ABB Ltd v Bam Nuttall Ltd

An adjudicator’s error of fact, law or procedure does not ordinarily justify refusing enforcement. The court will intervene where there has been an actual or probable serious failure in the decision-making process, including reliance on a decisive or materially important point which the parties were not given an opportunity to address. A breach affecting an important part of the decision may render the whole decision unenforceable if confidence in the fairness of the process is lost. The court should not speculate about what the adjudicator would have decided or substitute its own view.

ABB engaged Bam under an NEC3-based subcontract for cable works on the London Underground. A dispute arose over compensation event CE002 and Bam’s claim for additional design costs incurred after January 2011.

An adjudicator treated Bam’s quotation as accepted and awarded payment. In deciding that the parties had not reached a binding agreement concerning a £1.5 million lump sum, he relied on clause 11.1A, which required written and signed amendments. Neither party had referred to that clause, and the adjudicator had not invited submissions on it.

ABB sought a declaration that the decision was unenforceable for breach of natural justice. Bam sought summary judgment to enforce it. The central issue was whether the adjudicator’s reliance on the unargued clause was a material breach.

1. ABB was entitled to a declaration that the adjudicator’s decision was unenforceable. Bam’s summary judgment application failed.

2. The governing principles were established in Carillion Construction Ltd v Devonport Royal Dockyard Limited [2005] EWCA 1358. Errors of fact, law or procedure do not themselves establish a breach of natural justice. The court intervenes only where there has been an actual or probable serious failure in the adjudicator’s process, and enforcement remains the general rule under the statutory adjudication scheme.

3. The approach in Cantillon Ltd v Urvasco Ltd [2008] BLR 250 was clarified. A breach is material where the adjudicator relies on a point or issue which is decisive, or of considerable potential importance, and which is neither peripheral nor irrelevant. The issue need not determine the whole decision. A breach affecting an important part may make the entire decision unenforceable where the parties and the court can no longer have confidence in the fairness of the decision-making process.

4. The adjudicator plainly relied on clause 11.1A in deciding that no binding agreement had been reached. That clause had not been mentioned by either party and had not been raised for comment. The adjudicator could properly have raised the point and invited submissions, but could not fairly decide the issue on that basis without doing so.

5. The breach was material. The adjudicator had avoided deciding which account of the 3 December 2010 agreement was factually correct. Had ABB’s account been accepted, Bam’s entitlement to post-January 2011 design costs might have been substantially reduced or eliminated. The court could not speculate about the alternative decision or substitute its own assessment.

6. The repeated reliance on clause 11.1A in relation to waiver and acceptance of quotations confirmed that the adjudicator had treated it as an important legal reason, rather than making an incidental observation. The declaration was therefore granted.

Not an appeal. The judgment records no prior appellate decision.