In John Sisk & Son Ltd v Duro Felguera UK Ltd, Duro Felguera engaged Sisk to carry out civil works at a combined cycle power plant. A dispute arose and Sisk commenced adjudication proceedings. The adjudicator awarded Sisk a sum in excess of £10 million. Sisk subsequently applied to the Court to enforce the adjudicator’s decision.
Duro Felguera resisted the enforcement, contending that there had been breaches of natural justice and/or a wrongful delegation of the adjudicator’s decision-making function.
- Breach of natural justice
Duro Felguera challenged the adjudicator’s jurisdiction at the start of the adjudication. After asking Sisk to comment, and Sisk providing its reply, the adjudicator issued a letter stating his ‘non-binding opinion’ that he had jurisdiction.
Duro Felguera then argued that the adjudicator had decided a number of additional issues raised in Sisk’s reply to the jurisdictional challenge without giving Duro Felguera the opportunity to respond. The adjudicator, it argued, was in breach of natural justice and should resign.
The adjudicator did not resign and gave the parties the opportunity to make further submissions on the matter of his jurisdiction on two subsequent occasions during the adjudication process.
The Court rejected Duro Felguera’s arguments because it could have responded to Sisk’s reply before the adjudicator made his (non-binding) decision on jurisdiction, and indeed did so during the remainder of the process.
The Court said that the applicable test was whether a fair-minded and informed observer, having considered all the facts, would conclude that there was a real possibility of predetermination (i.e. the surrender by the adjudicator of his judgment by having a closed mind and failing to apply it to the task).
According to the Court, if a judge (or adjudicator) has considered an issue carefully before reaching a decision on the first occasion, it cannot be said that he has a closed mind if, the evidence and arguments being the same as before, he does not give as careful a consideration on the second occasion as on the first. He will, however, be expected to give such reconsideration of the matter as is reasonably necessary for him to be satisfied that his first decision was correct.
- Delegation of the adjudicator’s decision-making role
In a meeting with the parties where issues of quantum were considered, the adjudicator invited a quantity surveyor (the “QS”) to attend. At a later stage the adjudicator indicated that the QS had assisted him at the meeting by taking notes, so that the adjudicator could concentrate on the matters in issue, and that at other times the QS had also undertaken items of checking and research into matters that the adjudicator directed him to review on his behalf.
Duro Felguera complained about this, arguing that the involvement of the QS in the process meant that the adjudicator had wrongly (and without the consent of the parties) delegated part of his role as a decision-maker to the QS. Duro Felguera pointed out that the QS was the creator of Excel spreadsheets appended to the adjudicator’s decision. Duro Felguera contended that the QS must have been engaged by the adjudicator as an expert or an assessor in relation to those documents.
The adjudicator indicated that the spreadsheets in question were produced from an original document of Sisk, and were populated by the adjudicator. The adjudicator described the QS’s role as carrying out research for him trawling through the parties’ submissions and compiling them, and assisting with administrative tasks such as checking his calculations and proofing documents.
The Court rejected Duro Felguera’s arguments because the QS’s role was that of a data handler, manipulator and a general administrative assistant, which did not involve any decision-making. The Court found no evidence that any material decision or valuation was taken by the QS rather than by the adjudicator.
COMMENT: This decision demonstrates the strict approach the Court takes when considering challenges to adjudicator’s decisions. The benchmark for breaches of natural justice is high. Once a matter is referred to adjudication, the responding party will usually find it difficult to avoid the claim unless it can defend against it on substantive grounds.
