Natural justice and jurisdiction are the two fundamental doctrines of adjudication, and should the adjudicator offend either, her decision may be unenforceable. A breach of natural justice is a defence to the summary enforcement of the adjudicator’s decision and should the adjudicator breach the rules in an act of bad faith then it may be argued that the adjudicator is liable to pay the party costs. This chapter explores the development of natural justice in the adjudication arena.

The rules of natural justice have their origins in the judiciary’s control of decisions made by public authorities in early Victorian times. As Lord Hewitt CJ succinctly put it: “It is critical that justice should not only be done, but should manifestly and undoubtedly be seen to be done” (R v Sussex Justices ex parte McCarthy [1924]).

Today, natural justice is enshrined into legislation. In the Human Rights Act 1998 Article 6 states that “… everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.” Even though it is thought that Article 6 does not apply to adjudication – due to its temporarily binding nature (Elanay Contracts Ltd v The Vestry [2000]) – it is now trite law that natural justice applies to adjudication.

Natural Justice in Adjudication

As in most forms of dispute resolution that involve an independent third-party decision maker, there is a requirement for the adjudicator to comply with the rules of natural justice. Amec v Whitefriars [2004] – and the subsequent Court of Appeal decision – established the fact that the adjudicator is a servant to natural justice, albeit with a slightly lower bar.

In the Court of Appeal, Dyson LJ defined natural justice as follows: “The common law rules of natural justice … are twofold. 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.” Statutory adjudication adheres to this definition of natural justice and the articles ‘B is for Bias’ and ‘P is for Procedural Unfairness’ discuss the rules applicable to each.

The right to challenge the adjudicator’s decision is predominantly limited to procedural and not substantive matters. Put simply, for a breach of natural justice to occur, the adjudicator must fail to give a party a fair hearing. Natural Justice concerns whether the process is conducted fairly and not whether the adjudicator gets the decision wrong. It naturally follows that a wrong decision could be due to the way the procedure is conducted, hence the reason the rules are of fundamental importance.

Test for Breach

In adjudication, the court has determined that adjudicators have a qualified duty to comply with the requirements of natural justice. The duty is qualified due to the tight timescale imposed by Parliament and the provisional nature of adjudicators’ decisions. To give some context on when the Courts may intervene in adjudication enforcement proceedings, in Cantillon v Urvasco [2008] Akenhead J said that a breach of the rules of natural justice must be more than peripheral. That has come to be known as a ‘material breach’.

A material breach of natural justice will always be a question of fact and degree (Discain v Opecprime [2000]). Judge Bowsher QC stated: “Repugnant as it may be to one’s approach to judicial decision-making, I think that the system created by the [Act] can only be made to work in practice if some breaches of the rules of natural justice which have no demonstrable consequence are disregarded.”

In Van Oord v Dragados [2022], the adjudicator had failed to canvass the parties on his own view and Dragados stated that given the opportunity it would have raised a different defence. The judge found that Dragados was not required to prove it would have succeeded, only that it had a tenable argument. The judge said, “The test is not ‘Has an unjust result been reached?’ but ‘Was there an opportunity afforded for injustice to be done?’ If there was such an opportunity, the decision cannot stand.” Time will tell if this Scottish judgment is a larger burden facing the adjudicator and whether it will be persuasive in other jurisdictions.

With bias, the court has a distinctive objective test. This test states that a fair-minded and informed observer would need to consider there a real possibility that the tribunal was not impartial. That is a rather high bar and there are few occasions whereby the adjudicator has fallen foul.

Conclusion

It is a rare event that the adjudicator has crossed the line and fallen foul to either bias or procedural unfairness. This is testament to the adjudicators and the standards upheld. However, the author opines that there is an infinitude of opportunity to cross the line and breach the rules of natural justice, even under the truncated adjudication procedure, and the adjudicator must ensure to maintain the highest standards.