Factual and Procedural Background
This judgment concerns conjoined appeals arising from three separate actions related to an adjudication decision between two companies operating in the construction industry. The dispute involves a sub-contract for roof renewal works at a traction maintenance depot owned by a railway infrastructure entity. The subcontract was between Company B, the main contractor, and Company A, the subcontractor.
Company A commenced works under the subcontract but experienced delays and alleged wrongful termination by Company B. Company A initiated court proceedings claiming damages for wrongful termination, while Company B sought arbitration and later adjudication for delay and termination claims.
Company B initially appointed an adjudicator, but due to a mistaken belief of bias, failed to serve referral documents, resulting in the lapse of that adjudication. Company B then served a fresh adjudication notice and appointed a second adjudicator. Company A challenged the jurisdiction of the second adjudicator and the validity of his decision, alleging apparent bias.
The Technology and Construction Court heard three actions: Company A's injunction to restrain the second adjudication, Company A's claim that the second adjudicator lacked jurisdiction and was biased, and Company B's claim to enforce the adjudicator's award. The court held that the second adjudicator had jurisdiction but found his decision a nullity due to apparent bias. Both parties appealed these decisions to the Court of Appeal.
Legal Issues Presented
- Whether the second adjudicator had jurisdiction to conduct the adjudication after the first adjudication lapsed due to failure to serve referral documents.
- Whether the adjudicator’s decision was a nullity by reason of apparent bias arising from issuing provisional findings before receiving all submissions.
Arguments of the Parties
Appellant (Company A)'s Arguments
- Company A argued that under the relevant statutory provisions and subcontract terms, a party may only refer a dispute to adjudication once. Therefore, after Company B allowed the first adjudication to lapse, it lost the right to commence a fresh adjudication on the same dispute.
- Company A contended that the second adjudicator lacked jurisdiction as only the first adjudicator was validly appointed.
- Company A further argued that the second adjudicator was or appeared to be biased because he issued firm provisional conclusions before considering Company A’s submissions, amounting to apparent pre-determination.
Appellee (Company B)'s Arguments
- Company B submitted that there is no authority supporting the loss of the right to adjudicate a dispute simply because an adjudication lapses prematurely.
- Company B pointed out that the subcontract terms, the ICE Adjudication Procedure, and the Scheme for Construction Contracts recognize circumstances permitting a restart of adjudication proceedings.
- Company B argued that the adjudicator’s Preliminary View was explicitly provisional and not a final decision, and that issuing such provisional views is a legitimate procedural step that does not amount to apparent bias or pre-determination.
- Company B noted that the adjudication process is intended to be swift and flexible, and courts are generally reluctant to invalidate adjudication decisions on grounds like natural justice unless clearly established.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Hart Investments Limited v Fidler [2007] BLR 30 |
Adjudicator gains jurisdiction only after referral; preliminary steps do not start time running. |
The court relied on this to confirm that an adjudicator’s powers commence only upon proper referral, supporting the view that a claimant may reserve claims for later adjudication. |
| Midland Expressway Ltd v Carillion Construction Ltd (No. 3) [2006] BLR 325 |
A claimant can drop one head of claim and reserve it for later adjudication. |
Supported the court’s rejection of the argument that the right to adjudicate is lost after an abortive adjudication. |
| Connex South Eastern Ltd v MJ Building Services Group plc [2005] EWCA Civ 193 |
Abuse of process has no place in adjudication. |
The court accepted that abuse of process is not a ground to invalidate adjudication rights, supporting Company B’s position. |
| Porter v McGill [2001] UKHL 67 |
Test for apparent bias: whether a fair minded and informed observer would conclude there was a real possibility of bias. |
The court applied this test to determine whether the adjudicator’s Preliminary View amounted to apparent bias. |
| Gillies v Secretary of State for Work and Pensions [2006] UKHL 2 |
Elaboration of the fair minded and informed observer test for apparent bias. |
The court used this to clarify the qualities attributed to the hypothetical observer in assessing apparent bias. |
| Amec Capital Projects Ltd v White Friars City Estates Ltd [2004] EWCA Civ 1418 |
Application of the fair minded observer test to adjudication decisions. |
Supported the court’s approach to alleged apparent bias in the adjudication context. |
| E I Dupont de Nemours & Co v S T Dupont [2003] EWCA Civ 1368 |
Scope of appellate review under Civil Procedure Rules, rule 52.11. |
The court noted that the review on appeal approaches a re-hearing, influencing its assessment of bias allegations. |
| Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358 |
Courts reluctant to invalidate adjudication decisions on grounds of natural justice unless clearly made out. |
Reinforced the court’s reluctance to find apparent bias absent a clear case. |
Court's Reasoning and Analysis
The court first addressed the jurisdictional issue, rejecting the repudiation argument that Company B lost the right to adjudicate after the first adjudication lapsed. It reasoned that statutory and contractual provisions, including the subcontract terms, the ICE Adjudication Procedure, and the Scheme, allow for restarting an adjudication in various circumstances. The court emphasized that adjudication is a unique, swift process and the claimant’s entitlement to adjudicate is not lost simply because preliminary steps were not completed or an adjudication lapses.
On the apparent bias issue, the court outlined the legal principles governing bias and apparent bias, focusing on the "fair minded and informed observer" test as established by leading authorities. It noted the distinction between actual bias, pre-determination, and apparent bias, recognizing that findings of actual bias are rare and require strong proof.
The court examined the adjudicator’s Preliminary View, which contained firm language but was expressly stated to be provisional and not binding. The court found that issuing provisional views to assist parties and invite submissions is a legitimate procedural practice and does not amount to apparent bias or pre-determination.
The court acknowledged the practical realities of adjudication, which demands swift and efficient decision-making, and noted that adjudication decisions are not final but binding only until final resolution by litigation or arbitration.
Consequently, the court concluded that the adjudicator did not exhibit apparent bias or pre-determination, and his decision was enforceable.
Holding and Implications
The Court of Appeal held that the second adjudicator had jurisdiction to determine the dispute despite the lapse of the first adjudication and that the adjudicator’s decision was not a nullity on grounds of apparent bias.
Accordingly, the appeals by Company B were allowed in part, affirming jurisdiction and overturning the finding of apparent bias, while the appeals by Company A were dismissed.
The court ordered summary judgment for Company B for the sums awarded by the adjudicator, with appropriate interest.
This decision clarifies that a party’s right to adjudicate a dispute is not forfeited by an abortive adjudication and confirms the permissibility of issuing provisional views during adjudication without constituting apparent bias. No new precedent was set beyond affirming existing principles and their application to the adjudication context.