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Serial referrals and abandoned adjudications: will the court grant an injunction prohibiting adjudication proceedings?

09 October 2017. Published by Julia Edwards, Associate

In Jacobs UK Limited v Skanska Construction UK Ltd [2017] EWHC 2395 (TCC), the TCC has held that starting a second adjudication on the same or similar issues is unreasonable but not oppressive and an injunction should not be granted.
In the recent case, Justice O'Farrell DBE clarified that the courts will not necessarily restrain a party who opens and closes numerous adjudications for a tactical benefit but, the responding party may be granted a wasted costs order.

Background

On 8 February 2017, Skanska gave notice of an intention to refer a dispute to adjudication, claiming damages over an alleged defective design produced by Jacobs. On 13 February 2017, the parties agreed to the applicable procedure rules and a modified adjudication timetable. However on 7 April 2017, Skanska withdrew from adjudication on the basis its counsel had become unavailable and was unable to meet the agree timetable. Some two months later, on 21 June 2017, Skanska issued notice of its intention to refer a second adjudication –the dispute and substance of its claim was the same as the previous but a different adjudicator was appointed.

Jacobs, who had incurred substantial costs in preparing for the first adjudication, commenced part 8 proceedings on the basis that Skanska's behaviour was unreasonable and oppressive and sought an order requiring Skanska to withdraw from the second adjudication and a declaration that Skanska were responsible to pay Jacobs' wasted costs from the first adjudication.

Skanska argued that the abuse of process principle was not applicable to adjudication, and that a party is entitled to seek any tactical advantage it can, even if that includes the commencement and withdrawal of serial adjudications.

Decision

It was held that that although Skanska's withdrawal from the February 2017 adjudication was unreasonable, starting a second adjudication was not oppressive because on the facts, the substance remained the same and Jacobs could rely upon its previous submissions and earlier work.  O’Farrell J agreed with Skanska that the principle of abuse of process does not apply to adjudication.

However, the Judge rejected the submission that continual opening and closing of adjudications is always available to the parties – and clarified that the court has the power to grant relief to prevent such tactics, particularly where new material (such as new expert evidence) is so "severe or exceptional". 

This was not the case here but because the parties had entered into an agreement governing the timetable of the first adjudication after the notice of adjudication was given; the Judge declared that Jacobs was entitled to its wasted or additional costs resulted by Skanska's unilateral withdrawal which amounted to a breach of contract.

Decision analysis


This judgment reinforces the TCC's support for adjudication and the underlying principles, with the Judge noting that t
his case highlights that any "inherent unfairness in the adjudication process is justified by the advantage of speed and efficiency in obtaining a decision and balanced by the temporary effect of any decision".

It is also reiterates that injunctive relief arising from adjudication proceedings are only granted by the court in fairly limited circumstances, largely because the Construction Act 1996 allows parties to refer a dispute to adjudication "at any time". Save for exceptional circumstances, the courts are generally reluctant to interfere and grant an injunction which would potentially undermine the adjudication process. As Edwards-Stuart J recorded in Twintec Ltd v Volkerfitzpatrick Ltd [2014] EWHC 10 (TCC), for a referral to adjudication to be considered oppressive and unreasonable, both elements have to be present to a "fairly high degree". The Judge suggested examples of unreasonable and oppressive behaviour could include referring a dispute shortly before Christmas when witnesses are no longer available to the responding party - well worth keeping in mind as the festive season approaches.

To see the full judgment of this case, click here.