrawal, and such action does not necessarily preclude that party from pursuing the claim in a later Adjudication (as per the 2012 Lanes Group plc. v Galliford Try Infrastructure Ltd case).
However, as made clear in the recent Jacobs UK Ltd v Skanska Construction UK Ltd [2017] case, it does not follow that the courts will never intervene to prevent a party from pursuing a claim in Adjudication.
Section 37 of the Senior Courts Act 1981 provides: 'The High Court may by order (whether interlocutory or final) grant an injunction … … … in all cases in which it appears to the court to be just and convenient to do so'.
The court's power under section 37 may be exercised (a) where one party can show that the other party has invaded, or threatens to invade, a legal or equitable right of the former for the enforcement of which the latter is amenable to the jurisdiction of the court; or (b) where one party to any action has behaved, or threatens to behave, in a manner which is unconscionable.
The court's jurisdiction extends to a power to grant an injunction restraining a party from commencing or continuing an Adjudication that is unreasonable and oppressive.
In respect of the Jacobs’ case, Skanska engaged Jacobs to provide design services in respect of a PFI project for the design and replacement of street lighting. A dispute arose between the parties as to the adequacy of the design services provided by Jacobs. Skanska claimed that as a result of the inadequacy of Jacobs’s design, together with delays in the production of the design and the poor quality of the design, it suffered loss and damage.
The parties agreed to refer the matter to Adjudication and agreed the rules and timeframes which were to apply. Following the appointment of the Adjudicator and initial exchange of documents, Skanska was unable to serve its reply and requested an extension of time from Jacobs, which was refused. Skanska's request for an extension of time was also rejected by the Adjudicator, after which Skanska withdrew its reference to Adjudication and invited the Adjudicator to resign, which the Adjudicator did. Skanska then gave a fresh notice of an intention to refer the dispute to a second Adjudication which contained substantially the same claims against Jacobs.
Jacobs made an application to court under Part 8 seeking a declaration that Skanska was acting unlawfully in the second Adjudication; an order restraining Skanska from taking further steps in the second Adjudication; an order requiring Skanska to withdraw from the second Adjudication; and a declaration that Jacobs was entitled to be paid its costs from the first Adjudication.
Jacobs argued that the parties had agreed that the reference of the dispute should be to an Adjudicator appointed under the Scheme and that the Adjudication should be conducted in accordance with an agreed timetable. Further, Jacobs had a right to a resolution process which was fair to both parties and did not confer an uncovenanted advantage on the Referring Party.
Skanska, on the other hand, argued that there is no concept of abuse of process in Adjudication and a Referring Party is free to obtain whatever tactical advantage it can. A party has the right to start Adjudication in relation to a dispute at any time. This, Skanska argued, gives a party an unrestricted right to start, abandon and pursue serial Adjudications in respect of the same dispute.
In her decision, O'Farrell J noted that the 1996 Act and the Scheme do not impose any restrictions on the Referring Party's entitlement to withdraw unilaterally a claim referred to Adjudication or to commence a further Adjudication in respect of the same, or substantially the same, dispute. The Adjudicator in the first Adjudication did not reach a decision and therefore the Adjudicator in the second Adjudication would have jurisdiction to determine the dispute referred.
O'Farrell J went on to confirm that the court has the power to grant an injunction to restrain the second Adjudication 'if it is established that it is unreasonable and oppressive'. Such power, O'Farrell J stated, will be exercised where the Adjudicator does not have jurisdiction (such as where the dispute has already been decided in an earlier Adjudication), where the Referring Party has failed to comply with the Adjudication agreement (such as failures to pay awards or costs from earlier Adjudications), or where the further Adjudication is vexatious (such as serial Adjudications in respect of the same claim).
O'Farrell J also held that Jacobs was entitled to any wasted or additional costs caused by Skanska's failure to comply with the agreement regarding the timeframes and procedure of the Adjudication.
Therefore, the Jacobs’ case reaffirms the basic principle that the Adjudication process does not impose restrictions on a Referring Party's entitlement to unilaterally withdraw from one Adjudication and to refer the same matter to a subsequent Adjudication. Further, the case makes it clear that the courts will only intervene and grant an injunction against the Referring Party refraining it from commencing a subsequent Adjudication in circumstances where the high threshold of `unreasonable and oppressive conduct' can be demonstrated.
Despite this, the Jacobs’ case sends out a clear warning that the courts will not hesitate to penalise a party by way of a wasted costs order where that party has failed to discharge its agreed procedural obligations in the Adjudication process.
Peter Barnes
Blue Sky ADR Ltd
6 December 2017
In such a situation, can the Referring Party, withdraw a dispute from Adjudication and subsequently refer the same, or substantially the same, dispute to a second Adjudication? Also, can the Responding Party seek an injunction to restrain the Referring Party from commencing a second Adjudication?
By way of background, it must first be noted that there is no express or implied restriction in the 1996 Construction Act or in the Scheme that prevents a party from withdrawing a disputed claim which has been referred to Adjudication. In Midland Expressway Ltd v Carillion Construction Ltd [2006], it was found that the entitlement of a Referring Party to withdraw a claim persists even after the Referral has been served, regardless of the motive for the withdrawal, and such action does not necessarily preclude that party from pursuing the claim in a later Adjudication (as per the 2012 Lanes Group plc. v Galliford Try Infrastructure Ltd case).
However, as made clear in the recent Jacobs UK Ltd v Skanska Construction UK Ltd [2017] case, it does not follow that the courts will never intervene to prevent a party from pursuing a claim in Adjudication.
Section 37 of the Senior Courts Act 1981 provides: 'The High Court may by order (whether interlocutory or final) grant an injunction … … … in all cases in which it appears to the court to be just and convenient to do so'.
The court's power under section 37 may be exercised (a) where one party can show that the other party has invaded, or threatens to invade, a legal or equitable right of the former for the enforcement of which the latter is amenable to the jurisdiction of the court; or (b) where one party to any action has behaved, or threatens to behave, in a manner which is unconscionable.
The court's jurisdiction extends to a power to grant an injunction restraining a party from commencing or continuing an Adjudication that is unreasonable and oppressive.
In respect of the Jacobs’ case, Skanska engaged Jacobs to provide design services in respect of a PFI project for the design and replacement of street lighting. A dispute arose between the parties as to the adequacy of the design services provided by Jacobs. Skanska claimed that as a result of the inadequacy of Jacobs’s design, together with delays in the production of the design and the poor quality of the design, it suffered loss and damage.
The parties agreed to refer the matter to Adjudication and agreed the rules and timeframes which were to apply. Following the appointment of the Adjudicator and initial exchange of documents, Skanska was unable to serve its reply and requested an extension of time from Jacobs, which was refused. Skanska's request for an extension of time was also rejected by the Adjudicator, after which Skanska withdrew its reference to Adjudication and invited the Adjudicator to resign, which the Adjudicator did. Skanska then gave a fresh notice of an intention to refer the dispute to a second Adjudication which contained substantially the same claims against Jacobs.
Jacobs made an application to court under Part 8 seeking a declaration that Skanska was acting unlawfully in the second Adjudication; an order restraining Skanska from taking further steps in the second Adjudication; an order requiring Skanska to withdraw from the second Adjudication; and a declaration that Jacobs was entitled to be paid its costs from the first Adjudication.
Jacobs argued that the parties had agreed that the reference of the dispute should be to an Adjudicator appointed under the Scheme and that the Adjudication should be conducted in accordance with an agreed timetable. Further, Jacobs had a right to a resolution process which was fair to both parties and did not confer an uncovenanted advantage on the Referring Party.
Skanska, on the other hand, argued that there is no concept of abuse of process in Adjudication and a Referring Party is free to obtain whatever tactical advantage it can. A party has the right to start Adjudication in relation to a dispute at any time. This, Skanska argued, gives a party an unrestricted right to start, abandon and pursue serial Adjudications in respect of the same dispute.
In her decision, O'Farrell J noted that the 1996 Act and the Scheme do not impose any restrictions on the Referring Party's entitlement to withdraw unilaterally a claim referred to Adjudication or to commence a further Adjudication in respect of the same, or substantially the same, dispute. The Adjudicator in the first Adjudication did not reach a decision and therefore the Adjudicator in the second Adjudication would have jurisdiction to determine the dispute referred.
O'Farrell J went on to confirm that the court has the power to grant an injunction to restrain the second Adjudication 'if it is established that it is unreasonable and oppressive'. Such power, O'Farrell J stated, will be exercised where the Adjudicator does not have jurisdiction (such as where the dispute has already been decided in an earlier Adjudication), where the Referring Party has failed to comply with the Adjudication agreement (such as failures to pay awards or costs from earlier Adjudications), or where the further Adjudication is vexatious (such as serial Adjudications in respect of the same claim).
O'Farrell J also held that Jacobs was entitled to any wasted or additional costs caused by Skanska's failure to comply with the agreement regarding the timeframes and procedure of the Adjudication.
Therefore, the Jacobs’ case reaffirms the basic principle that the Adjudication process does not impose restrictions on a Referring Party's entitlement to unilaterally withdraw from one Adjudication and to refer the same matter to a subsequent Adjudication. Further, the case makes it clear that the courts will only intervene and grant an injunction against the Referring Party refraining it from commencing a subsequent Adjudication in circumstances where the high threshold of `unreasonable and oppressive conduct' can be demonstrated.
Despite this, the Jacobs’ case sends out a clear warning that the courts will not hesitate to penalise a party by way of a wasted costs order where that party has failed to discharge its agreed procedural obligations in the Adjudication process.
Peter Barnes
Blue Sky ADR Ltd
6 December 2017
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