Challenging an adjudication award: a breach of natural justice

When it comes to challenging an adjudicator’s decision, the losing party’s options are limited; they will either need to show that the adjudicator had no jurisdiction to make the decision or that there was a material breach of the rules of natural justice. 

The rules of natural justice are twofold: "First, the person affected has the right to prior notice and an effective opportunity to make representations before a decision is made. Secondly, the person affected has the right to an unbiased tribunal" (Dyson LJ, AMEC v Whitefriars 2004 EWCA Civ 1418). If an adjudicator is shown to be impartial or biased in reaching his or her decision, and this breach is more than peripheral, the successful party may be prevented from enforcing the adjudicator’s decision through the courts.

In the recent case of Liverpool City Council v Vital Infrastructure Asset Management (Viam) Ltd (In Administration) [2022], a High Court Judge held that the adjudicator had breached the rules of natural justice by deciding the dispute on a different basis to that which the parties had contended and, in addition to this, neither party was given an opportunity to make submissions on that basis. The adjudicator had not given Liverpool City Council fair notice of what he was considering, thereby preventing the Council from putting forward submissions which might have helped its case. The Judge decided that this was a fundamental departure from the obligation to follow fair procedure and the Council was entitled to a declaration confirming that the adjudicator’s decision is unenforceable.  

Another example of a breach of natural justice was a situation where an adjudicator discussed a central issue in the case with a representative of just one of the parties on the telephone, excluding the opportunity for input from the other. There was also a case where an adjudicator took an erroneously restrictive view of their own jurisdiction (by wrongly concluding that part of the defence given by the responding party fell outside the scope of the dispute) and this too was held to be a breach.

Whilst these examples show that it is possible to challenge the enforcement of an adjudicator’s decision, this is not an easy task and the courts have often adopted a rather robust approach when dealing with such matters; for example, in Discain Project Services Ltd v Opecrime Development Ltd [2001] EWHC 435 (TCC), the Court recognised that adjudicators work under pressures of time and circumstance, often making it difficult for them to comply with the rules of natural justice in the manner of a court or an arbitrator. The Judge in this case said: “the system created by the Act can only be made to work in practice if some breaches of the rules of natural justice, which have no demonstrable consequence, are disregarded”.

Whilst the recent case of Liverpool City Council highlights the importance of both parties having the opportunity to make submissions, and also demonstrates how a losing party may succeed in challenging the enforcement of an adjudicator’s decision, it must be remembered that such challenges are not straightforward and are only likely to succeed in limited circumstances.

If you need advice on adjudication or challenging a decision, please contact us.