How much do you know about the payment of adjudicator fees? The Court of Appeal in England has ruled that adjudicators are not entitled to payment of their fees where their decisions are unenforceable. Adjudication is a common alternative to court action in construction disputes and is referred to as the first 'port-of-call' for resolution of any dispute in the majority of construction contracts.
PC Harrington Contractors Ltd and Systech International Ltd:
The First Ruling
In the first instance, the court ruled that the role of the adjudicator is wide and varied, and made up of many component parts. Including investigation, interviewing parties, considering the issues and the information received, as well as finally coming to a decision. The court found that the fact that the adjudicator's remit is not restricted to simply giving a decision meant that the adjudicator was entitled to payment for the work done, even where that work resulted in the making of an unenforceable decision.
The Appeal
This ruling was overturned on appeal. The appeal court found that the statutory scheme does not provide for payment to an adjudicator on the basis of completion of separate elements of work. It lays out in detail the circumstances in which the adjudicator is entitled to payment where no decision has been made, none of which existed in this case.
The court found that the contract under which the adjudicator was engaged stipulated that he was to be paid in exchange for an enforceable decision on the matters in dispute. A failure to provide such a decision meant that the adjudicator had failed to perform his obligations under the contract and as such he was not entitled to be paid. A decision which was unenforceable was of no value to the parties. They would have to start again on a fresh adjudication in order to achieve the enforceable decision which the adjudicator had contracted to produce.
Implications
The court considered the policy implications of its ruling on the adjudication process, stating that if they were to rule that the adjudicator should be paid in these circumstances, it would demonstrate that parties can be forced to pay for, and comply with, a meaningless, futile outcome, which could have a detrimental effect on concept of the adjudication process.
If you are considering adjudication provisions in your construction contract, please contact us.
