Adjudication: can you adjudicate and litigate the same dispute at the same time ?

In the case of Herschel Engineering Limited - v - Breen Property Limited (14 April 2000) Dyson L J has decided that it is possible for a claimant to refer a dispute to adjudication pursuant to Section 108 of the Housing Grants, Construction and Regeneration Act 1996 ("the Act") when that same dispute is already the subject of court proceedings.

The factual background to the case is somewhat complex. In short, however, the claimant contractor brought two separate actions against his employer, one for recovery of sums unpaid and due under the contract and a second, later action to recover sums awarded by an adjudicator, but in respect of the same cause of action. The defendant sought to avoid enforcement of the adjudication award and argued that it was vexatious litigation.

The defendant argued that (a) courts should not countenance two concurrent proceedings in respect of the same cause of action; and (b) by starting proceedings in the county court the claimant had waived or repudiated the adjudication provisions in the contract. In response the claimant stressed that Section 108 (2) of the Act gave a party the right to refer a dispute to adjudication "at any time".

Dyson L J refused to accept the defendant's arguments. Whilst the court would not allow a dispute to be determined by both arbitrator and judge, the position with adjudication was different. By virtue of paragraph 23 (2) of the Scheme for Construction Contracts the decision of an adjudicator was only temporarily final and was not the last word, unless the parties so agreed. In contrast, a court judgment or arbitrator's award was final unless overturned on appeal. The wording of the Act did not expressly state that a reference to adjudication could not be made once arbitration or litigation had commenced. Further, the Act clearly contemplated that, unless accepted by the parties, adjudicator's decisions would be overtaken by subsequent court or arbitration decisions. It was "inherent" in the adjudication scheme that a defendant may well have to defend the same claim twice - first in adjudication and later in arbitration or litigation. It was also "inherent" in the adjudication process that there might be inconsistent findings of fact between adjudication, and later arbitration or litigation.

If you need any further information please contact Kate Tye ([email protected]) on (+44) (0)20 7367 3506.