Arcadis UK Ltd v May and Baker Ltd (t/a Sanofi)

In adjudication enforcement proceedings, an adjudicator’s decision will generally be enforced even if the adjudicator may have erred in fact or law. A previous adjudication between the same parties under the same contract may properly be placed before a later adjudicator and may be binding or persuasive, subject to the later adjudicator’s assessment of its relevance and effect. Natural justice requires a material failure to address a decisive or potentially important issue, or an unargued basis of decision which the parties had no opportunity to address. An adjudicator need not deal with every submission where the reasoning sufficiently resolves the referred dispute.

Arcadis sought enforcement of a second adjudicator’s decision concerning compensation and delay arising from contaminated material at the southern boundary of Sanofi’s site. A first adjudication concerning northern boundary works had found that the Project Manager could not withdraw an implemented compensation event or reassess its effects. The second adjudicator considered that decision, found that the southern boundary works constituted a compensation event, awarded compensation and allowed 29 days’ extension of time.

Sanofi challenged enforcement on jurisdictional and natural justice grounds. It alleged that the second adjudicator treated the first decision as binding, adopted an unargued method of assessing quantum, failed to consider its delay defence, and was apparently biased.

1. The adjudication decision was enforced. Arcadis was entitled to judgment for the full amount claimed. No proper ground existed for resisting enforcement.
2. A previous adjudicator’s decision between the same parties concerning the same contract may ordinarily be referred to a later adjudicator. It may be binding, give rise to an issue estoppel, or be persuasive. It was neither improper nor contrary to natural justice for Arcadis to rely on the first decision or for the second adjudicator to consider it. The second adjudicator had decided the issues on their own merits and had not improperly restricted his jurisdiction.
3. The natural justice challenge based on quantum failed. The parties had advanced materially different approaches to valuation. The second adjudicator adopted the forecast approach advanced by Arcadis and selected a figure between two forecast figures which had an evidential basis. This was not an unargued method of assessment of the kind considered in Herbosch-Kiere Marine Contractors Ltd v Dover Harbour Board [2012] EWHC 84 (TCC).
4. The second adjudicator had considered Sanofi’s case on culpable delay and had reached an intelligible conclusion that the southern boundary works caused 29 days’ critical delay. An adjudicator need not address every point, item of evidence or argument unless necessary to resolve the dispute. A possibly erroneous conclusion on the merits does not ordinarily affect enforceability.
5. Applying the test for apparent bias, a fair-minded and informed observer would not conclude that there was a real possibility of bias merely because the adjudicator considered the earlier decision.

The court also emphasised the importance of complying with directions in enforcement proceedings. Late evidence may be excluded or may lead to an adjournment at the defaulting party’s expense.