Reserving your position in adjudication

This article is from December’s edition of Aggregate, which featured a month-by-month review of 2021. This is February’s entry. To read the complete newsletter as a PDF, click here.

We promise that we won’t talk about adjudication every month – but there is a lot of it about!

Those who have been involved in an adjudication will be all too familiar with the responding party reserving its position as to the adjudicator’s jurisdiction throughout the adjudication process in the emails and submissions. This reservation on jurisdiction will arise from a responding party’s submission, issued early in the process, that the Adjudicator does not have jurisdiction for one or more separate reasons.

But what about once the party receives the decision and wants to defend enforcement of it? In February 2021 the Courts considered precisely this point, in Croda Europe Ltd v. Optimus Services Ltd.

The initial facts were quite simple. Croda received an adjudicator’s decision and its solicitors wrote to the Adjudicator pointing to a number of alleged clerical mistakes or ambiguities. The email also invited the Adjudicator to include a declaration as to the timing of the payment required to be made.

Following an invitation by the Adjudicator for comments by Optimus, Optimus responded to the points made by Croda, agreeing some and suggesting an alternative declaration for the payment date. The email also confirmed that Optimus would be making payment of the Adjudicator’s fees (which it then did).

However, when Optimus didn’t pay, Croda issued enforcement proceedings. Optimus ran two grounds to resist enforcement, both of which were unsuccessful, but the interesting point for these purposes was the court’s consideration of whether Optimus had elected to treat the decision as binding by way of its correspondence following receipt of the Adjudicator’s decision.

In short, the court decided it had done. It said that the wording of Optimus’ email, which included a reference to interest being payable as part of a justification for seeking an extended payment date, coupled with Optimus seeking to rely upon the ‘slip rule’ (the rule which allows an Adjudicator’s decision to be corrected due to a clerical mistake or ambiguity) without reserving its position on jurisdiction showed that Optimus had treated the decision as binding.

The law applied here was not new, but it is a harsh reminder to those who correspond with the Adjudicator following receipt of the decision, even when dealing with what may be considered to be admin matters. Although ‘only’ admin matters, the correspondence about them gives rise to a waiver of their right to resist enforcement, however strong their grounds during the adjudication may have been, because they have not reserved their position on jurisdiction. So Croda was a very simple reminder that you should always reserve your position as to jurisdiction, even after receipt of the decision, in case there is a chance you wish to resist enforcement. Not doing so could end up being very costly