Beck Interiors LTD v Eros LTD

The statutory right to refer a construction dispute to adjudication at any time is broad. The court will restrain an ongoing adjudication only in rare and exceptional circumstances. A referral must generally be both unreasonable and oppressive, and those requirements apply to a high degree.

Pressure, additional cost, multiple concurrent adjudications, alleged weakness of the claim, or disputed procedural decisions will ordinarily be matters for the adjudicator. Any breach of natural justice may generally be raised when enforcement is resisted. A general injunction requiring permission before any future adjudication would constitute an extraordinary interference with the statutory regime.

Beck Interiors Ltd applied for an injunction against Eros Ltd. It sought to restrain four ongoing adjudications and to prohibit Eros from commencing any further adjudication without permission from a Technology and Construction Court judge.

The parties were involved in multiple adjudications concerning a substantial design and build fit-out contract. Beck argued that Eros’s claims were weak and that conducting four adjudications simultaneously was unreasonable, oppressive and procedurally unfair. Eros relied on its statutory right to adjudicate and on the adjudicators’ directions concerning timetable and jurisdiction.

The central issues were whether the court should intervene before the adjudications concluded and whether the court should examine the merits or alleged procedural unfairness at that stage.

1. Application refused. The court declined to restrain the four extant adjudications and refused the proposed general prohibition on future adjudications.
2. Section 108 of the Housing Grants Construction and Regeneration Act 1996 gives a party to a construction contract the right to refer a dispute to adjudication at any time. That statutory right carries a commercial advantage and will not be curtailed save in exceptional circumstances.
3. The court has jurisdiction to grant an injunction in relation to an adjudication, including one already commenced, but the jurisdiction is exercised very rarely. Where the complaint is oppressive or unreasonable conduct, both elements must be present to a fairly high degree. The court must also consider the substance of the relief sought rather than whether it is labelled prohibitory or mandatory.
4. Concurrent adjudications, the burden and expense of defending several references, disagreements about extensions of time, and allegedly weak claims did not establish unconscionable, unreasonable or oppressive conduct. The adjudicators knew of the other references and had directed timetables which they considered fair. Any unreasonable procedural proposal was a matter for the adjudicator, not a reason for the court to halt the process.
5. The merits of the adjudications were matters for the adjudicators. It would be exceptional for the court to consider the weakness of a claim when deciding whether to restrain it. The claims were sufficiently understood by Beck, and the temporary binding effect of adjudication decisions meant that Beck could pursue court proceedings or resist enforcement on jurisdictional or natural justice grounds if appropriate.
6. A general order requiring permission before any further adjudication would amount to extraordinary interference with the statutory right and risk satellite litigation about permission. No such order was justified on these facts, although the judge did not decide that such relief could never be granted in circumstances analogous to a vexatious litigant order.
7. Costs were assessed on the standard basis at £70,000.