Hitachi Zosen Inova AG Ltd v John Sisk + Son Ltd – the same disputes, but different?
In a recent decision by the Technology and Construction Court (TCC), Judge Stewart-Smith has clarified the position when determining whether two adjudications are “the same or substantially the same” when a party challenges jurisdiction under Para 9(2) of the Scheme for Construction Contracts. He stated that the decision reached in the first adjudication must be considered as well as the disputes referred to adjudication in each.
Hitachi employed John Sisk & Son (“Sisk”) to design, build and test a multi-fuel power plant at Ferrybridge in Yorkshire. Various disputes arose in connection with the contract, resulting in no less than eight adjudications.
The second of these adjudications concerned a number of variations claimed by John Sisk, including one relating to acceleration works named “Event 1176”. Sisk’s request for payment of £1 million for this Event was rejected by Hitachi, as it was their position that Sisk had been overpaid £2.7 million for the contract. The adjudicator concluded that Sisk had been instructed to accelerate works, but valued Event 1176 at “£nil”, on the basis that the substantiation provided by Sisk in support of the Event was insufficient.
In the eighth adjudication, Sisk sought payment for the works under Event 1176, and provided further substantiation in support of its claim. Hitachi challenged the jurisdiction of the adjudicator (who was the same as in the second adjudication) on the basis that the adjudicator had already made a decision on Event 1176 in the second adjudication. Under Paragraph 9(2) of the Scheme for Construction Contracts, an adjudicator must resign where the dispute is the same or substantially the same as one that has been referred to adjudication previously.
The adjudicator decided he had jurisdiction, on the basis that he had determined that Event 1176 was a variation in the second adjudication, but had not made a decision on its value due to the lack of evidence provided by Sisk. He proceeded to value Event 1176 at just over £800,000 in the eighth adjudication, and ordered Hitachi to pay Sisk. Hitachi challenged the enforcement of the decision in the High Court.
Judge Stewart-Smith decided that the adjudicator did have jurisdiction to determine the dispute in the eighth adjudication and rejected Hitachi’s challenge.
In his judgement, referring to the case of Quietfield Ltd v Vascroft Construction Ltd 2007 BLR 67, he clarified that, when deciding whether or not two disputes are the same or substantially the same, the focus should be on what was decided in the first adjudication, rather than purely what was referred in each. He said a comparison purely between the disputes referred to adjudication would result in a “misleading and irrelevant similarity” between the two disputes, and that since the adjudicator had expressly declined to decide the value of Event 1176 in the second adjudication, the dispute in the eighth adjudication was not the same.
In his judgement, Judge Stewart-Smith said:
“Adjudication is, by its very nature, an interim procedure for the protecting and promoting of cashflow in the construction industry rather than a system of litigation that is designed to ensure finality from the outset. In my judgment, that provides a cogent reason why the enquiry in the context of adjudications should focus intently upon what the first adjudicator decided.”
He also rejected Hitachi’s argument that Sisk was using serial adjudications as an instrument of oppression (despite the fact that there were eight), and instead noted that it had simply misjudged the evidence required for the second adjudication, gathered the necessary information and come back. This may provide some reassurance to parties that they can refer matters to adjudication again if they feel that the first adjudicator left aspects of their dispute undecided, even if this was due to their own lack of evidence; however, it remains the better position to provide full substantiation and evidence for claims at the outset.