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Contract Adjudicator’s Award Arguably Procured by Fraud High Court Rules

Contract adjudicators are often called upon to resolve very high value disputes and there is always a danger that one side or the other will attempt to dupe them. As a High Court case showed, however, judges are always alert to the risk of fraud.

The case concerned a bitter dispute between a company that had been engaged to design and build a biomass-fuelled energy plant and a subcontractor. Various matters were referred to adjudicators after each of them purported to terminate the contract. The subcontractor was successful in one adjudication and launched enforcement proceedings, seeking summary judgment against the company in the amount of the award, more than £1.7 million plus interest.

In refusing the application, however, the Court ruled that it was properly arguable on credible evidence that the adjudicator’s decision had been procured by fraud. The subcontractor had clearly made a number of false representations to the adjudicator and it was arguable that it had done so either knowingly or recklessly, in the sense of not caring whether its statements were true or false.

It was also arguable that the subcontractor had obtained a material advantage in the adjudication by making the false representations, which were intended to, and did, influence the adjudicator’s decision. The company could not reasonably have discovered the alleged fraud before the conclusion of the adjudication and it was not open to the Court to re-engineer the adjudicator’s decision so as to sever those parts of it which may have been affected by fraud.