Adjudication as an Alternative Dispute Resolution in Construction Industry

Disputes are common in daily life of individuals, and so is the case with disputes in business area. Construction industry is no stranger to disputes, be it small level disputes, or ones involving complexities. In order to solve such disputes, there is the option of going through litigation, or choosing an alternative dispute resolution method like adjudication. Under adjudication, the adjudicator presides over the dispute. After considering the evidence and arguments, they give their decision (Uff, 2013). Even though adjudication is a leading mode of solving disputes, there are issues which revolve around it. Through the precedent, clarity is brought to the different matters revolving adjudication. One of such cases is London & Amsterdam Properties Ltd. v. Waterman Partnership Ltd [2003] EWHC 3059 (TCC), which is discussed herewith.

Adjudication is a mode of alternative dispute resolution, which is commonly used in the construction industry. Legality is provided to the use of adjudication through the Housing Grants, Construction and Regeneration Act, 1996 (Chappell, 2013). Further, the clause of adjudication is also covered under the JCT 2016 edition (JCT Ltd 2018). In 1976, adjudication was initially brought in standard form constructions and had been inserted as being a kind of domestic subcontract. This was initially meant to be used with the JCT 63. With this, the construction industry was given a faster and cheaper manner for solving their issues, where an independent and unbiased individual, sitting on the post of arbitrator, decided on the matter in an impartial manner (Mann and Wong, 2016). Adjudication also allowed for cash flow to be quickly determined and this form also had the support of courts, as this mode was recognized as being a simpler mode of solving the matter. Further, as the decision given by the adjudicators could be enforced by the court, this method revolutionized construction industry. This is due to the fact that adjudication allowed for faster solution to disputes. The success of adjudication can be stemmed from the fact that only three hundred cases out of the fifteen hundred referred for adjudication were sent for an enforcement of verdict (Dancaster, 2005).

London & Amsterdam Properties Ltd. v. Waterman Partnership Ltd was a case which involved the case being referred to an arbitrator. This case is very crucial from the role of adjudication with regards to the construction contracts. This case had delayed submissions regarding a key part of evidence in such a manner that the responding party was not left with enough amount of time for dealing with this evidence. This led to the court rightly making a decision that the evidence was required to be provided with the referral notice. This was particularly because this was a key issue in the dispute. This led to the court refusing to grant summary judgement (Pickavance, 2015).

There have been a number of reports and reviews where the attempts have been made to find out the main problems which crop up in adjudication and the case of London & Amsterdam Properties Ltd. v. Waterman Partnership Ltd is just one of the examples of this. This case highlights the requirement of improving up adjudication, for it to fulfil its purpose. The judges in this case accepted that adjudication was not able to cope up with complex matters. It is thus successful for simple disputes but not for the complicated ones. The case of London & Amsterdam Properties Ltd. v. Waterman Partnership Ltd also presented that in order to determine the adjudicator’s fees the hourly rate was a prudent and rational yardstick. In such cases where the disputes are crystallized and there is non-availability of quantum details, it is stated that the dispute has taken place which covers quantum and liability. When there is ambush in submission of evidence particularly in a delayed way, the sense of natural justice is violated. This is particularly because the other party does not get an opportunity of making any comment on the late submitted evidence. This is the reason why the adjudicators have to refrain from proceeding with referral of costs, particularly when the natural justice is barred, and thus requires the adjudicators to leave the referral matter (McKenna, 2003). 

The matter of admission of the evidence made the case of London & Amsterdam Properties Ltd. v. Waterman Partnership Ltd famous. This case gave the adjudicators the lesson that they have to take into consideration all of the related information which the disputing parties provide to them, but this has to be done in a manner where the natural justice principle is upheld (Fenwick Elliott, 2003). When such a case is raised where the admission of evidence is not done in timely manner, the adjudicators need to play a proactive role in excluding the evidence owing to the natural justice principle being hampered with where such evidence is admitted. The case in discussion had the plaintiff relaying on the material which was submitted late; this submission had come after the defendant had given their response on the dispute (Bailii, 2003). The defendant had been given a week to give their reply to this new evidence, the circumstances became such that this was deemed as insufficient time. This led to the court regarding the delayed submitted evidence as an evidential ambush, which quashed the principles of natural justice (Jinadu, 2006).

Understanding the Limitations of Adjudication

The principle of natural justice was not simply applied in this case. This is a principle which is used as a limitation in the adjudication process in dispute resolution cases. In another matter which was of McAlpine v Transco [2004] EWHC 2030 (TCC), the court upheld that there was a need of upholding the principles of natural justice. Owing to these reasons, the judges dismissed the summary judgment. The large quantity of new material which was submitted in this case resulted in Transco not being provided with a fair opportunity of responding to it. The adjudicator had thus dealt with a different issue in this case, resulting in the decision of adjudicator not being enforced (McKenna, 2004).

This is the limitation which had been set through the case in discussion and the case of McAlpine where the adjudicators are required to always uphold the principles of natural justice. Where this is not done, Judge Wilcox stated provides the submission of late evidence as lame, and also resulted in procedural unfairness. The adjudicators have to be careful in accepting any evidence at a later stage, and should refrain from doing so, based on the two cases discussed here. There is a need for adjudicators to decide the matters based on natural justice principles where they want their decision to have the validity and for the same to be upheld where the matter reaches the court. Where the natural justice is not upheld, there would be no meaning in adopting adjudication or litigation, as natural justice is the theme of these dispute redressal forms.

Conclusion

Thus, in the discussion which was covered here, the case of London & Amsterdam Properties Ltd. v. Waterman Partnership Ltd was discussed from the point of limitations which this case imposed on the adjudicators. This limitation is in terms of principle of natural justice, where the adjudicators have to take specific care in admitting new evidence, where one party is prejudiced against owing to such conduct of the adjudicator. As highlighted in the discussion, this is not the only case where the sense of natural justice was required for the adjudicators to uphold. Thus, the learning here is for the adjudicators to be fair and impartial and to work in a manner where the parties are given a fair chance of analysing the evidence. And where the evidence is submitted late, they should avoid any sort of ambush in submission of evidence. 

References

Bailii. (2003) London & Amsterdam Properties Ltd v Waterman Partnership Ltd [2003] EWHC 3059 (TCC) (18 December 2003). [online] Available from: https://www.bailii.org/ew/cases/EWHC/TCC/2003/3059.html [Accessed 10/03/18]

Chappell, D. (2013) Understanding JCT Standard Building Contracts. 9^th ed. Oxon: Routledge.

Dancaster, C. (2005) Avoiding disputes and what to do if things go wrong. ADR. Glamorgan: University of Glamorgan.

Fenwick Elliott. (2003) London & Amsterdam Properties Limited v Waterman Partnership Limited. [online] Available from: https://www.fenwickelliott.com/research-insight/adjudication-case-notes/london-amsterdam-properties-limited-v-waterman-partnership-limited [Accessed 10/03/18]

JCT Ltd. (2018) Adjudication Agreement (Adj). [online] Available from: httphttps://www.jctltd.co.uk/product/adjudication-agreement [Accessed 10/03/18]

Jinadu, A. (2006) UK: Adjudication Round-up: Key Decisions and Developments 2004-2006. [online] Available from: https://www.mondaq.com/uk/x/39678/Adjudication+Roundup+Key+Decisions+and+Developments+20042006 [Accessed 10/03/18]

Mann, P., and Wong, D.T.W. (2016) Construction Adjudication: The Way Forward, The Construction, Building and Real Estate Research Conference of the Royal Institution of Chartered Surveyors, Toronto Canada, September 2016 (ISBN: 978-1-78321-160-9) [online] Available from: https://www.rics.org/Global/Construction%20Adjudication%20The%20Way%20Forward.pdf [Accessed 10/03/18]

McKenna, C. (2003) London & Amsterdam Properties Ltd v Waterman [2003] EWHC 3059. [online] Available from: https://www.adjudication.co.uk/archive/view/case/808/london_&_amsterdam_properties_ltd_v_waterman_%5B2003%5D_ewhc_3059 [Accessed 10/03/18]

McKenna, C. (2004) McAlpine PPS Pipeline Systems Joint Venture v Transco Plc [2004] EWHC 2030 (TCC). [online] Available from: https://www.adjudication.co.uk/archive/view/case/73/term/search+our+site/mcalpine_pps_pipeline_systems_joint_venture_v_transco_plc_%5B2004%5D_ewhc_2030_(tcc) [Accessed 10/03/18]

Pickavance, J. (2015) A Practical Guide to Construction Adjudication. West Sussex: John Wiley & Sons.

Uff, J. (2013) Construction law: law and practice relating to the construction industry (11th ed.).   London: Sweet & Maxwell / Thomson Reuters.