Severance of Adjudicators’ Decisions

United Kingdom

An adjudicator’s decision can be challenged on the basis that the adjudicator (1) did not have jurisdiction, or exceeded his jurisdiction; or (2) failed to comply with the rules of natural justice. This often means that if an adjudicator’s decision is tainted by one or more of these problems, the decision is unenforceable.

But what is the position where, like the curate’s egg, some parts of an adjudicator’s decision are tainted but others are not? Are the “good” parts of the decision enforceable, leaving the “bad” to fall away? There have been mixed statements from the courts over the years about severance in adjudication, but yesterday Mr Justice Akenhead gave the clearest guidance to date as to when severance is possible:

“(a) The first step must be to ascertain what dispute or disputes has or have been referred to adjudication. One needs to see whether in fact or in effect there is in substance only one dispute or two and what any such dispute comprises.

(b) It is open to a party to an adjudication agreement as here to seek to refer more than one dispute or difference to an adjudicator. If there is no objection to that by the other party or if the contract permits it, the adjudicator will have to resolve all referred disputes and differences. If there is objection, the adjudicator can only proceed with resolving more than one dispute or difference if the contract permits him to do so.

(c) If the decision properly addresses more than one dispute or difference, a successful jurisdictional challenge on that part of the decision which deals with one such dispute or difference will not undermine the validity and enforceability of that part of the decision which deals with the other(s).

(d) The same in logic must apply to the case where there is a non-compliance with the rules of natural justice which only affects the disposal of one dispute or difference.

(e) There is a proviso to (c) and (d) above which is that, if the decision as drafted is simply not severable in practice, for instance on the wording, or if the breach of the rules of natural justice is so severe or all pervading that the remainder of the decision is tainted, the decision will not be enforced.

(f) In all cases where there is a decision on one dispute or difference, and the adjudicator acts, materially, in excess of jurisdiction or in breach of the rules of natural justice, the decision will not be enforced by the Court”.

This decision is important because it confirms that the courts do not necessarily adopt an "all or nothing" approach to the enforcement of adjudicators' decisions. This will be of comfort to enforcing parties who need to salvage something from a tainted decision.

Reference: Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC)