Construction Adjudication Awards – “We can't avoid reasoning”

“We can't avoid reasoning; we can only avoid doing it well” – Peter Kreeft

Recently I was involved in an adjudication which, after reading the final award, left me rather perplexed as to how the adjudicators (a three party tribunal) managed to come to its final decision.

The award, at the outset, followed a typical format:

(1) The Recitals;

(2) Background to the Dispute;

(3) Summary of the issues in Dispute;

(4) Summation of the each of the Parties assertions and allegations re the issues in dispute;

And here is where it started to go horribly wrong...

What should have come next would have been for the Adjudication panel to thoroughly address:

(5) The Submissions and Evidence;

(6) Analysis/Findings/Reasons/Decisions – on an issue by issue basis;

The Adjudicators findings can only reasonably only be founded upon a proper consideration of the parties submissions and evidence – this is trite.

However, while the award contained certain findings and decisions on some of the issues it was not immediately clear how these findings and decisions had in fact been reached (the agreement between the parties required the adjudicators to produce a reasoned decision).

What was missing was a clear – step by step approach – to logically set out the analysis of the evidence and the reasons which underpinned the findings and decisions ultimately reached.

The topic of possibly challenging an Adjudicators award on this basis is best left for another article.

Who are you writing for?

There is a saying in adjudication that the award is written for the losing party – this is because it is the losing party that must be satisfied that the position which it advanced is patently incorrect and the other party’s assertions justify an award in its favour.

However there is much to be gained by the winning party in obtaining a well-reasoned award; particularly on large scale projects.

Despite the fact that adjudication is not a forum which creates precedent it would take a desperate party to refer different matters, to a standing adjudication board, throughout the project which are founded upon the same disputed principles – accordingly the winning party may set down principles of common understanding upon which future disputes may be resolved without the need for an Adjudicator.

What is required of the Adjudicator?

Quite simply the Adjudicator is required to decide the dispute and communicate his decision in writing.

However in the world of construction disputes we must go one step further and in all but the rarest of occasions require the Adjudicator to produce a decision that is reasoned.
As to the reasons themselves the court in the matter of Carillion vs. Royal Devonport Dockyard Ltd found they:

“should be sufficient to show that the adjudicator has dealt with the issues remitted to him and what his conclusions are on those issues.”

In the matter of Thermal Energy Construction Ltd v AE & E Lentjes UK Ltd the court on the question of a reasoned decision held:

“An adjudicator is obliged to give reasons so as to make it clear that he has decided all of the essential issues which he must decide as being issues properly put before him by the parties, and so that the parties can understand, in the context of the adjudication procedure, what it is that the adjudicator has decided and why.”

What is required then is not an answer to every issue raised.

Rather the Adjudicator is required to explain how the decision has been reached with an explanation for each significant step in the reasoning process.

How should the Adjudicator go about drafting a reasoned decision?

Or put differently what are the key components of decision-making?

The first step must be a clear formulation of the issues – the Adjudicator should not hesitate to confirm with the parties what those issues are.

I have seen Adjudicators formulate these issues absent any prior clarification from the parties – this practice has led to:

(1) Partial and incomplete identification of all the issues which require to be addressed;

(2) The incorrect identification of issues as being in dispute;

(3) The answering of the wrong question;

(4) The failure to address key issues in dispute.

Once the issues have been identified the Adjudicator must move towards resolving the matters in issue.

In resolving the matter the adjudicator must analyse and reason through each issue or sub-issue in order to reach singular conclusions.

A simple approach would be to, in respect of each issue which is in dispute:

(1) Ascertaining the relevant facts;

(2) Determining the applicable legal principle;

(3) Appling the legal principle to the facts;

(4) Coming to a finding on the issue;

(5) Including the reasons for the finding in a suitable form within the award itself;

Anything which falls short of this approach will surely leave the parties wanting more and justified in their expectation of additional substantiation.

Finally

Having been involved in a number of adjudications and having written a number of adjudication awards myself I find it surprising to see awards which are handed down where the issues are been incorrectly identified and then, to add insult to injury, not dealt systematically.

The ultimate effect of this haphazard approach to award writing is that conclusions are reached which have not been properly ventilated through a robust decision making process.
While we on the one hand must appreciate that adjudication is meant to be a rough and ready form of justice delivered along tight timelines – Adjudicators cannot let this framework stand in the way of delivering a properly reasoned and clearly substantiated award.

References:

Carillion Construction Ltd v. Devonport [2005] EWCA Civ 1358; [2006] BLR 15 (CA)
Thermal Energy Construction Ltd v AE & E Lentjes UK Ltd [2009] EWHC 408 (TCC)
Pickavance, James. A Practical Guide To Construction Adjudication
Coulson, Peter and Peter Coulson. Coulson On Construction Adjudication. Oxford: Oxford University Press, 2011
Turner, Ray. Arbitration Awards. Oxford, UK: Blackwell Pub, 2005