must we adjudicate?
You may already be aware that in the recent case of DGT
Steel and Cladding –v– Cubbitt Building and Interiors, HHJ Peter
Coulson QC helpfully clarified the law covering contractually
binding dispute resolution clauses.
The court will generally stay court proceedings, started in
breach of a contract that says that disputes shall be referred to
adjudication or some other form of alternative dispute resolution
first. The party resisting a stay of court proceedings must show
why the agreement in the contract to adjudicate, mediate or go
down an alternative ADR route should not be enforced.
It's important to note that the Construction Act 1996 gives
parties to a construction contract the right to refer disputes to
adjudication; but there is no obligation to do so. With most
construction contracts, there would be nothing expressly preventing
one party commencing adjudication and the other immediately
commencing court proceedings. However, even if the adjudication
provisions in contract are not mandatory, the court still has
discretion. HHJ Coulson’s view was that a stay would often be
appropriate, even if the court was only dealing with a right to
adjudicate.
Otherwise one or other party would be denied its right to have
the dispute adjudicated. If appropriate pre-action steps had not
been taken (in compliance with the pre-action protocol) a stay
pending the outcome of the adjudication would most likely find
favour with the court. Furthermore, the judge said that in
circumstances where the dispute involved the valuation of an
account, an experienced construction professional, particularly a
quantity surveyor, could provide a better tribunal for resolving
the dispute than the court.
So it seems that the only difference between an adjudication
agreement that requires disputes to be referred to adjudication, as
opposed to a right to adjudicate by virtue of Section 108, is that
if the recourse to adjudication is mandatory, the court
would be more willing to exercise its discretion in favour of
a stay. There might however be good reasons why a court would order
a stay of proceedings whilst the adjudication concluded, even where
there were no obligation in the contract to adjudicate.
Generally, courts are reluctant to interfere with the
adjudication process and the jurisdiction of adjudicators.
For further information please contact Richard Wade on 01865
254244 or email richard.wade@bllaw.co.uk
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