This article provides a detailed review of the judgment handed down by the Court of Appeal in the case of Amec Capital Projects Ltd v Whitefriars City Estates Ltd [2004] EWCA Civ 1418. The case concerns a dispute arising from a construction contract and addresses the jurisdiction of an adjudicator and allegations of bias against the adjudicator. The Court of Appeal ultimately overturned the Technology and Construction Court’s decision that the second adjudicator’s decision was invalid due to breaches of natural justice (apparent bias).

Background to the Dispute

AMEC was engaged by Whitefriars for pre-construction works and procurement in connection with the building development near the old Whitefriars Fire Station in London. The contract was based on the JCT Standard Form with amendments and included a provision for adjudication. A dispute arose regarding unpaid invoices following the termination of the contract by Whitefriars.

AMEC initiated a first adjudication, and an the adjudicator was appointed by RIBA. On enforcement, His Honour Judge Humphrey LLoyd QC decided that para 2(1)(c) of the Scheme was not applicable, and that, in accordance with the contract, the adjudicator should have been “George Ashworth of Davis Langdon & Everest, or in the event of his unavailability a person nominated by him”.  Accordingly, the adjudicator had no jurisdiction and his decision was a nullity. 

AMEC initiated a second adjudication for the same claim. Interestingly, but for different reasons, AMEC arrived at the same place and applied to RIBA under the Scheme and the same adjudicator was appointed. Mr Geoffrey Ashworth was sadly deceased, so AMEC argued that the contractual mechanism failed, and the Scheme applied.

The adjudicator issued a second decision, not surprisingly in favour of AMEC. Whitefriars resisted enforcement, arguing lack of jurisdiction (failure to follow the contractual appointment mechanism) and breach of natural justice (bias). Judge Toulmin QC dismissed AMEC’s enforcement claim, finding that while the adjudicator had jurisdiction in the second adjudication, his decision was void due to breaches of natural justice. AMEC appealed this decision.

Jurisdiction Issues

The contract named “George Ashworth of Davis Langdon & Everest, or in the event of his unavailability a person nominated by him” as the adjudicator. It was common ground this was a misnomer for the deceased Geoffrey Ashworth. Whitefriars argued that upon Mr Ashworth’s death, making him “unavailable“, clause 39A.3.2 of the contract should have been invoked, requiring AMEC to apply to the partner managing Mr Ashworth’s practice for a replacement adjudicator. Therefore, applying to RIBA under the Scheme was incorrect, and the adjudicator lacked jurisdiction.

The Court of Appeal rejected Whitefriars’ argument. Lord Justice Dyson stated: “It is clear that clause 39A.2 is dealing with the appointment of the adjudicator. It provides a number of different methods by which the adjudicator may be appointed. Thus, on the face of it, if a person is not appointed as adjudicator pursuant to clause 39A.2, the default machinery of the Scheme must apply.” The court reasoned the substitute adjudicator provision only applies after an adjudicator has been appointed and then becomes unavailable. Since Mr Ashworth was unavailable before an appointment could be made, the contract provisions failed. As no Adjudication Agreement was executed with Mr Ashworth or his nominee, the default provisions of the Scheme were correctly invoked by AMEC.

Apparent Bias

The court reiterated the two limbs of natural justice: “First, the person affected has the right to prior notice and an effective opportunity to make representations before a decision is made.  Secondly, the person affected has the right to an unbiased tribunal” [14]. Further, the court applied the test of bias from Porter v Magill [2001] UKHL 67: “whether a fair-minded and informed observer, having considered all the circumstances which have a bearing on the suggestion that the decision-maker was biased, would conclude that there was a real possibility that he was biased.”

Whitefriars argued apparent bias based on a number of accounts: (i) the fact that the adjudicator had made a previous decision; (ii) a telephone conversation between AMEC’s solicitor and the adjudicator before the second adjudication; (iii) legal advice obtained by the adjudicator on his jurisdiction in the second adjudication and the timing of its disclosure after reaching a decision; and (iv) the possibility of a claim by Whitefriars against the adjudicator for costs incurred in the first adjudication.

On the first point, the court held that the mere fact of a previous decision is insufficient for apparent bias. The judge stated: “In my judgment, the mere fact that the tribunal has previously decided the issue is not of itself sufficient to justify a conclusion of apparent bias. Something more is required.” Judges and adjudicators are assumed to approach each case with an open mind.

In respect of the telephone conversation, the court reviewed the adjudicator’s note of the conversation with AMEC’s solicitor, mentioning that re-appointing the adjudicator would save time and costs due to his familiarity with the facts. The court found this to be an innocuous administrative conversation and did not see it as an invitation to pre-judge or as creating a real possibility of bias. While acknowledging the general preference for written communication, the court found no real possibility of bias arising from this context.

Importantly, the court disagreed with Judge Toulmin’s finding that failing to disclose the gist of the legal advice on jurisdiction before deciding on jurisdiction was a breach of natural justice. The court reasoned that an adjudicator’s decision on jurisdiction is of no legal effect until determined by the court. Therefore, the rules of natural justice do not necessarily apply in the same way to jurisdictional matters. However, the court advised that where time permits, it is good practice to allow representations on jurisdiction.

Finally, the court found that the threat of a claim against the adjudicator (for costs incurred due to the first adjudication) was unlikely to succeed due to paragraph 26 of the Scheme requiring bad faith for liability. Moreover, a fair-minded observer would likely see the adjudicator’s firm response as a rejection of “crude bullying” and would not conclude bias based on this threat. “If the threat of proceedings against a tribunal were, without more, to lead to a conclusion of apparent bias, it would be open to a party to undermine the integrity of the Scheme simply by making such a threat.” [46]

Conclusion

This judgment reinforces the high threshold for establishing apparent bias against an adjudicator. The fair-minded and informed observer test requires a real possibility of bias based on objective circumstances. While the court did not find bias in this instance, it highlights the importance of maintaining proper communication protocols with adjudicators, preferably in writing with copies to all parties.

Finally, the case provides an important clarification on the extent to which the rules of natural justice apply to an adjudicator’s consideration of their own jurisdiction. The court suggests a less stringent application compared to decisions on the merits of the dispute.