Can you stop an adjudication in its tracks?  Not likely … unless the referring party has acted unreasonably and oppressively

31 / 01 / 2018

Jacobs UK Ltd v Skanska Construction UK Ltd [2017] EWHC 2395 (TCC)

The case concerned an application by Jacobs against Skanska for an injunction to stop Skanska from proceeding with an adjudication, following Skanska’s withdrawal from an earlier adjudication in respect of a similar dispute between the parties.

What happened?

On 8 February 2017 Skanska gave notice of an intention to refer a dispute to adjudication. A timetable for the adjudication was agreed by the parties. Jacobs incurred substantial costs in responding to Skanska’s claim in accordance with such timetable.

Skanska then failed to serve its reply by the agreed time (7 April 2017) due to unavailability of its Counsel. Skanska withdrew its adjudication on 7 April 2017 and gave a fresh notice of an intention to refer the dispute to a second adjudication on 21 June 2017.

The second adjudication contained similar terms to the first, with revisions to the methodology and quantum of the damages claim and a slight narrowing of the scope of the dispute. Jacobs then commenced proceedings seeking a declaration that in proceeding with the second adjudication Skanska was acting unlawfully. It argued that the adjudication should be conducted in accordance with an agreed timetable and that the way that Skanska had acted meant that the process was unfair, unreasonable and oppressive.

Skanska argued that a referring party has an unrestricted right to start, abandon and pursue serial adjudications in respect of the same dispute and that it is free to obtain whatever tactical advantage it can.

Decision

Mrs Justice O’Farrell held that generally there is nothing to stop a party from withdrawing from an adjudication and starting a new one.  However, under section 37 of the Senior Courts Act 1981, the Courts have the power to grant an injunction restraining a party from commencing or continuing an adjudication that was unreasonable and oppressive. This was a question of fact. It follows that if a party was to start and stop serial adjudications in respect of a claim and so required the other party to incur irrecoverable costs, then this could amount to unreasonable and oppressive behaviour.

In the circumstances, it was held that Skanska’s withdrawal was unreasonable, the Judge commenting that the referring party is in control of the timetable and so the unavailability of Counsel was not a sufficient excuse. However, the substance of the claims remained the same and so the Judge did not consider that the second adjudication was oppressive; Jacobs could re-use much of the material that it had prepared for the first adjudication in the second.  Accordingly the injunction was not granted.  Nonetheless, Mrs Justice O’Farrell did consider that Jacobs was entitled to any wasted or additional costs caused by Skanska’s failure to comply with the agreed timetable due to the fact the parties had entered into an ad hoc agreement under which the timetable to resolve the referred dispute in the first adjudication was explicitly agreed.

Comment

This case reinforces the Court’s general support for the adjudication process and a party’s ability to refer a dispute to adjudication at any time. The Court defended adjudication’s rough and ready nature with the advantage of ‘speed and efficiency in obtaining a decision’.

If you agree a specific timetable regarding procedure and timetable (which can be very helpful to both parties), make sure you comply to avoid the risk of having to pay the other party’s wasted costs.