Challenging an Adjudicator's Decision: A Case Study on Riverside Construction vs. Apex Developments

The Background of the Dispute

Apex Developments Limited (‘Apex’) enters into a construction contract with Riverside Construction LLP (‘Riverside’) to build a medium-sized office development (‘Arcadia House’) in Sheffield. The parties adopt the JCT Design and Build Contract 2016 (unamended) for the project. For the first few months Riverside makes excellent progress. But as the development edges towards practical completion cracking begins to appear in exterior walls and in some of the interior supporting walls.

Apex obtains a structural report which points the finger at unstable ground conditions as the cause of evident structural failure of parts of the newly built development. The report concludes that the design should have incorporated specially strengthened foundations to address the ground conditions. While the contracting parties concede that Apex’s in-house design team was involved in producing early designs for the project – which included a cursory review of ground conditions – both Apex and Riverside acknowledge that Riverside bears at least some responsibility for the design defects and structural flaws that have beset the development. Being in a ‘dispute’, therefore, Apex and Riverside decide to refer the matter to adjudication under clause 9.2 of the applicable JCT contract, with the adjudicator’s appointment determined in accordance with the Contract Particulars. Not long after the adjudication process commences, Riverside’s managing partner (Martin Forest) becomes uneasy at the way the adjudicator is conducting himself at the initial stages of the adjudication and receives a tip-off that the adjudicator is not only a cousin of Apex’s CEO but one of Apex’s shareholders. Rumours then begin to circulate that the adjudicator and Apex’s CEO were spotted during the first weekend of the statutory 28- day timescale (for the conduct of the adjudication) at a country hotel outside Sheffield. Reliable witnesses claim that both men spent hours poring over paperwork, including drawings, in the hotel’s main restaurant and in a small meeting room next to the restaurant. The adjudicator and Apex’s CEO are frequently overheard talking about ‘Arcadia’, ‘Arcadia House’ and ‘dodgy foundations’

Martin Forest is somewhat aggrieved at not being invited to what might have been very significant discussions potentially affecting the outcome of the adjudication and challenges both the adjudicator and senior management at Apex to come clean about the private hotel meetings. Forest’s request for a detailed statement of all relevant discussions meets with limited success. On the morning of the commencement of the main 4 hearing, the adjudicator provides only a brief written outline of what he describes as ‘one or two recent conversations’ that he claims took place in private between himself and Apex’s CEO. But the adjudicator opens the formal part of the adjudication proceedings by declaring an interest – disclosing that he is a shareholder of Apex. (He does not mention that he is a cousin of Apex’s CEO.) At the hearing the adjudicator appears to show undue deference and respect to Apex’s witnesses but questions Riverside’s witnesses quite robustly, if not aggressively. He also appears to make light of the extent to which Apex might have had responsibility for the design defects affecting the foundations and structural parts of the development. He questions witnesses in a way that leaves observers in no doubt that he believes Apex had minimal responsibility for design defects, despite senior people at Apex having conceded some degree of responsibility at an earlier stage in the process.

When the adjudicator finally communicates his decision to the parties Martin Forest is not too surprised to find that, in his decision, he has assigned the entire responsibility for the design defects to Riverside, entirely exonerating Apex. Martin Forest’s initial reaction to the decision is to claim that the whole point of the adjudication was to determine the proper extent of the parties’ responsibility for the design defects, not to exonerate Apex entirely, and that in rendering such a decision the adjudicator has in effect addressed himself to the wrong question. As such, Forest claims that the decision is not binding, and makes it clear that Riverside intends to challenge the decision in court.

Arising out of the factual scenario outlined above, discuss and explain on what basis Riverside could challenge the adjudicator’s decision by way of court proceedings. (Consider any available ground of challenge including issues around the adjudicator’s impartiality – i.e. the answer should not be limited only to, though it should still address, the jurisdictional issue of whether the adjudicator has or has not addressed himself to the wrong question.)