Background and contentions

Dragados, the main contractor for the Aberdeen Harbour Expansion Projec, sub-contracted the dredging works to Van Ooord (VOL) on an NEC form of contract.

There were delays and Dragados purported to terminate the sub-contract. In the aftermath there were seven adjudications between the parties. One adjudication resulted in a decision that VOL was entitled to an EOT and prolongation costs for a compensation event that delayed access to openquay work. VOL sought to enforce that part of the decision that related to its delayed access claim. Dragados said that part of the decision was unenforceable, the adjudicator having reached his decision on a basis not canvassed by either party or
their experts, and which they had no chance to address.

The adjudicator had:

• Founded his analysis on a baseline programme dated 75 march 2079, which both experts had rejected as starting point, instead using programmes dated October 2078 and April 2079
  respectively
• Calculated the impact of delay from 37 July 2079, a date earlier than the critical date relied on by either expert.
  
  Dragados further complained that had they been denied the opportunity to address this analysis. Had they been given notice, they would have contended that the claim was out of time. Vol’s position was that the adjudicator had adopted an intermediate position which he was entitled to do without having to give the parties notice.
  
  The law
  An adjudicator should not decide a factual or legal point on a basis not put to it by the parties. The adjudicator may reach a decision on the material before it, on a basis for which neither party had contended provided the parties were aware of the relevant material and the issues had been fairly canvassedQ0].
  
  If the adjudicator proposed to use its own knowledge and experience to advance a proposition of fact or law not argued by the parties, it would usually be appropriate to raise the same with the parties before making a decisionQ7].
  
  An adjudicator would be afforded ‘considerable leeway and could adopt an intermediate position not advanced by either party, without needing to give notice and opportunity to commentQ2]. A breach of the rules of natural justice would need to be material before it would vitiate a decision.
  
  It would be material where the adjudicator failed to bring to the attention of the parties a point or issue which they ought to have been given the chance to comment on, or which was either decisive or of considerable importance to the outcome.
  
  [70] Roe Brickwork Ltd v Wates Construction Ltd; Costain v Strathclyde Builders Ltd 2004 SCLR 707
  [77] Miller Construction (UK) Ltd v BOP [2074] SCOH 80 _
  [72] Balfour Beatty Engineering Services (HY) Ltd v Shepherd Construction Lt
  
  Findings
  In adopting the March 2019 programme as his starting point and reaching 31 July 2019 as the critical date, the adjudicator had not only taken a date earlier than either party or its expert contended for, he had arrived at different critical date than either party had put forward. It was not an intermediate approach (such as was adopted in Miller).
  
  It might have been arguable that the adjudicator was entitled to take the earlier programme, thus to arrive at the critical date, but if so he should have given notice to the parties if his intention to do so and a chance to comment.
  
  It did not matter whether or not the arguments which Dragados said they would then have deployed were arguments that would have succeeded; the point was they were deprived on the opportunity to raise them.
  
  The beach was material and the court declined to enforce the award.

This article was originally written and published on the internet by Ken Salmon of Slater Heelis.

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