In the recent High Court judgement, Beumer Group UK Limited – and – Vinci Construction UK Limited 2016 EWHC 2283 (TCC), a well known and busy arbitrator, adjudicator and dispute board member has been found guilty of what? Communicating with the other party without knowledge of the first party? No! Patently using his own knowledge to the benefit of one of the parties? No! During the hearing acting in a manner which was partial to one or other of the parties? No!
He was found guilty of failing to notify a party that he was sitting as an adjudicator and adjudging matters that were arising from the same contract and indeed from the same phase of the contract.
It appears that various airports in the United Kingdom have agreed between them to use a standard form NEC contract in order to simplify the normal variety of airside works which are a continuum. What a surprise! Efficiency! The standard contract, as the Judge properly pointed out, used option “W2” for the dispute determination proceedings. There are two options available under the NEC contracts: options W1 and W2. The contract in question chose three named adjudicators as pre-approved adjudicators should any dispute arise. And it is important to note only three persons!
These three gentlemen, and they are gentlemen, were pre-approved for sitting as adjudicators on the disputes arising in the designated category 1 into which category this dispute fell and further in category 2 disputes. The category 1 disputes related to those arising out of the contract between the main contractor and subcontractor. The category 2 disputes related to those arising between a subcontractor and a sub-subcontractor. As are his colleagues Dr Chern was pre-approved to work to sit within both category of disputes.
Unlike the RICS, under the Chartered Institute of Arbitrators and the TECBAR systems of appointment there is no pre-appointment procedure. Under the NEC Airport system, a pre-approved adjudicator is asked by the potential claimant only whether or not he is free and it is clear from the judgement that Dr Chern’s two colleagues were not free.
Under this particular system there is no requirement placed upon any of the three adjudicators to tick any box declaring whether the parties one or both or any of them were known to him, a point much emphasised by the learned judge. There was no such machinery involved. The adjudicators were already approved and were NOT required to declare knowledge as it was part of the appointment system that the adjudicators would be sitting upon related contracts and were preapproved to do so. On the contrary it would be expected by the parties that the adjudicators would be known to them.
It is necessary to look at the charges of which Dr Chern was found guilty and therefore had his reputation impugned.
He was sitting on three adjudications. The adjudications related to the same contract and more importantly the same phase within the same contract. Adjudication A was between party B, the main contractor, and party C, a subcontractor. The second Adjudication was between party C, a subcontractor and party D a sub-subcontractor. Similar facts arose between the two adjudications.
However, the case pleaded by party B in the two adjudications was completely different. In other words, identical alleged facts but totally different pleaded cases. In one case party B pleaded that completion has not been achieved and in the other case it pleaded that completion had been achieved.
It could be said that party B and its advisors were abusing the adjudicatory system by relying upon the concept of confidentiality. Indeed, as to the fact that Dr Chern had been hearing several of the disputes between the parties arising from the same facts the learned judge also lauded him and wrote:
“I wish, however, to emphasise the following points. Dr Chern considered both parties’ submissions …[in the earlier adjudication] with evident care, and produced a detailed and thoroughly reasoned decision. He appears to have restricted himself to the actual submissions before him in that adjudication. Although the inability of Vinci to make the submissions I have identified above constitutes a breach of natural justice, that should not be taken as constituting a criticism of Dr Chern’s overall approach to the material he had before him, or the evident care with which he approached his task and made findings.” [Emphasis added]
Here is the charge on which Dr Chern was found guilty! The judgment in simple terms stated that although the process was confidential, that whenever an adjudicator was sitting to determine disputes arising out of the same contract but with different parties then not only should he inform the different parties that he was adjudicator in concurrent disputes but further and even more extraordinary that he should order the parties to disclose material in adjudication A to the party, who is not a party in adjudication A, in the second adjudication. Incredible!
It should be borne in mind that in the structure of the NEC contract Dr Chern was pre-approved. The parties knew that either he or one of his colleagues would be the appointed adjudicator in any and all disputes.
To find him guilty of omitting or failing to make a declaration which the parties themselves did not require was extraordinary.
The second charge relates to the failure by Dr Chern to carry out duties which were in addition to those duties of a judge or arbitrator. The judge in this case found that Dr Chern would have noticed the conflicting evidence. But having noticed the conflicting evidence in the separate adjudication he then should, and would, have ordered the party introducing the conflicting evidence to disclose that evidence in the other adjudication or even adjudications.
The judge did not compare the role of judge or arbitrator in identical circumstances for the simple reason he could not do so. As a sitting arbitrator, it would be impossible within the strict confines of the rules of confidentiality to bring the pleaded case of party A to the attention of another party in a completely separate arbitration even were that separate arbitration between party A and a party unrelated to the first arbitration. It is a fundamental rule of understanding the role of an arbitrator or a judge that all matters disclosed in the first arbitration are confidential to that particular arbitration. The fact that one or more of the arbitrators may have heard contradictory evidence relating to one or more of the same issues in previous arbitrations is completely and utterly irrelevant to the current arbitration. Whether the action is heard in court or in arbitration the pleadings and the facts alleged within them remain within those particular actions.
Otherwise, the situation would occur that a duty would be demanded of a judge or arbitrator, and note while the rules are similar the requirement for confidentiality is different, when that judge or arbitrator noticed a pleading arising out of the same contract but setting out contradictory facts to draw attention to the parties in the current proceedings that the judge or arbitrator had knowledge of contradictory evidence from a previous/ current and unrelated hearing. Unrelated to the extent that there was possibly a common party but where a key point was a contradictory pleading. Such an exercise would be unthinkable in an arbitration where confidentiality is fundamental. In the situation where a judge in court in remembers a salient point from a salient judgement is that judge really likely to bring that point to the attention of the parties before him in the current litigation? It is thought not!
While it is permitted for an arbitrator to bring to the attention of parties expert knowledge that he has if it is relevant to the case before him that is totally different from an arbitrator bring to the attention of the parties contradictory evidence. That would be a fundamental breach of confidentiality. Is a judge in the same circumstances likely to act in a different manner? Absolutely not.
If this judgement comes to its logical conclusion then entirely different and new duties will be imposed not only upon adjudicators but also upon judges and arbitrators. It will destroy London as a centre for arbitration.
It will destroy the court system especially that which focuses within London as a place where foreign parties bring their disputes for settlement.
Civil/commercial mediator, arbitrator, adjudicator, barrister and chartered surveyor with extensive legal and directorial experience. He has wide-ranging international experience and works in a number of different worldwide jurisdictions.