Prater Limited v John Sisk & Son (Holdings) Limited was handed down in the TCC in April 2021. The case will be of interest to lawyers and construction professionals managing the enforcement of adjudication awards.

In the context the enforcement of an adjudication decision, the court was asked to determine whether the adjudicator had jurisdiction to make the award in the first place because, it was argued, the award had been based on findings made in an earlier adjudication which had incorrectly considered multiple disputes instead of a single dispute as was provided for in the contract.

Background

The parties to the dispute were Sisk, the contractor and Prater, the subcontractor. The subcontract was the for the design and installation of cladding and roofing works at an airport hangar.  The contract’s terms included an adjudication clause and, at the time of the court hearing, 4 adjudications had taken place, 3 of which had been commenced by Prater.

Prater’s application for summary judgment was concerned with the enforcement of the fourth decision, that had found that Sisk was liable to Prater in the sum of about £1.7 million. 

However, Sisk argued that the award of £1.7m was not enforceable, because it was based on a decision made in a second adjudication which was itself unenforceable.  Sisk argued that Prater’s referral in the second adjudication was concerned with multiple disputes and not a single dispute and that this was contrary to the terms of the agreement. 

The decision

The judge highlighted that the contract, an NEC3 which had been amended by the parties, provided as follows:

"The Adjudicator's decision is binding on the Parties unless and until revised by the tribunal and is enforceable as a matter of contractual obligation between the Parties and not as an arbitral award. The Adjudicator's decision is final and binding if neither Party has notified the other within the times required by this subcontract that he is dissatisfied with a matter decided by the Adjudicator and intends to refer the matter to the tribunal."

The judge concluded that until the decision in the second adjudication had been challenged before the court, it would remain binding on the parties and the subsequent adjudications. It was too late for Sisk to challenge the second adjudication and, for this reason alone, Sisk’s defence of the application failed and Prater’s application for summary judgment and enforcement of the decision in the fourth adjudication would be successful. 

This meant that the judge did not need to consider whether it was correct to argue that the second adjudication lacked jurisdiction, because multiple disputes had been referred.  However, helpfully, the judge did so anyway.

The judge further concluded that each of the points submitted by Prater in the second adjudication were linked to the determination of a single dispute, the proper amount of Sisk’s payment certificate, and not multiple issues. This conclusion also meant that the court did not need to consider whether it was correct to argue that Prater would have been prohibited from referring more than one dispute to the adjudicator but, again, the judge helpfully examined the point. 

The judge concluded that, based upon the proper interpretation of the contract, it did indeed provide that only a single dispute may be referred to adjudication in any one referral, and not multiple disputes. Option W2 of NEC3 refers to "a dispute" in the singular. The natural and ordinary meaning of the words "a dispute" is a single dispute and not multiple disputes.

Comment

It is clear to see that matters were not proceeding smoothly between Prater and Sisk, and this reinforces the importance of having a well drafted agreement to try and prevent or minimise the risk of disputes.

Complex disputes are not suitable for adjudication. Unlike court, where a party may be criticised for failing to advance all of its related claims in the same proceedings, in an adjudication, parties are able to isolate their easier or more straightforward arguments and only seek resolution of those isolated issues.  This can be a useful tactic. 

It is curious why Sisk did not take steps to challenge the jurisdiction of the second adjudication sooner. By the time the third referral to the adjudicator had been submitted, Sisk must have suspected that Prater would be gearing up for an award of payment.

(c) Melissa Worth 2021