ADJUDICATION, NATURAL JUSTICE AND A FAILURE TO EXHAUST JURISDICTION

In SGL Carbon Fibres Ltd v RBG Ltd [2011] CSOH 62, 2011 Scot (D) 16/4 Lord Glennie held that an adjudicator who intends to proceed on the basis of his own knowledge and experience, in circumstances where he is required to give the parties a reasonable opportunity of commenting upon what he proposes to do, should raise the issue with the parties as soon as he is aware of it and must do so in time to allow adequate opportunity for comment. The adjudicator in the present case failed to do this with the consequence that his decision was held not to be enforceable. It was also held that the adjudicator had failed to exhaust his jurisdiction so that the decision was unenforceable on that ground too. Finally, Lord Glennie questioned the assumption of the parties that it is necessary in Scotland to reduce or set aside the decision of an adjudicator in order to entitle the parties to refer the dispute again to adjudication. In his opinion it should suffice that the decision in the first adjudication has been held not to be binding on the parties. Once a court has concluded that the decision is not enforceable and so not binding upon the parties, they should be free to refer the dispute again to adjudication without the need formally to reduce or set aside the decision in the first adjudication. However, he expressly refrained from deciding the case on this ground and so the issue may be regarded as an open one in Scots law.

The Facts

The pursuers sought to enforce the decision of an adjudicator. The defenders resisted enforcement on two grounds. First, they alleged that the decision had been reached in breach of the principles of natural justice in that the adjudicator had relied upon his own knowledge and experience to make factual determinations for which there was no evidence and he did so without giving to the parties a reasonable opportunity to comment upon his findings. Second, it was submitted that he had failed to exhaust his jurisdiction or had acted in excess of that jurisdiction.