Adjudication Decisions are Binding, Right or Wrong

January 24, 2014

Adjudication Decisions are Binding, Right or Wrong

In the context of a bitter building dispute that was characterised by confusion over the identity of one of the contracting parties, the High Court has emphasised that an adjudicator’s decision, if made with jurisdiction, is enforceable even if it is shown to be wrong as a matter of fact or law.

A main site contractor had contracted out drainage work to another company. Although negotiations for the subcontract were carried out with one company (company A), whose employees performed the work, a dormant company (company B) was named as the subcontractor on the relevant documents.

On completion of the contract, company B – which was not a subsidiary of company A although they each had one or more shareholders in common –argued that it was owed more than £640,000. The site contractor had originally valued the work done as being worth nearly £364,000, but subsequently lowered its assessment and claimed a repayment of the balance.

The matter was referred to an adjudicator, who valued the work at just over £500,000 and ruled that company B was the correct party to the adjudication. The contractor was ordered to pay almost £150,000 to company B, that being the adjudicator’s overall assessment of the sum due. The contractor claimed that this decision was wrong because company B was a dormant company and did not as a matter of fact do the work.

In ordering enforcement of the adjudicator’s decision, the Court noted that it had been agreed that he would have jurisdiction to determine the identity of the parties to the subcontract and it was not now open to the company to challenge his conclusion on that issue, whether right or wrong. The Court entered judgment in favour of company B in the sum of £147,164.66.