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Adjudicators’ Decisions are Enforceable – Right or Wrong

hotelThose who voluntarily submit contract disputes to adjudicators must live with their decisions, right or wrong. However, in one wholly exceptional case, the High Court suspended payment of £1.5 million of an adjudicator’s award on the basis that one of the parties might otherwise receive an unjustified windfall.

Company A had employed company B to carry out design and building works on a seaside hotel. When the latter submitted an interim request for payment, company A did not serve a counter-notice within the time limit specified under the contract. As a result an adjudicator awarded company B the full amount of its bill, almost £4 million.

Company B launched High Court proceedings to enforce the adjudicator’s award and company A accepted that his decision fell within his jurisdiction and was legally unassailable. That was on the well established basis that an adjudicator’s decision, even if it contains a glaring error, is in principle enforceable.

However, company A argued that the adjudicator’s decision was ‘palpably wrong’ and that compliance with it in full would cause irreparable prejudice to any future adjudication proceedings as well as undermining its cash flow to the extent that completion of the project would be put in jeopardy.

The Court awarded company B summary judgment in respect of the full amount of the adjudicator’s award. However, in the exceptional circumstances of the case, it stayed payment of £1.5 million of that sum. The stay, which was designed to encourage completion of the project, was granted subject to stringent conditions and the Court emphasised that such a step would only rarely be appropriate.