Jacobs UK Ltd v Skanska Construction UK Ltd

A party may unilaterally withdraw a dispute from adjudication and refer the same, or substantially the same, dispute to a further adjudication. The absence of an abuse-of-process restriction does not prevent the court from intervening. Under section 37 of the Senior Courts Act 1981, an injunction may be granted where the further adjudication is unreasonable and oppressive. That is a fact-sensitive, objective assessment. Unreasonable conduct in withdrawing an adjudication is insufficient by itself. The further reference must also cause oppression of the other party. An ad hoc agreement fixing the procedure and timetable may create enforceable obligations beyond the adjudication regime. Breach may entitle the other party to recover wasted or additional costs as damages, but only to the extent caused by the breach.

Skanska engaged Jacobs to provide design services under a construction contract containing an adjudication provision. After commencing an adjudication, Skanska failed to serve its reply within the agreed timetable, withdrew the reference and invited the adjudicator to resign. The adjudicator resigned. Skanska then commenced a second adjudication concerning the same or substantially the same claims, with some changes to scope and quantum.

Jacobs sought declarations, an injunction restraining the second adjudication and recovery of its costs in the first adjudication. The issues were whether Skanska could withdraw and re-refer the dispute, whether the court could restrain the second adjudication, whether relief should be granted on the facts, and whether Jacobs could recover wasted costs.

1. Withdrawal and re-referral. The Housing Grants Construction and Regeneration Act 1996 and the applicable Scheme imposed no restriction preventing a referring party from unilaterally withdrawing a claim after referral or commencing a further adjudication concerning the same or substantially the same dispute. The first adjudicator had resigned without deciding the dispute, so the second adjudicator had jurisdiction.
2. Injunctive jurisdiction. The court had power under section 37 of the Senior Courts Act 1981 to restrain an adjudication where pursuit of it was unreasonable and oppressive. Examples included lack of jurisdiction, failure to comply with obligations arising from earlier adjudications, and vexatious serial adjudications. The question was objective and fact-sensitive.
3. Application. Skanska’s withdrawal was unreasonable. Counsel’s unavailability was rarely a good reason for failing to comply with an agreed timetable, particularly where the referring party controlled the timing and scope of the reference. Nevertheless, the second adjudication was not both unreasonable and oppressive. Jacobs could rely substantially on its existing response, and the additional material and costs were not sufficiently severe or exceptional to justify an injunction.
4. Costs. The parties’ agreement of 13 February 2017 was an ad hoc agreement imposing enforceable obligations concerning procedure and timetable. Skanska’s failure to serve its reply and continue with the first adjudication was a breach. Jacobs could recover wasted or additional costs caused by that breach as damages, but not costs that would have been incurred in the second adjudication or costs relating solely to an abandoned claim.
5. Alternatively, the agreement contained an implied term requiring Skanska to pay wasted costs resulting from its failure to adhere to the agreed procedure and timetable.