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Human rights, natural justice and adjudication: The story so far

By Simon Tolson
Lecture to the Royal Institution of Chartered Surveyors
17 May 2001

1. First Some Background

1.1. Until the Human Rights Act 1998 the concept of popular rights and popular sovereignty was overshadowed by the concept of parliamentary sovereignty, according to which, since the parliament is sovereign (in place of the monarch) the subject could not possess fundamental rights such as guaranteed to the citizen by many foreign and commonwealth constitutions, as well as by international and European law. According to this traditional view of the doctrine of parliamentary sovereignty, the liberties of the subject were merely implications drawn from two principles, namely:

1. that individuals may say or do what they please, provided that they do not transgress the substantive law, or infringe the legal rights of others;
2. public authorities, including the crown, may do nothing but what they are authorised to do by some rule of common law or statute, and in particular may not interfere with the liberties of individuals without statutory authority. Where public authorities are not authorised to interfere with the individual, the individual had liberties. In this sense under English law until the Human Rights Act 1998 liberties were residual rather than fundamental and positive in their nature. Apart from the general provisions ensuring the peaceful enjoyment of property, and the freedom of the individual from legal detention, duress, punishment of taxation, contained in the four great charters or statutes which regulate the relations between the Crown and people ⁽¹⁾, and apart from legislation conferring particular rights, the fundamental rights and liberties of the individual were not expressly defined in any United Kingdom law or code.

1.2. Historically there were many legislative attempts to codify fundamental human rights and freedoms in the United Kingdom but it was only last year when the Human Rights Act 1998 ("the Act") that we implemented into our law the European Convention for the Protection of Human Rights and Fundamental Freedoms ⁽²⁾ (hereinafter "the Convention").

1.3. Parliament recognised that the United Kingdom could no longer remain immune from the basic constitutional principle adopted by almost all developing countries in the world, and which we exported to many countries of the Commonwealth on their independence, and which are contained in the Convention. It is rather curious that it took 50 years to reach our statute books bearing in mind that English lawyers were largely responsible for casting the Convention and the fact that it was also modelled on the principle tenets of the Universal Declaration of Human Rights proclaimed by the General Assembly of the United Nations on 10 December 1948. A milestone with which once again English lawyers had played a major hand.

1.4. And so it is that the 1998 Act enshrines Human Rights. It came into force in England and Wales on 2 October 2000 and was immediately engulfed in medias controversy.

1.5. Depending on your reading matter one could not escape the polemic claims. At one level were remarks such as Lord McCluskey's in the House of Lords during the passage of the bill. Whilst his opposition was unsuccessful he proclaimed, "It would create a field day for crackpots, a pain in the neck for Judges and legislators and a goldmine for lawyers".

1.6. I cannot for one deny that it has created an opportunity for creative lawyering, notwithstanding our Lord Chancellor's and Lord Chief Justice's caution to the legal profession not to abuse it. Concerned that having introduced fundamental civil legal reforms in April 1999 that was about to be undone and the courts clogged by a float of human rights claims.

1.7. The Daily Mail called the Act a "complainer's charter", others referred to it as Victor Meldrew's delight. Jack Straw said: "It was the most major piece of legislation since Magna Carta". Perhaps a little more pompously Lord Justice Laws said in a recent Court Marshal appeal case: "I have a wholly unorthodox fear, which I am sure I am not allowed to voice or even entertain, that Convention rights bear some similarity to iatrogenic disease."

1.8. Most of you reading this paper will of course be from the Construction professions and by and large Chartered Surveyors. It might therefore seem a little strange that a Convention drafted following the Second World War with the aim of protecting those basic human rights, which for the most part Joe Soap has taken for granted, could impinge upon our everyday lives and even, shock horror, a dispute between a subcontractor and main contractor concerning a disputed interim payment or an issue over a non-compliant work claim.

1.9. Surprisingly for an Act that has only been in force for the better part of eight months there has already been quite a number of cases to cogitate upon. I hope to give you at least a few things to think about after today.

1.10. But of course there were means of bringing human rights cases before the Act. Potential victims were entitled to bring a claim before the European Court of Human Rights in Strasbourg, with rare exceptions, English law and practice withstood the scrutiny of the European Court. One such case that always sticks in my mind was a claim the Convention meant that a local authority was obliged to collect a victim's wheelie bin!

1.11. One thing is for sure. The time and cost involved in pursuing cases to the European Court in Strasbourg has been replaced by a far more preferable process. Whilst previously the European Court could give decisions that bound the United Kingdom, it is plainly desirable that our own Judges now have the opportunity to consider and apply Convention rights. I suspect if, as will usually be the case, our Judges reject the complaint, it will buttress the defence of the United Kingdom in Strasbourg if the complainant pursues the grievance. In those exceptional cases where a breach of Convention is found, it will of course have been much more satisfactory that the matter should be addressed without delay in our costs and without the need for our dirty laundry to be washed abroad.

1.12. The Convention is therefore pivotal to legal practise in the United Kingdom as our courts must apply the Convention when making decisions.

1.13. The Act's three main provisions:-

1. so far as it is possible, to do so, the courts will now be obliged to interpret legislation consistently with the Convention;
2. where such a consistent interpretation is not possible, judges must apply the existing statute but can make a declaration of incompatibility, which will assist parliament to decide whether to amend the law;
3. except where legislation compels otherwise, all public authorities must act compatibly with Convention rights.

1.14. The Convention rights which have been incorporated into our laws by section 1 and Schedule 1 to the Act are set out below.

It is article 6 with which this paper is predominantly concerned. It is however worth mentioning that article 13, being the right to an effective remedy, was not incorporated because the Government concluded the Act itself provides an effective remedy and so article 13 is otiose.

2. Well What Does it all Mean?

2.1. From now on legislation has to be interpreted subject to Convention rights, so far as is possible to do so.

2.2. Public authorities have to respect Convention rights and it is unlawful for a public authority to act in a way that is incompatible with a convention right.

2.3. Courts and tribunals have to give remedies for human rights violations.

3. Interpretation of Convention Rights

3.1. Under section 2 courts or tribunals must take account of judgments and decisions made by the Court, the Commission of Human Rights, or the Council of Ministers. However, courts are not required to follow them. The doctrine of precedent is not significant in Convention case law. This might surprise some of your. In my opinion it should help English courts to develop their own approach within the boundaries they are to operate in.

4. Interpretation of the Legislation

4.1. Under section 3 so far as is possible to do so all legislation (both primary ⁽³⁾ and secondary ⁽⁴⁾ must be read and given effect in a way which is compatible with Convention rights whether it was made in the past or the present. However if the legislation cannot be read compatibly with Convention Rights it remains valid and continues to operate and continues to be enforceable. So there are exceptions where our laws will be incompatible with the Convention where others factors prevent Convention rights impugning our otherwise domestic laws.

1. Namely Magna Carta (1297); the Petition of Right (1627); the Bill of Rights; and the Act of Settlement

2. Rome, 4 November 1950 (Cmd 8969)

5. Declarations of Incompatibility

5.1. Where legislation cannot be read compatibly with Convention rights a higher court may make a declaration of incompatibility under section 4(2) ⁽⁵⁾. For this purpose "higher court" means the High Court, Court of Appeal or the House of Lords. Where a declaration of incompatibility is made, the crown is entitled to notice and has the right to intervene in the proceedings under section 5. If a declaration of incompatibility is made it does not affect the validity, continuing operation or enforcement of the provision in respect of which it is given; and is not binding on the parties to the proceedings in which it is made under section 4(6).

5.2. Procedurally the fact that the Crown is entitled to notice in accordance with the rules of court which the court is considering making a declaration of incompatibility is an important one. This is because in any such case, a minister of the crown or a person nominated by him is entitled, on giving notice, at any time during the proceedings, in accordance with the rules of court, to be joined as a party to those proceedings. This is exactly what happened in a House of Lords decision handed down last Wednesday 9 May 2001 in R v Secretary of State for the Environment, Transport and the Regions ex parte Holding & Barnes plc which much to the relief of the planning authorities avoided the need in the result for wholesale redrafting of our planning laws which an earlier court had ruled incompatible with the Convention.

6. Public Authorities

6.1. Public Authority is one of the key concepts of the Act enshrined by s6. It is unlawful for a public authority to act in a way which is incompatible with a Convention right unless it is required to do so to give effect to primary legislation. In that sense the authority could not have acted differently.

6.2. A public authority includes all courts and tribunals and any person exercising functions of a public nature and "any person" covers any natural or legal persons, corporate or unincorporate. It does not include either house of parliament or a person exercising functions in connection with proceedings in parliament.

6.3. The legislation allows for three kinds of body. The first are what have been termed obvious public authorities. These according to our Lord Chancellor including the police, courts, Government departments and prisons. As we shall see, the fact that the courts have been made public authorities is especially significant. While the Act only allows individuals to directly enforce Convention tights against public authority, courts as public authorities will self-evidently be required to act compatibly with Convention rights.

6.4. There are then quasi public bodies which exercise functions that are partly public and partly private. Examples that ministers have given include Railtrack, for its public rail safety functions but not as a private property developer, the BBC and ITA (but not independent TV companies), the Jockey Club (only in respect of public functions) and anybody which spends taxpayers' money or fulfils a statutory function or has government appointees on its governing body. Such quasi public authorities will only be liable for acts which relate to performance of their public and not their public functions. Deciding what is, or is not, public authority has already become a key issue under the Act particularly in relation to adjudication.

6.5. Thirdly there are organisations with no public functions for which the Act will have no direct application.

7. How is a Challenge Against a Public Authority Mounted?

7.1. Well let's take an example, breach of article 6 in relation to the right of a fair trial can act as a ground for judicial review; breach of statutory duty and as a defence in proceedings brought by a public authority on account of its illegal act but it is only victims of an unlawful Act (or a potential victim of a proposed unlawful Act by a public authority) that can bring proceedings or rely upon Convention rights ⁽⁶⁾.

3. ie any public general Act, local and personal Act, private Act, measure of the General Synod of the Church of England

4. ie Order in Council including things like Statutory Instruments, Bylaws, Regulations made under primary legislation

5. As was achieved in Wilson v First County Trust (2001) CA 2.5.01 in relation to s.127(3) of the Consumer Credit Act 1974; and failed ultimately in R v Secretary of State for the Environment, Transport and the Regions ex parte Holding & Barnes Limited (2001) HL 9.5.01 concerning inter alia sections 77 - 79 of the Town and Country Planning Act 1990.

7.2. The concept of victim is taken directly from the Convention itself under Article 34. This has been interpreted as meaning a person actually and directly affected or at risk of being directly affected by the alleged breach. For this reason interest groups can only bring proceedings if their members are themselves victims.

8. Are There any Time Limits?

8.1. There is a limitation period for bringing proceedings arising under the Act and that is one year from the date on which the act complained of took place. However for those who are interested procedurally in judicial review ⁽⁷⁾ the period for making a claim is three months from the act complained of.

9. Remedies and Remedial Action

9.1. The court can grant any relief or remedy or make orders as it considers just and appropriate provided the remedy is within its powers. Damages are exceptionally allowed.

9.2. If a provision of legislation has been declared to be incompatible with a convention right the relevant legislation may by order be amended to remove the incompatibility. If it relates to an incompatibility of subordinate legislation the Crown can if it considers it necessary also amend the primary legislation under which the subordinate legislation was made, in order to enable the incompatibility to be removed.

9.3. For those of you that are interested, no remedial order can be made unless the draft of the order has been approved by resolution of each house of parliament made after the end of the period of 60 days beginning with the day on which the draft was made or it is declared in the order that it appears to the person making it that, because of the urgency of the matter, it is necessary to make the order without a draft being so approved.

9.4. Much of what I have said above has been necessary in order to understand the judicial debate with reference to challenges to adjudicators' decisions, predominantly decisions made pursuant to adjudications under the Scheme for Construction Contracts which have been statutorily incorporated into the relevant construction contracts by way of a statutorily implied term ⁽⁸⁾.

6. Section 7 of the Act

7. Under CPR Part 54

10. It All Started with Macob

10.1. It is generally regarded by most in the industry that the adjudication provisions of the HGCR Act are good for the industry because they reduce the number of disputes in the industry, and those that are fought out are resolved generally more quickly and cheaply and often without the need to proceed to formal arbitration or litigation.

10.2. There were commentators in the legal and construction journals who were suggesting as long ago as the beginning of 1998 that the Human Rights Act 1998 would pose a threat to adjudication. In particular the right under article 6 to a fair trial. It provides that:

In the determination of his civil rights obligations … everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly …

10.3. The question is whether adjudication, a procedure which produced a result which has only temporary finality and which does not prevent a trial, arbitration or a negotiated settlement, could infringe the right to a fair trial. The first attacks made on the legality of adjudication were mounted on the basis of a breach of the principles of natural justice and that of itself sets a few hares running. For it has long been accepted by lawyers that in considering whether there has been compliance with the rules, of which more in a moment, attention should also be paid to the provisions of the European Convention on Human Rights and the cases decided thereunder and up until October last year whilst the Convention did not form part of English law, the courts had strived to interpret English law in accordance with it where possible. Its relevant provisions were said by legal academics to amount to a statement of the principles of fair dealing.

10.4. As we shall see there are in fact no hard and fast rules of natural justice but most of you know the three essential touchstones:

• Not to be a judge in one's own cause.
• The right to a fair hearing.
• The right to the reasons for the decisions made.

10.5. Over the last 50 years or so the High Court has exercised very considerable control both over the proceedings of inferior courts and over the proceedings of arbitrators. With the coming of the HGCR Act we all waited with baited breath to see how the High Court might exercise its powers over adjudicators and those seeking to enforce their decisions because if arbitration was anything to go by, the control exercised by the courts had been a significant influence.

10.6. Two basic trends had developed the tendency for the court to intervene by way of judicial review and matters of natural justice were argued before them. Such challenges by judicial review are not an intervention upon the rightness or otherwise of the decision but upon the ground, practice or procedure which has contravened the principles of natural justice. The courts tended to be more often involved in dealing with complaints involving natural justice about the way some agency of the government had exercised its executive powers than in relation to private bodies and if any generalisation is going to be made it can be said that the courts have found that it is a requirement of justice that a person should not be a judge in his own cause, that everyone is entitled to a fair hearing and, depending on the circumstances, the parties are entitled to reasons for the decision.

10.7. It has been recognised from the inception of the process of adjudication under the HGCR Act that the principles of natural justice may need to be more finely honed due to the brevity of the process that might be required of a court or an arbitrator. Nevertheless as Lord Denning said in the case of Kanda v Government of Malaya ⁽⁹⁾ "The rules of natural justice can be put in two words impartiality and fairness". Those two words enshrine natural justice.

8. Under section 114(4) of the HGCR Act

10.8. To add some legal weight to the contention that there are no hard and fast conditions of the requirements of natural justice we need look only at two cases. In Russell v Duke of Norfolk ⁽¹⁰⁾ the Court of Appeal said:

There are, in my view, no words which are of universal application to every kind of enquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the enquiry, the rules under which the tribunal is acting, the subject matter that is being dealt with and so forth; accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case.

10.9. Then in the case of Wiseman v Borneman ⁽¹¹⁾ the House of Lords said:

Natural justice requires that the procedure before any court which is acting judicially shall be fair in all the circumstances, and I would be sorry to see this fundamental principle degenerate into hard and fast rules.

10.10. I said it started with Macob ⁽¹²⁾ and to Macob we will now go. The facts of the case need only be briefly addressed. Morrison Construction were the main contractor at a shopping centre in Carmarthen. Macob were its groundwork subcontractor. A dispute arose about the valuation of interim application number 6. Macob called for an adjudicator to decide the difference of opinion, the Chartered Institute of Arbitrators appointed an adjudicator and within 28 days he made his decision. Because the subcontract did not comply with section 108 of the HGCR Act the Scheme for Construction Contracts applied. The adjudicator decided that Morrison's in house payment provisions did not provide an adequate mechanism for interim payment, so Scheme provisions for payment applied. Then he decided that the Notice of Withholding did not comply with the Scheme. Then he decided that Morrison owed monies which were to be paid forthwith together with interest to Macob. Morrison did not comply and so began enforcement proceedings but Morrison's defence to enforcement was that that the Adjudicator's decision was invalid because he had made a technical error by not hearing argument on whether Morrison's payment provisions in their subcontracts were in accordance with the HGCR Act and that the failure to hear the argument was in breach of natural justice.

10.11. Mr Justice Dyson, the senior Judge in the Technology and Construction Court at the time was asked not to decide whether the adjudicator had gone wrong with his procedure, but simply to refuse to oblige Morrison to pay out while the dispute about the decision was sent to trial or arbitration. The argument in essence was that no-one yet knew whether the decision was valid and therefore enforceable.

Judge Dyson said:

It will be seen at once that if this argument is correct, it substantially undermines the effectiveness of adjudication. The intention of parliament in enacting the Act was plain. It was to introduce a speedy mechanism for settling disputes in construction contracts on a provisional interim basis, and requiring decisions of adjudicators to be enforced pending final determination of disputes by arbitration, litigation or agreement. However as there was an arbitration clause in Morrison's contract they argued that the question of whether a proper decision had been made should go to arbitration

10.12. Judge Dyson held that this was precisely "the mischief at which the Act was aimed." All a disappointed party would do is tell a court that an argument about the validity of a decision had occurred and then it had to go to arbitration or trial. That would drive a coach and horses through parliament's intention.

10.13. Judge Dyson held that if the decision of an adjudicator on the issue referred to him is wrong, whether because he erred on the facts or the law, or because in reaching his decision he made a procedural error, it is still a decision on the issue. It is binding.

9. (1962) AC 332

10. (1949) 1 All ER 190

11. (1971) AC 267

12. Macob Civil Engineering v Morrison Construction Limited

10.14. Mr Justice Dyson also formed the strong provisional view that a challenge to the adjudicator's decision on the basis of an alleged breach of natural justice was "hopeless". Stephen Furst QC, Counsel for Morrison wrote in Building magazine shortly after the decision ⁽¹³⁾ that one of the principles of natural justice is that both parties should have the opportunity to make representations. In arbitration or other quasi judicial proceedings, a breach of natural justice and, in particular, a breach of this principle, can lead to an award being set aside. However, he commented that the extent to which the requirements of natural justice extend to adjudications as a result of the decision in Macob was not at all clear given the very tight acknowledged timetable for the adjudication and the fact that the Act and the Scheme give the adjudicator the power to conduct an entirely inquisitorial procedure which included, in this case, inviting representation from the parties.

11. The Canvas Became Muddied

11.1. As a result of a series of reported decisions on enforcements of adjudicators' decisions a mixed message was being imparted, largely obiter by the Judges of the Technology and Construction Court. The next significant decision to look at is Discain Project Services Limited v Opecprime Development Limited ⁽¹⁴⁾ in which His Honour Judge Bowsher QC considered the application of the rules of natural justice to adjudication and on the facts declined summarily to enforce the adjudicator's decision. He found an adjudicator had to conduct proceedings in accordance with the rules of natural justice, or as fairly as the limitations imposed by parliament. The timing of the decision was perhaps slightly surprising in the light of the bullish judgments of Mr Justice Dyson in Macob and in Bouygues UK Limited v Dahl-Jensen UK Limited (2000) ⁽¹⁵⁾. In the latter case when a party sought to resist enforcement on the grounds that the adjudicator had plainly got his arithmetic wrong in calculating his decision Judge Dyson was not persuaded that it was the role of the court in enforcement proceedings to investigate the rights and wrongs of the decision even where, as here, the adjudicator had plainly performed a miscalculation. His decision which was essentially on all fours with his earlier judgment in Macob when he concluded that parliament must have known what it was doing in legislating for adjudication and so the duty of the court was to give effect to the intention of parliament. The publication of Judge Dyson's decision prompted rumours when a case came before the Court of Appeal that Judge Dyson would be taken to task on his robust approach because he had gone too far in keeping judicial intervention in the adjudication process to a minimum, even where the adjudicator had not conducted himself properly or reached an obviously correct decisions.

11.2. There was therefore some surprise when the Court of Appeal unanimously upheld not only Dyson's decision but his bold approach. However the decision of Judge Bowsher in the Discain case marked a new watershed and served to give the cynics of the adjudication process some ammunition.

11.3. Discain had been engaged by Opecprime for the design, manufacture and erection of structural steel balconies from a job at Harrow. A dispute over payment arose and Discain applied to the RICS to appoint an adjudicator and Roy Sutcliffe was appointed.

11.4. It was an adjudication under the Scheme. At the end of the adjudication Mr Sutcliffe ordered that Opecprime pay Discain a further £55,000. Opecprime refused to comply with the decision. Discain then commenced proceedings to enforce by way of summary judgment in the Technology and Construction Court. Opecprime defended the enforcement on the grounds of jurisdiction and natural justice. The jurisdiction points need not be gone into here: it is the matters that Opecprime described as breach of natural justice - but which Judge Bowsher characterised as amounting to a danger of bias that we now concentrate on.

11.5. Opecprime's reasons for grievance were that Discain's representative had on three occasions during the adjudication telephoned Mr Sutcliffe and had conversations with him. During these conversations they had discussed material issues in the adjudication and also three faxes had been sent to Mr Sutcliffe each of which were sent to Opecprime - summarising those conversations and forwarding certain authorities to the adjudicator. Two of the faxes were sent immediately but the third was three days after the conversation took place.

11.6. The particular point which Discain's representative had discussed with Mr Sutcliffe was of considerable importance in the adjudication because Discain was challenging the validity of a section 111 withholding notice on the grounds that it had not been sent on Opecprime's headed notepaper but on that of another company in the group. Mr Sutcliffe ultimately found, in Discain's favour, that the notice was invalid as alleged.

11.7. When the case came before Judge Bowsher he made it clear that whilst he disagreed with Mr Sutcliffe's conclusion about the validity of the withholding notice he recognised that his mere disagreement with it was no reason not to enforce it - so long as he was content that it had been reached in a satisfactory manner.

11.8. In examining closely the means by which Mr Sutcliffe had reached his decision, Judge Bowsher acknowledged Judge Dyson's view in Macob that a breach of the rules of natural justice is in itself insufficient grounds to resist the enforcement but he went on to identify two types of breach of natural justice. On the one hand, there are mere procedural errors, which have no demonstrable effect on the outcome of the adjudication, such as the particular breach considered in Macob. On the other hand, there are more significant breaches of the rules of natural justice, as in this case, that obviously impinge on the decision.

11.9. In Judge Bowsher's opinion, the very nature of adjudication, in which there is no appeal from the adjudicator's decision on matters of fact or law, makes the strict regard for the rules of natural justice more - not less - important. Had the rules of natural justice been complied with in this case, he opined that Mr Sutcliffe might have come to a rather different decision.

11.10. Although the Judge made it clear that he was not criticising Mr Sutcliffe's conduct, he considered that what had happened was distasteful and in a special addendum to his judgment he said he could not bring himself to enforce the decision arrived at. The decision was not appealed, as many thought it might be in view of the careful measures which Judge Bowsher went to in producing an addendum to his extempore judgment. The case did however go on to full trial when Judge Bowsher had the chance then to review the decision as well as receiving the benefit of the adjudicator's personal evidence. This did not result in him changing his mind from that he reached in August last year. He decided once again that the facts would lead a fair minded and informed observer, on an objective test, to conclude that there was a real possibility or a real danger of bias. It is relevant also that Judge Bowsher's decision in the addendum to his judgment of 9 August 2000 stated that the same principles would apply when the Human Rights Act 1998 came into force! So by now we are all on tenterhooks.

11.11. This brings us to the next seminal case where the concept of natural justice became interwoven into something of a tangled web. The case is Woods Hardwick Limited v Chiltern Air Conditioning Limited (2000). Woods Hardwick was an architect and engineer. Its client, Chiltern, was a developer and main contractor. They ran into a dispute with each other on a job at Bedford over the fees claimed by Woods Hardwick and certain additional work. It went to adjudication because the agreement for architectural services was evidence merely by an exchange of letters, without an adjudication clause, thus the Scheme for Construction Contracts applied.

11.12. The job in Bedford had gone pear shaped. Chiltern blamed the architect, the architect blamed Chiltern. A Mr Yiannis Pareas was appointed adjudicator. The adjudicator had a strained relationship with Chiltern's representative. According to the adjudicator this representative was confrontational, abusive, inexperienced and made long speeches that were irrelevant. The adjudicator duly reached his decision and order Chiltern to pay the architect's fees. The case went to enforcement during which Chiltern attacked the adjudicator's decision on the basis that he had prevented it from presenting its case, took evidence from the architect and did not report it to Chiltern, took evidence from two subcontractors and did not report it to either, took legal advice and did not report it and helped the architect to enforce the award by making a statement which showed that he was partisan and partial.

11.13. The adjudicator as it so happens made a rather major mistake in that he failed to recognise an abatement argument that was put to him and the fact that he was not constrained by the need for service of a withholding notice under section 111 of the HGCR Act. Nevertheless such a wrong decision would be binding in any event as Macob and Bouygues tell us. Chiltern's principal line of attack was to claim that the adjudicator's procedure was out of order. Bias or gross unfairness was its tack in trying to persuade His Honour Judge Thornton QC in the Technology and Construction Court to refuse to enforce the decision. Judge Thornton refused to enforce the decision because he concluded that the adjudicator had acted in a way which appeared to the court not to be impartial whatever the attitudes of the parties to the adjudication proceedings. In particular the adjudicator breached the provisions of the Scheme in three respects. He failed to make available to one of the parties, information obtained from the other and third parties. Second he obtained legal advice without notifying the parties of his intention. Finally he submitted a witness statement to the enforcement proceedings which left the impression that he was not impartial. Judge Thornton said:

In reaching these findings, I am conscious of the nature of adjudication proceedings. They are inevitably rushed in their outcome and must be carried out by an adjudicator taking summary and inquisitorial steps which he has himself devised. No party is entitled to expect an oral hearing, let alone a third oral hearing as Chiltern were submitting was appropriate. However, the adjudicator must not make up his mind to shut up further arguments from a party merely because he believes that any comments he receives on newly acquired and material information from other sources, particularly from the other party, will not affect his view as to that party's position. He has a statutory duty to make available to both parties any information he has received which he is to take into account in reaching his decision. It must be remembered that the defendant, as in this case, is an unwilling party to the adjudication. This makes it important that the basic statutory requirements of fairness towards all parties are complied with.

I am also conscious that the adjudicator attempted to act in an impartial manner and showed no conscious bias or hostility to Chiltern. However, the statutory requirement to act impartially requires the adjudicator to act in a way that does not lead to a perception of partiality by one party which might objectively be held by that party. In this case, the adjudicator led the parties to believe that there would be no need for a hearing. Such a view would only be tenable if the adjudicator took other steps, by way of written communications for example, to inform both parties of any relevant additional information he subsequently obtained to enable them to comment upon it. Having left the parties with the impression that he did, he acted in a manner which could readily be perceived to be partial in approaching one side without informing the other, and seeking much additional information from third parties and in them taking adverse steps against the party left in ignorance of these steps. These difficulties were then compounded by the adjudicator voluntarily providing a witness statement which seeks to put forward Woods Hardwick's case in favour of enforcement and which elaborates on the reasons for making adverse findings against Chiltern.

11.14. It is interesting that in the judgment His Honour Judge Thornton commented in relation to natural justice that "I need not consider these difficult matters in this judgment …" His reasoning is of course understandable given the facts of the case and the rather extreme transgressions which he committed.

11.15. It is clear from this decision that adjudicators must first and foremost abide by the rules governing the conduct of the adjudication process. The question of whether natural justice applies to adjudication was essentially left unanswered.

12. Judges' Early Proclamations had a Mixed Message

12.1. It will be seen from the decisions in Macob and Discain and Woods Hardwick that the judgments conflict significantly with each other. With Mr Justice Dyson making it clear in his judgments that natural justice is subordinate to the intention of parliament whilst at the same time requiring impartiality and fairness in the 28 day dispute resolution procedure. We then have His Honour Judge Bowsher declaring that the Scheme makes regard for the rules in natural justice more, rather than less important and his closing point that whilst he had been writing about the rules of natural justice the same principles would apply when the Human Rights Act came into force. Whilst Judge Thornton did not deal specifically with Natural Justice it was clear it had a place close to his heart.

12.2. There are differences of approach. In Woods, the adjudication decision was not enforced because of breaches of the Scheme. As we have seen, issues of natural justice were not expressly considered whereas in Discain again the award was made under the Scheme and not enforced but this time Judge Bowsher held that the rules of natural justice were important and that as the award was reached in breach of natural justice, it should not be enforced. There is however also similarity in these two decisions. On the one had Judge Thornton emphasised that whilst adjudicators must bide by the rules governing the conduct of the adjudication process there will be occasions when an insignificant departure will not preclude enforcement and a point made by Judge Bowsher that some breaches of natural justice which had no demonstrable consequence will be disregarded on enforcement.

12.3. One might be forgiven for thinking that the cases after Discain might draw the strings together. We did not have to wait long. Only three weeks after the date for implementation of the Human Rights Act we had the benefit of a judgment in the case of Elanay Contracts Limited v The Vestry (2000). In this case, article 6 of the European Convention on Human Rights was raised in relation to the right to be afforded a reasonable opportunity to present one's case and have a fair hearing.

12.4. The Vestry was a ladies clothing shop. They had a dispute in one of their shops at the Braehead Shopping Centre in Glasgow. Elanay Contracts undertook the shopfitting work and when it came to concluding the final account Elanay found that it could not agree the variations with the Vestry. The Vestry in turn alleged that there were a number of defects in the works which Elanay disputed.

12.5. Elanay commenced adjudication which it duly won and was awarded £64,000. The Vestry refused to pay and Elanay made an application for summary judgment. Of the three grounds challenging the application to enforce the most important was the Vestry's argument that the 35 day time limit within which the adjudicator had been required to complete the adjudication, including the time from service of the notice of adjudication, infringed the defendant's right under article 6 of the European Convention on Human Rights to a reasonable opportunity to present its case and demonstrated an abject inequity of arms. Of this His Honour Judge Havery QC said:

The question is whether article 6 applies to proceedings before an adjudicator. In the first place proceedings before an adjudicator are not in public whereas the procedure under article 6 has to be in public … it seems to me that if article 6 does apply to proceedings before an adjudicator, it is manifest that a coach and horses is driven through the whole of the Construction Act … in my judgment, article 6 does not apply to the adjudicator's award or to proceedings before an adjudicator because although they are a decision or determination of a question of civil rights, they are not in any sense a final determination.

12.6. It was of course educational that His Honour Judge Havery considered the Convention did not apply, first because adjudications are not carried out in public and second, and more significantly, because an adjudication decision is provisional it can be set aside by a subsequent arbitration or litigation.

12.7. This has led to a period of uncertainty. It was hoped that as Judge Havery had given leave to appeal in the Vestry case that it would be followed up but this does not appear to have been pursued and so no decision of the Court of Appeal, which would be very much welcomed, has been handed down.

12.8. Then came:

In Glencot Development & Design Co Limited v Ben Barrett & Son (Contractors) Limited (2001) HHJ Lloyd QC held that summary judgment would not be automatically given where an adjudicator had also acted in a mediation role between the parties, even where he did so with the agreement of the parties.

The reason for this was that there could be an arguable case of perceived (not actual) bias on the part of the adjudicator. The judgment included a lengthy discussion on the current position of the law in relation to bias. HHJ Lloyd QC said that the relevant test was whether the circumstances of the case would lead a fair-minded and informed observer to conclude that there was a real possibility or danger that the Tribunal was biased. This is an objective test. An adjudicator must conduct proceedings in accordance with the rules of natural justice or as fairly as the limitation imposed by parliament permit.

13. Some Light at the End of the Tunnel

13. 12 March 1999

14. (2000) CILL 1676

15. 73 Con LR 135

13.1. In what is a very well reasoned judgment His Honour Judge Bowsher QC in the case of Austin Hall Building Limited v Buckland Securities Limited (2001) ⁽¹⁶⁾ delivered a landmark judgment for the Technology and Construction Court to the effect the Human Rights Act and the conventions thereunder are not applicable to construction adjudication.

13.2. Austin Hall, the claimants, were a building contractor. Buckland Securities, the defendant, were the employers and engaged Austin Hall to carry out building work for a job in East London. Austin Hall submitted its final account in draft. Agreement could not be reached on the account and at the end of last year Austin Hall commenced adjudication. Buckland Securities made allegations in the adjudication which were repeated in their defence to the enforcement proceedings, which went against them in the sum of £81,000-odd with interest at 5% above base rate of the Bank of England. The main issue with which Judge Bowsher was to deal was whether, in acting in accordance with the statutory Scheme for Construction Contracts (itself subordinate legislation) laid down by the HGCR Act (primary legislation), the adjudicator had acted incompatibly with the defendant's right to a fair and public hearing under article 6 of the Convention. In particular the defendant complained that:

1. the statutory requirement that the adjudicator reach a decision in 28 days was manifestly unfair, since it did not allow the defendant sufficient time to prepare its case;
2. the defendant was not given a public hearing and the adjudicator's decision was not pronounced publicly.

13.3. Judge Bowsher remarked that in many cases coming before the Technology and Construction Court on the enforcement of adjudications, it had become commonplace to look at the Convention and in particular article 6. It is helpful for these purposes to recite the full provision:

In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by and independent and impartial tribunal established by law. Judgments shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interest of morals, public order or national security in a democratic society, where the interest of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice.

13.4. The Judge was taken to authorities which demonstrated that the right to fair administration of justice is so important that article 6 is to be given a broad and purposive interpretation ⁽¹⁷⁾.

16. Judgment date: 11 April 2001

13.5. Prior to considering article 6 Judge Bowsher examined the terms of the Human Rights Act 1998 to see how and in what manner the Convention is made part of English law. He referred to section 1 of the Act which indicates that article 6 is one of the "Convention rights" in the Act. Section 2 requires the court to take into account the jurisprudence of the Strasbourg court. Section 3 was said to be particularly important to the facts of this case because:

1. So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights;
2. This section applies to primary legislation and subordinate legislation whenever enacted; it does not affect the validity, continuing operation or enforcement of any incompatible primary legislation.

13.6. The Judge referred to section 4 which gives the court the power to make a declaration of incompatibility this being one of the declarations that was sought in the case upon notice then given to the Crown pursuant to section 5 of the Act.

13.7. Judge Bowsher made it plain that even if the necessary notices had been given, he would not consider making a declaration of incompatibility without evidence of the workings of adjudication in general and much more argument on the law.

13.8. On the first question that he dealt with, namely "Did the Convention apply to adjudicators?" he answered that question by reference to section 6 of the 1998 Act. He concluded that there was a short answer to the defendant's case which was that even assuming that the adjudicator is a public authority (on which he expressed grave doubts) and that the Act applies article 6 of the Convention to his conduct, almost the whole of his conduct complained of is covered by section 6(2) of the Act. He found that since subsection (1) does not apply to an act if - as a result of one or more provisions of primary legislation - the authority could not have acted differently. It followed that in order to comply with the 28 day time limit provided by the statute, the adjudicator could not have acted differently in imposing the time limits that he set on the parties. Therefore since the adjudicator, Mr Linnett, was acting in accordance with primary legislation, even if the Convention applies to his function, the defendant cannot pray in aid the Convention right or rights concerned in any legal proceedings under section 7(1)(b) as a defence to application for enforcement. That was Judge Bowsher's short answer. A point not covered by this answer is a point made on the second day of the hearing that the defendant was not given a public hearing and that the judgment was not pronounced publicly.

13.9. The Judge viewed this area fully on the authorities brought to his attention by Counsel. He remarked that it would be possible for the adjudicator to pronounce his decision publicly. The Judge doubted whether there had ever been a public hearing between parties to an adjudication.

13.10. Because of the complaint of lack of publicity Judge Bowsher ruled that he was compelled to address the whole argument.

13.11. In relation to the first question, namely whether an adjudicator is a public authority and on that account required not to act in a way which is incompatible with the Convention he reviewed various European authorities of the European Court and the Commission on the question of waiver of the right to a public hearing which was being considered by the European Court of Human of Human Rights in a number of cases ⁽¹⁸⁾.

17. Delcourt v Belgium (1990) 1 EHRR 355; Moreira De Azevedo v Portugal (1990) 13 EHRR 721

13.12. In the course of the case there was argument as to the nature of the act of the adjudicator and whether it was private in the sense of section 6(5) of the Act. He decided that an adjudicator was not unlike a certifier but somewhere closer along the scale to a court or tribunal.

13.13. Applying the definition of tribunal in section 21 of the Human Rights Act in the light of the decisions to which he was referred he concluded that he did not regard an adjudicator under the HGCR Act as a person before whom legal proceedings may be brought. He said that legal proceedings result in a judgment or order that in itself can be enforced. That is not the case with an adjudicator. The language of the HGCR Act is that an adjudicator makes a decision. He does not make a judgment. Nor does he make an award as an arbitrator does though of course he can order his decision to be complied with. He highlighted the fact that the decision of an adjudicator, like the decision of a certifier, is not enforceable of itself. These decisions, like the decisions of a certifier, can be relied on as the basis of an application to the court for judgment, but they are not themselves enforceable.

13.14. On balance Judge Bowsher concluded that an adjudicator exercising functions of the sort required by the HGCR Act is not a public authority and is not bound by the Human Rights Act not to act in a way incompatible with the Convention subject to the limitation provided by section 6(2) of the HGCR Act. Proceedings therefore before an adjudicator are not legal proceedings. They are a process designed to avoid the need for legal proceedings. In coming to this conclusion Judge Bowsher remarked that he approached the matter from a different direction from His Honour Judge Havery QC in the Elanay decision. He referred to the Building Law Reports editorial which described the Elanay decision as "intellectually respectable". Judge Bowsher did not agree with Judge Havery in saying that the reason why article 6 did not apply is because the decision or determination was not a final determination. He reached his alternative view having looked to the jurisprudence from the European Court of Human Rights. Judge Bowsher believed that an adjudicator's decision is binding in the sense that it is an extremely important decision that might result in one party being put into liquidation or bankruptcy to save another from a similar fate and was at least as important as a decision of the court making an order for a temporary injunction for payment on account. No-one would suggest that a court making orders of that sort should not comply with the common law rules of natural justice.

13.15. So in conclusion Judge Bowsher found that an adjudicator acting under section 108 of the HGCR Act was not a public authority and was not bound by the Human Rights Act which required decision makers to act in a way which was not incompatible with the Convention. He found that proceedings before an adjudicator were not legal proceedings, but a process designed to avoid the need for them.

13.16. He found that even if an adjudicator were a public authority for the purposes of the Act, the whole process necessary to the adjudicator's decision had to be considered to decide whether there had been a breach of article 6. Considering this process as a whole, including the core proceedings necessary to enforce the decision, he found that there had been a public hearing before the decision was enforced.

13.17. In applying the statutory 28 day time limit for his decision the adjudicator could not have acted differently and he held that there was therefore no breach of article 6 of the Convention as the exception under section 6(2)(a) of the Act applied because primary legislation dictated the adjudicator could not act differently.

13.18. He went on to hold that to found a complaint of lack of publicity under section 7 of the 1998 Act, the defendant had to show that he would have been "a victim of the unlawful act". The defendants had not asked the adjudicator at the outset or at any time before his decision for a public hearing and public pronouncement of the decision and thus had not acted like a victim. In fact the defendant waived any right to a public or private hearing, if any existed, by failing to ask for it.

14. Drawing the Strings Together and Where is it all Going?

14.1. Following Austin Hall we now have a first rate High Court decision to the effect that the Human Rights Act does not apply to adjudication. What is now awaited is a period during which that decision is either adopted as universally right in later judgments or left in the cold. It is obviously not binding but only persuasive under our laws of precedence on later High Court cases. The reasoning of the Judge certainly seems to suggest that one needs a lot more than a strong headwind and a favourable incline to establish a contrary position.

14.2. There is however every possibility that the Court of Appeal and/or the House of Lords will some day soon sweep a clean broom and turn this all on its head.

14.3. For the time being at least we do have some certainty. We now know that natural justice does have a place in adjudication and breaches of those common law principles provided they are not material are unlikely to affect the enforceability of adjudication decisions per se.

14.4. We also know that the process of adjudication is not one which involves a decision by a public body but is essentially private and that essentially it is accordant with the exceptions which avoid the Convention being an impediment to this process of adjudication foisted upon the industry by parliament - watch this space!

18. Schuler-Zraggen v Switzerland (1993) 16 ECHHR 405

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