BLOWING YOUR CHANCE TO RESERVE YOUR POSITION IN ADJUDICATION
A party must reserve its position to challenge the Adjudicator’s decision on jurisdiction or natural justice if it acts in such as a way that could be construed as an acceptance of the decision. If a party through its conduct decides to accept that decision and then changes its position in the adjudication process it may be find itself accused of “blowing hot and cold” by choosing to adopt opposite positions at the same time. This is known as “approbating and reprobating” or “blowing hot and cold”.
The recent Technology and Construction Court decision of Dawnus Construction Holdings Limited -v- Marsh Limited [2017] EWHC 1066 (TCC) reasserts this long established principle that a party cannot “approbate and reprobate”, by simultaneously challenging and accepting the Adjudicator’s decision. In Dawnus, on an application to the TCC for summary judgment to enforce the Adjudicator’s decision, the Defendant (Marsh) identified some mistakes made by the Adjudicator in his calculations of the amount awarded to the Claimant (Dawnus).
The legal representatives of the Defendant wrote to the Adjudicator and asked him to rectify these errors under the “slip” rule, which he duly did. The Defendant’s legal representatives did not at that stage complain of a breach of natural justice in the Adjudicator’s failure to deal with the items that were subsequently corrected under the “slip” rule. Nor did they reserve their position to claim breach of natural justice when they asked the Adjudicator to correct the items.
The court said that the Defendant could have, but did not, expressly reserve its right to pursue a claim of breach of the rules of natural justice when inviting the Adjudicator to make corrections under the “slip” rule. The court ruled that in the absence of doing so and by inviting the Adjudicator to exercise his powers under the “slip” rule, they waived or elected to abandon its right to challenge enforcement of the decision and they elected to treat the Adjudicator’s decision as valid.
The court said that it cannot be right that a party to an adjudication simultaneously approbates and to reprobates a decision of the Adjudicator. Assuming that good grounds exist on which a decision may be subject to objection, in the absence of an express reservation of rights, either the whole of the relevant decision must be accepted or the whole of it must be contested. This meant that the Defendant was precluded from challenging the decision and the Claimant succeeded in its application for summary judgment.
The Dawnus decision followed that of Shimizu Europe Limited v Automajor Limited [2002] BLR 113, when it was decided, in the context of Arbitration, that a party cannot on the one hand claim that the Arbitrator has exceeded his jurisdiction and simultaneously make part payment of the Arbitrator’s award. Any right which there would otherwise have been to raise objection on behalf had been waived by making part payment of the sum awarded by.
By inviting a correction of an Arbitrator’s award under the “slip” rule meant that it was accepted that the award was valid. The invitation to correct the award under the “slip” rule was consistent with recognising it as valid. By paying part of the sum that was subject to the Award the paying party was electing to treat the Award as valid, and they had forgone any opportunity to object to the Award.
In Laker Vent Engineering v Jacobs [2014] EWHC 1058 (TCC) there were three separate challenges; two of which were as to jurisdiction and one was as to consistency, which was at least in part an allegation of breach of natural justice. Ramsey J decided that a party could rely on a general reservation of jurisdiction when inviting an adjudicator to make corrections under the “slip” rule.
In Dawnus Construction Holdings Limited -v- Marsh Life Limited [2017] EWHC 1066 (TCC) the Defendant tried to draw a distinction between expressly and impliedly acknowledging that the Adjudicator had jurisdiction by asking him to correct his decision under the “slip rule” and that of challenging the decision on the basis of the rules of natural justice. They argued that , whilst it might be that by inviting the Adjudicator to exercise his powers under the “slip” rule, the Defendant had waived or elected to abandon its right to challenge enforcement on grounds of jurisdiction, it had not done so on the different ground of a breach of the rules of natural justice. The court rejected the Defendant’s argument that the only sensible way of reading the legal representative’s correspondence to the Adjudicator was that it identified a natural justice failure by the Adjudicator to deal with the Defendant’s defence to those claims and, implicitly, that if the Adjudicator did not make the correction then the Defendant would challenge the decision.
The lesson from these cases is that a party who asks the Adjudicator to correct his decision under the “slip” rule should make sure he does not in doing so waive his rights to complain that the Adjudicator did not have jurisdiction or has committed a breach natural justice at a later stage and in defence to enforcement of the Adjudicator’s decision.
Anthony Philpott
12 Old Square Chambers
