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Adjudicator’s Decision Breached Natural Justice

UndergroundIn the context of a contract dispute relating to a major power up-grade on the London Underground, the High Court has ruled that an adjudicator’s decision was invalidated by a serious breach of natural justice. The adjudicator had decided one of the central issues between the parties on the basis of a contractual clause that had not been relied upon by either of them in the course of argument.

The dispute was in respect of payments due for design costs and fees in relation to cabling works. The adjudicator had directed the main contractor to pay a cabling sub-contractor more than £970,000, plus interest and costs. The former was dissatisfied with his decision and appealed.

In upholding the main contractor’s challenge, the Court noted that it was accepted by both sides that a certain clause in the contract that had been mentioned by neither party in the course of the adjudication had been relied upon by the adjudicator in resolving an issue of considerable potential importance.

In circumstances where the relevant clause had not even been referred to from start to finish of the adjudication and the adjudicator had not himself raised the point with the parties before publishing his decision, the Court found that there had been real unfairness to the main contractor in respect of an issue which could well have been decisive.