How Can I Avoid Paying an Adjudicator's Decision?
Adjudication is a common dispute resolution method in the construction industry, offering (in theory) a faster and more cost-effective way to resolve conflicts than going to court. However, if an adjudicator has ruled against you, you may be wondering whether there are ways to resist enforcement of the decision. While the courts generally uphold adjudicators' decisions, there are some limited grounds on which you can challenge enforcement.
When Can You Resist Enforcement?
The Technology and Construction Court (TCC) will enforce an adjudicator’s decision unless you can demonstrate that either:
the adjudicator lacked jurisdiction to make the decision; or
there was a material breach of natural justice in the adjudication process.
If you intend to challenge enforcement, you must establish a clear legal basis for doing so.
Did the Adjudicator Lack Jurisdiction?
An Adjudicator ‘lacks jurisdiction’ if s/he does not have the authority to decide the dispute. The authority comes from the parties’ agreement or the adjudication legislation, depending on the circumstances. To challenge an Adjudicator’s decision based on a lack of jurisdiction, you will therefore have to show that s/he was not empoweered to do what s/he has done. For example, you might contend one or more of the following:
that the contract was not a "construction contract" under the Housing Grants, Construction and Regeneration Act 1996, with the result that the Adjudicator did not have the statutory power to decide the dispute;
that the Adjudicator’s appointment did not comply with the adjudication procedure rules or the Scheme for Construction Contracts 1998, and that because s/he was not properly appointed then the resulting decision was of someone no empowered to make that decision;
that the dispute had not "crystallised" before being referred to adjudication, meaning that there was nothing for the Adjudicator to decide at the time s/he made the decision';
that the dispute referred to the Adjudicator was different from the one that had crystallised, such that the Adjudicator’s decision relates to a different topic than the one s/he would have been entitled to decide;
that the adjudicator decided an issue that had already been determined in a prior adjudication (once decided, there is no longer a dispute that can be referred to an Adjudicator for a decision, and so any second decision on the same dispute will not be one which the second Adjudicator was entitled to make);
that the adjudicator failed to reach a decision within the required timeframe (i.e. that the jurisdiction the Adjudicator did have expired before s/he exercised it);
that the adjudicator imposed a condition (such as requiring payment of fees) before releasing their decision.
If any of these apply, you may have grounds to resist enforcement.
Was There a Breach of Natural Justice?
Adjudicators must act fairly and impartially in conducting the adjudication. If there was a serious procedural failure, you may be able to challenge enforcement. Examples of breaches of natural justice include:
the Adjudicator considering arguments or evidence from one party, without giving the other a chance to respond;
the Adjudicator relying on external advice or reports without notifying the parties and/or seeking their comment on that advice/report;
a party was not given enough time to make a submission or respond to key evidence;
the Adjudicator ignoring a party’s submissions, defences, or counterclaims altogether;
the Adjudicator failing to give reasons for their decision (where required to do so by the referring party).
Importantly, any procedural breach must be material / serious for it to be a basis for resisting the enforcement of a decision. Technical breaches with minor consequences will not usually be enough to prevent enforcement. For example, if a party is to argue that a submission has been ignored by the Adjudicator, that submission must be a significant and not peripheral part of the dispute, and one which (if accepted/rejected) would have a material impact on the result. It is not the case that Adjudicator have to acknowledge, consider, r
Did You Reserve Your Position on Jurisdiction?
In order to resist enforcement after the decision is made, it is necessary for a party to reserve their position on jurisdiction at an appropriate point at the start of the adjudication process. A party cannot fully argue a dispute to an Adjudicator (thereby implicitly accepting that the Adjudicator has the power to make the decision) and then contend that the Adjudicator did not have the requisitie jurisidction after the decision has been made. A party who has concerns about jurisdiction must raise those concerns at the appropriate time during the adjudication, and be as specific as possilbe as to what the concerns are, before explaining that their continue participation is subject to those concerns.
If no reservation was made, the court is unlikely to entertain a later jurisdiction challenge.
What Won’t Work?
Adjudication has now been around for a long time, and enterprising parties and lawyers have tried all sorts over the years to avoid paying an Adjudicator’s decision. The courts are generally in favour or enforcing decisions (seeing the ‘rough and ready’ nature of adjudication as imperfection preferable to the cost and delay of full-blown litigation) and so most attempts to resist enforcement have been unsuccessful. It is extremely unlikely, for example, that the following reasons will lead to an Adjudicator’s decision being successfully avoided:
the dispute was too complex for adjudication;
a separate adjudication is ongoing, and you want to wait for its outcome;
you intend to refer the matter to arbitration or litigation in the future (or have already done so - even if it was before the decision was made).
Are There Any Other Options?
If you cannot prevent enforcement by arguing jurisdiction or natural justice, you may still have options, such as:
seeking a declaration under CPR 8 to clarify a legal issue which, if it is clarified in your favour, will show the Adjudicator’s decision to be wrong and therefore make it unconscionable for the court to enforce that decision;
applying for a stay of execution, which could delay (but not prevent) enforcement in specific circumstances.
If enforcement is unsuccessful, you will have to pay the sum awarded, along with interest (if applicable) and the costs of the enforcement proceedings.
What If My Challenge Fails?
Adjudication decisions are interim-binding, meaning you must comply with the decision unless it is successfully overturned. However, you can still pursue final resolution through court or arbitration if you believe the Adjudicator was wrong and the decision was been enforced. Generally, the process takes the following order:
Adjudication takes place;
Adjudicator makes decision;
losing party fails or refuses to comply with decision;
winning party applies to court to enforce decision;
court determines that decision is (or is not) enforceable;
if enforceable, losing party complies with decision
losing party decides whether or not to litigate or arbitrate the dispute in the hope that the court or arbitrator will make a different decision to the one made by the Adjudicator
Conclusion
While resisting enforcement of an Adjudicator’s decision is difficult because of the few bases on which a challenge is possible, it is possible. If you are concerned about enforcement, it is crucial to act quickly, assess whether you appropriately reserved your jurisdictional rights, and determine whether the Adjudicator exceeded their powers or breached natural justice principles. The best way to navigate these difficult issues at speed is by seeking legal advice from an adjudication specialist law firm as early as possible.