In February 2019, we wrote an article headed “Approbation and Reprobation in Adjudication - Another Jurisdictional Challenge Fails” in which we made the point that parties regularly challenge an adjudicator’s jurisdiction. Hitachi was no different in the case of Hitachi Zosen Inova AG v John Sisk & Son Limited.
The facts
Hitachi engaged Sisk to provide design and construction services for a power plant at Ferrybridge in Yorkshire. There were numerous disputes between the parties which resulted in a significant number of adjudications, in which the parties habitually referred to additional works as “Events”. This case concerned Event 1176 in the second and eighth adjudication.
The second adjudication
Sisk issued its Application for Payment of Events No. 6, together with a schedule which included an entry for Event 1176. Event 1176 was described as “Acceleration Works to the Boiler Hall construction as agreed … during the meetings of 29th August, 18th September and 1st October 2014” and the amount stipulated was £1,092,497.45. The works were said to be 100% complete and the comment was added “As per Sisk’s Substantiated Pack - Letter 2957”.
Hitachi submitted a Payment Notice with respect to Application No. 6. It rejected the claim for any payment for Event 1176 and asserted as an overall position that Sisk had been overpaid £2,720,683.52.
Given this dispute, Sisk referred some of the items included in Application No. 6 to adjudication. As to Event 1176, the adjudicator decided that “this is a variation that requires valuation” but stated
“Sisk provide some cost details but with limited exceptions they comprise unreferenced abstracts of daily and weekly resources or extracts from sub-contract accounts without the necessary context to satisfy the requirements of Clause 30.1.
I do not have sufficient details to value the works and hence for the purposes of Payment Notice 6 my value is £nil.”
The eighth adjudication
Sisk made a further attempt to recover monies for Event 1176, commencing with an application for payment in the revised sum of £999,595.59. It relied upon evidence that included much of what had been submitted in the second adjudication but also went well beyond it. Hitachi rejected the claim asserting that it had no contractual merit. Hitachi referred to the adjudicator’s decision in the second adjudication asserting that the cost details now provided by Sisk did not comply with the requirements of the contract.
Sisk gave notice of its intention to refer the dispute to adjudication. The notice documented the previous history in relation to Event 1176, including relevant parts of the decision in the second adjudication.
Hitachi raised a jurisdictional challenge alleging that the adjudicator in the second adjudication “was asked to decide the value of Event 1176 and he did so”; and that “the claim [now being made] is the same or substantially the same as that advanced in the second Adjudication, namely a claim for additional payment in respect of Event 1176.”
The adjudicator considered the substantiation that was now put forward by Sisk and concluded that Sisk had substantiated a claim for £825,703.17 in accordance with the requirements of the contract.
The decision
The issue was whether, in consideration of the second adjudication, the adjudicator in the eighth adjudication had jurisdiction to decide what sums were properly payable for Event 1176.
What did the adjudicator in the second adjudication decide about Event 1176?
The court said that, while there could be no doubt that Sisk was asking the adjudicator to evaluate Event 1176 in the sum claimed or such other sum as he found to be proved, the adjudicator expressly declined to take a view or make a decision about the proper value that could or should be attributed to Event 1176. The court decided that the adjudicator’s “value” of “£nil” was not a valuation of the variation as such; the figure “£nil” was merely the consequence of the lack of substantiation before him and was not intended to express any view about or to decide whether Sisk had incurred Cost and Expense for which they should be reimbursed in due course.
Is the dispute that was referred to the adjudicator in the eighth adjudication the same or substantially the same as the dispute decided by the adjudicator in the second adjudication about Event 1176?
The court held that the referred dispute in the eighth adjudication was the valuation of Event 1176 and that that was precisely what the adjudicator declined to decide in the second adjudication. Accordingly, it was decided that the dispute referred in the eighth adjudication was not the same nor “substantially the same” as the dispute decided in the second adjudication.
Conclusion
It is common ground that, as a general statement of principle under paragraph 9(2) of the Scheme for Construction Contracts, an adjudicator does not have jurisdiction to decide a dispute that is the same or substantially the same as a dispute that has already been decided in a prior adjudication. However, Coulson makes the point that that often leads to adjudicators being caught between two inflexible rules: not reaching a decision that qualifies or alters any earlier adjudication decisions while, at the same time, not assuming that the mere fact a point may have arisen in an earlier adjudication means that the same point cannot be considered at all.
Now the court in Hitachi v Sisk has offered guidance; the comparison to be made is between what was referred in the eighth adjudication and what was decided in the second. The court said that, once it is recognised that there was no valuation decision at all in the second adjudication, it became clear that, in the matter of the value to be attributed to and recovered for Event 1176, there was no overlap at all. It is only if one compares what was referred in each adjudication that a misleading and irrelevant similarity between the two referred disputes appears.
Case: Hitachi Zosen Inova AG v John Sisk & Son Limited [2019] EWHC 495 (TCC).