Adjudications – court considers whether referring parties can commence multiple narrowly defined adjudications at the same time

Posted: 19/11/2024

Without the agreement of the parties, a single adjudicator can only decide a single dispute at a time. It is open to the referring party to define that dispute narrowly, such as a dispute concerning a single variation; or widely, potentially concerning the entire final account.

However, what if a referring party commences multiple, narrowly defined adjudications concurrently before different adjudicators, each for large sums of money? Some may consider this approach to be unfair, especially if the referring party has greater resources than the responding party, but is it conduct that should be permitted? This was the question considered by the court in Beck Interiors Ltd v Eros Ltd [2024] EWHC 2084 (TCC).

Background

Beck contracted with Eros on 27 August 2020 for a development in Hannover Square, London, which included the fitout of a 50-room hotel, 79 residential apartments, and retail space for the sum of just over £40 million. By the time of the application to the court, Beck believed its work to be worth in excess of £100 million, having already been paid over £73 million by Eros.

The first two adjudications were commenced by Beck on 8 and 18 March 2024, and sought a significant extension of time, and a decision as to whether the installation of a smoke extraction ventilation system was additional work, respectively. There was no suggestion that Beck had acted in any way untoward by commencing the adjudications.

What then followed was the commencement of four separate adjudications by Eros on 17, 21, 28, and 30 May 2024, which broadly concerned the following disputes, respectively:

• additional costs of £3.8 million incurred by Eros due to the delay in the hotel opening;
• the ‘true value’ of Beck’s interim application 47, certified at negative £5.8 million;
• a claim for LADs of £8.6 million; and
• increased financing costs of £15.5 million due to the delayed sale of the residential apartments.

Broadly, it appears that Eros was claiming more than £32 million across the four adjudications. On 18 June, Eros also intimated a further claim of £36.9 million in respect of a lost opportunity/lost profit claim on another project due to delays at Hannover Square.

In three of the four adjudications, Beck challenged the adjudicators’ jurisdictions asserting:

• that disputes had not crystallised;
• potential breaches of natural justice if Beck was given insufficient time to respond; and
• that the adjudications were an abuse of process, pointing to inter alia, the lack of merit in the disputes referred.

The adjudicators were all unmoved by these arguments and declined to resign from their respective adjudications. Beck therefore applied to the TCC (Technology and Construction Court) for an injunction to restrain any future adjudications being started without court permission, as well as the ongoing adjudications.

Judgment

The court refused to grant the injunction sought by Beck, holding that Eros’s conduct was neither unreasonable nor abusive, both of which are necessary for a court to order an injunction in relation to adjudication.

The court re-emphasised that, while having power to injunct an adjudication, this is to be used only in exceptional circumstances. If this was not the case, the court would run a significant risk of being drawn into policing the conduct of adjudications generally. Ordinarily, an adjudication should be allowed to run its course.

In the present case, the court noted that the merits of the claims advanced by Eros were clearly matters for the respective adjudicators to decide. Further, matters of jurisdiction and natural justice are capable of being raised on enforcement. In particular, the court considered that it would be better placed to consider issues of natural justice at the enforcement stage, having access to an overview of the entire process. The court noted that the adjudicators had considered Beck’s concerns about natural justice in relation to timetabling and had, at least in the adjudicators’ views, ordered timetables which were ‘fair’.

Comment

Whilst concurrent adjudications are not particularly common, they are certainly not unheard of[1], and this judgment will provide comfort and clarity to those who have chosen such a course of action. There may be several ‘good’ reasons for starting multiple adjudications at once, one of which was identified by the court in this case, in that (slightly unusually) there was not a ‘single dispute’ which could be referred that encapsulated all of the ‘sub-disputes’.

Equally, it may be that, even if there was a single ‘dispute’ wide enough to capture all of the sub-issues, the referring party may not be yet ready to have all of the sub-issues resolved. For example, the referring party may have several high-value claims for additional work it is ready to pursue, but not yet be in a position to do the same with its alleged extension of time claim. Why should the referring party be prevented from resolving its additional work claims, and potentially jeopardise its cashflow, simply because it may be more convenient for the responding to deal with all sub-issues in a single adjudication?

Finally, the judgment certainly seems consistent with the referring party’s right to frame its claim as narrowly or widely as it sees fit, and to leave it to adjudicators to do their best to ensure a fair process. If the judgment had been otherwise, this right could be somewhat curtailed as the referring party would be at risk of being injuncted if it started too many narrowly defined adjudications at once. Such a legal constraint would create unwelcome uncertainty.

Return to news headlines