McAlpine PPS Pipeline Systems Joint Venture v Transco Plc

An adjudicator must decide the dispute, and the legal and factual basis of that dispute, which the referring party has submitted. The adjudicator may take the initiative in ascertaining facts and law, but that power does not permit enlargement or alteration of the reference without the parties’ agreement. A materially different case or new evidence introduced late in the adjudication may make the decision non-responsive and breach procedural fairness, particularly where the responding party lacks a proper opportunity to answer it. Where such procedural unfairness significantly affects the decision, enforcement should be refused.

McAlpine applied under Part 24 to enforce an adjudicator’s decision requiring Transco to pay contractual interest arising from allegedly late certification of compensation events. The adjudicator considered detailed evidence about the administration of individual compensation events, much of which was served late and after Transco had objected to the expansion of the issues.

Transco argued that the adjudicator had decided a dispute wider than the one referred and that the procedure was unfair and prejudicial. The central questions were the scope of the referred dispute, the limits of the adjudicator’s fact-finding powers, and whether Transco had a real prospect of defeating enforcement.

1. Application refused. The adjudicator’s decision was not enforced. Transco had a real prospect of establishing at trial that the adjudicator had acted outside his jurisdiction and unfairly.
2. The dispute referred was McAlpine’s claim for interest on the basis that payments for compensation events had not been certified when they should have been. The referring party defines the issues and the basis of the reference. Without the parties’ agreement, the adjudicator cannot alter that basis or decide what he considers to be the underlying or real dispute.
3. The adjudicator may take the initiative in ascertaining facts and law under section 108(2)(f) of the Housing Grants, Construction and Regeneration Act 1996 and paragraph 13 of the Scheme for Construction Contract Regulations 1998. That power remains subject to the scope of the reference and the duty to act fairly. It permits investigation of the referred dispute, not the introduction of a materially different dispute.
4. The detailed assessment histories served by McAlpine constituted, or provided evidence for, a substantially different case concerning the administration of compensation events. Transco had objected to that change and served its response under protest. It had only a short period to examine extensive new material, retrieve archived documents and obtain witness evidence.
5. There was therefore a realistic prospect that the procedure was unfair and that the unfairness significantly affected the decision, which relied substantially on the new material. The parties remained free to pursue a full hearing on the merits.

Not stated in the judgment.