Adjudication
The Edinburgh Royal Joint Venture (2002) Crt of Session

© Daniel Atkinson 2003      28 January 2003        

The Scots decision in the Edinburgh Royal Joint Venture (2002) Crt of Session examines whether contract terms may effectively prevent enforcement of an adjudicator’s decision, by postponement of the date of enforcement.

Following an adjudication in accordance with the procedure in the subcontract, the Adjudicator made his award. The ERJV refused Broderick Structures Limited consent for the adjudication award to be registered as provided in the subcontract. Broderick raised an action in the Court of Session to enforce the award. The ERJV obtained an interlocuter, pronounced ex parte on 1st July 2002, to suspend the action. Broderick applied to recall the interim suspension and T G Coutts QC gave judgment on 2 August 2002

The terms of the subcontract did not provide for the resolution of disputes by arbitration. The specified dispute resolution procedures were adjudication and (ultimately) by court action.

The provisions in the subcontract were based on amendments to the Official Referees Solicitors Association ORSA Adjudication Rules 1998 to adapt them to the Scottish subcontract. Coutts QC observed that the terms were more than usually difficult to follow and a virtually incomprehensible attempt at amendment.

The starting point for interpretation was Section 108 of the Act which provided that a party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with Section 108.  Section 108(3) states that the contract shall provide that a decision of the Adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration if the contract provides for arbitration or the parties otherwise agree to arbitration (or by agreement).

Section 108(6) provides that for Scotland the Scheme may include provision conferring powers on courts in relation to adjudication and provision relating to the enforcement of the Adjudicator's decision.

Clause 27 was the relevant term of the subcontract.  Clause 27.1 provided that any dispute or difference arising between the contractor and sub-contractor would be resolved in accordance with the sub-contract disputes resolution procedure set out in Appendix 8.

Appendix 8 contained the amendments to the ORSA Adjudication Rules. Rule 14 ORSA provides that decisions of the Adjudicator shall be binding until the dispute is finally determined by legal proceedings, by arbitration or by agreement.

Paragraphs (f), (g) and (h) of Appendix 8 provided that notwithstanding Rule 14, no party could make any application whatsoever to a competent court in relation to the conduct of the Adjudication or the decision of the Adjudicator

6. except in the case of bad faith on the part of the Adjudicator, until the earlier of the Actual Completion Date of the last Phase or termination of the subcontract unless and until the prior written consent of both the subcontractor and the contractor had been obtained;
7. after that date being the later of, ninety (90) days from the decision of the Adjudicator or ninety (90) days from the Actual Completion Date of the last Phase;
8. unless it involved the pursuit of a claim or a counterclaim of a monetary value in excess of £25,000.00 (index-linked) or in the case of claims or counterclaims of a lesser monetary value arising out of the same facts and circumstances an aggregate monetary value of £25,000.00 (index-linked).

Paragraph 28(A) of Appendix 8 provided that every decision of the Adjudicator was to be implemented without delay. The parties were entitled to such reliefs and remedies as set out in the decision, and were entitled to summary enforcement thereof, regardless of whether such decision was or was to be the subject of any challenge or review. No party was be entitled to raise any right of set-off counterclaim or abatement in connection with any enforcement proceedings. The parties agreed to registration of the Adjudicator's decision in the Books of Council and Session for execution.

ERJV argued that the terms of (f) meant that all disputes were postponed until the conclusion of the subcontract when they could all be raised at one time. That was reinforced by (g) and (h) which provided a means whereby disputes do not attract publicity and may all be resolved within the window of time provided in (g).  Further, the Adjudicator's award declined to give Broderick the extension of time they sought. It followed therefore that sums were due by way of either liquidated and ascertained damages for delay or at least damages for delay.

Coutts QC held that it was an inevitable consequence of the statutory provisions that monies paid after an adjudication may not ultimately be found to have been due or may even prove to be irrecoverable. That there was no set off at the adjudication stage might, perhaps, lead on occasions to inequity in the end of the day, but the statute and the subcontract so compelled.

The parties had agreed paragraph 27 and the purported invocation of the earlier provisions (f), (g) and (h) to attempt to prevent enforcement were of no avail. Broderick in its action in the commercial court were not seeking to challenge the award, merely to enforce it as was their contractual right. If ERJV were motivated by not wishing to have adverse publicity, as was contended, they could have quietly consented to registration and simply paid the sum due. Coutts QC held that the lack of consent to registration argued, irrebuttably, that the procedure they had adopted was an attempt to obtain an illegitimate deferral of payment of the Adjudicator's award. A sum had been fixed, it was due, it should be paid. That there may be sums due by Broderick to ERJV might be correct, but these were not quantified and no award had been made by the Adjudicator for any specific sum in that regard.

Accordingly Coutts QC recalled the interim suspension granted on 1 July 2002 and put the case out By Order so that further procedure could be discussed.