ADJUDICATION, GROUNDS OF CHALLENGE AND THE POWER TO AWARD INTEREST

Carillion Construction Ltd v Devonport Royal Dockyard [2005] EWCA Civ 1358, 16 November 2005

In Carillion Construction Ltd v Devonport Royal Dockyard [2005] EWCA Civ 1358, 16 November 2005, the Court of Appeal refused to grant permission to appeal against the judgment of Mr Justice Jackson (on which see our June 2005 issue, pp 4–7) with the exception of the appeal against that part of his judgment which dealt with the power to award interest. In refusing to give permission to appeal the Court of Appeal stated that in the ‘overwhelming majority of cases’ the party who is unsuccessful in an adjudication will not be able successfully to challenge the validity of the decision of the adjudicator. Instead, that party should pay the amount that it has been ordered to pay and then institute legal or arbitral proceedings if it wishes to establish what it believes to be the correct position. However, the Court of Appeal did differ from Mr Justice Jackson in that it held that paragraph 20(c) of the Scheme for Construction Contracts (England and Wales) Regulations 1998 does not create ‘a freestanding power to award interest’. But it did not allow the appeal in relation to the interest point because the court found that the parties had agreed that the adjudicator should decide whether interest should be paid and in doing so had conferred on the adjudicator jurisdiction to award interest which he would not otherwise have had.