Summary and implications

Choosing the right adjudicator to decide your dispute can be one of the most important and difficult aspects of the adjudication process. All too often the referring party proposes the name of an adjudicator, who is then declined by the responding party due to some deep seated (and most probably unfounded) suspicion that the individual in question must certainly have a biased opinion in favour of the referring party. The end result is usually a panel appointment of an adjudicator that neither party feels is best placed to decide the dispute.

Nominating bodies

There is a plethora of adjudication bodies available, all keen for parties to incorporate reference to that body in the dispute resolution provisions of their contracts. The most well-known bodies within the infrastructure, construction and engineering sectors, include TecSA, ICE, IChemE and the Royal Institution of Chartered Surveyors (RICS). Each nominating body has its own application form which allows the parties to submit differing amounts of detail in terms of the dispute in question.

It is not uncommon for parties to use the nomination forms as an attempt to select an adjudicator of their choice, (although the TeCSA application form specifically states that, save in the case of a genuine legal conflict, TeCSA will not take into account any preferences expressed by either party as to the names of adjudicators to be excluded).

Applying for the nomination – what to watch out for

In Eurocom Ltd v Siemens Plc [2014] EWHC 3710 (TCC) Mr Justice Ramsey held that there was a strong prima facie case that the referring party's representative had made a fraudulent misrepresentation in the way in which he had applied to RICS for the nomination of an adjudicator (thereby invalidating the adjudicator's appointment and ensuring the adjudicator did not have jurisdiction to reach a decision).

The facts of the case

Siemens engaged Eurocom to install communications systems at Charing Cross and Embankment underground stations. A dispute arose between the parties, and in August 2012 Eurocom initiated adjudication proceedings against Siemens. Mr Matthew Malloy was appointed by RICS as the adjudicator. His decision was served in September 2012.

In November 2013, Eurocom served a second notice of adjudication on Siemens. Within the request form to RICS for the nomination of an adjudicator, Eurocom's representative was asked to identify any individuals who would have a conflict of interest in relation to the case.

13 individuals were identified as having a conflict of interest and not to be appointed, including Mr Malloy (on the basis that he had acted previously) and anyone connected with Fenwick Elliott solicitors, who had advised the referring party. Mr Anthony Bingham was subsequently appointed as adjudicator.

RICS did not copy the application form to Siemens until January 2014, at which point Siemens requested Eurocom's explanation regarding the alleged conflicts of interest. No response was received from Eurocom and the adjudicator reached his decision on 28 January 2014. In May 2014, Eurocom's new representative sought payment of the sums awarded to it by the adjudicator. Siemens advised that if enforcement proceedings were brought, they would be resisted as a result, in part, of the way in which Eurocom's representative had applied to RICS. Eurocom commenced enforcement proceedings, during the course of which the court had to decide whether the adjudicator's appointment had been invalid because of the conflict of interest information that had been included on the RICS application form, and/or because RICS had failed to raise those conflicts of interest with Siemens.

The decision

Mr Justice Ramsey dismissed the application to enforce the adjudicator's decision, finding that a fraudulent misrepresentation had taken place because there was, in fact, no conflict of interest in relation to Mr Malloy and a number of the other 12 individuals identified by Eurocom. Mr Justice Ramsey also indicated there was a very strong prima facie case that Eurocom's representative had deliberately or recklessly answered the question about conflicts of interest so that certain individuals would not be appointed. It was accepted that a party should not suborn or subvert the system of adjudication nomination by making a fraudulent misrepresentation and improperly limiting the pool of possible adjudicators.

Comment

A finding of fraudulent misrepresentation may seem a harsh decision in the circumstances, but it is a warning to those completing adjudication nomination forms, that only those individuals who have a genuine conflict of interest should be identified as being unsuitable (practitioners may find the RICS Conflicts of Interest guidance note of assistance in this regard). Adjudicators are required to be impartial, but that does not mean they also have to be independent of the parties, and a referring party will need to be prepared to defend its position in that regard if challenged by the responding party.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.