Bias on the part of the adjudicator will render their decision unenforceable. The law recognises two categories of bias: actual bias and apparent bias.
Actual bias, as you would expect, involves real bias on the part of the adjudicator. This is rarely alleged, as, in the absence of inculpating diary entries or similar material it is almost impossible to ascertain the adjudicator’s state of mind.
Apparent bias, on the other hand, is a matter of perception. It does not require that the adjudicator be truly biased, merely that an objective observer would conclude that they might well be.
The question the law asks is whether the fair-minded and informed observer, having considered the relevant facts, would conclude that there was a real possibility of bias?
A party’s motive in raising allegations of bias can be a convenient way for an unsuccessful party to resist enforcement of the adjudicator’s decision. As such, adjudicators can expect some parties to undertake relatively in-depth investigations to find evidence for such allegations.
For example, in Fileturn Ltd v Royal Garden Hotel [2010] EWHC 1736 (TCC) the unsuccessful party found out that six years earlier the adjudicator had been a director of a firm of claims consultants where the successful party’s representative had also been a director.
While Mr Justice Edwards-Stuart was satisfied there was no apparent bias – the adjudicator and representative worked in different offices and met only once a year – this case illustrates the lengths to which an aggrieved party will go to avoid the enforcement of an unfavourable decision.
Caution when contacting individual parties
Adjudicators need to tread carefully with contact with individual parties. It is generally advisable for all contact to be in written form and copied to both parties, even if the message is directed at only one of them. However, due to the compressed timescales of adjudication this is not always possible. Telephone calls can be more efficient but carry a greater risk.
In Makers UK Ltd v Camden [2008] EWHC 1836 (TCC) prior to the adjudication commencing, the referring party phoned a potential adjudicator to check his availability to act. The call was brief and the notes of it showed that nothing related to the dispute was discussed. This adjudicator was eventually appointed and when he found in favour of the referring party the unsuccessful party claimed that the pre-appointment telephone contact gave rise to apparent bias.
Mr Justice Akenhead found that there was no question of apparent bias and that checking availability was a sensible and practical step.
However, any discussion of the substance of the dispute is likely to cross the line and provide strong evidence of bias.
Bias is a matter of perception
For example, in Discain Project Services Ltd v Opecprime Development Ltd [2001] EWHC 435 (TCC) the adjudicator took a series of calls from one party where they discussed matters which were fundamental to the dispute between the parties.
His Honour Judge Bowsher QC accepted that there was no actual bias on the part of the adjudicator – in fact, it was his natural courtesy that prevented him from ending the conversations and hanging up – but nevertheless found that there was apparent bias and refused to enforce the decision.
This case is a reminder of how bias is a matter of perception. Even the most professional adjudicator can fall foul if they are ill-perceived by others.
One suggestion made by the Discain judge was that sensible adjudicators would have all calls to the parties made by their PA. However, even such attempts to create a seemly distance between the adjudicator and the parties can be fraught with difficulties.
In Harding v Paice [2015] EWHC 661 (TCC) allegations of apparent bias were made against the adjudicator in the fourth adjudication between the parties. He had previously acted in the first and second adjudications. Prior to the adjudicator being nominated in the fourth adjudication one party called his office and spoke to the adjudicator’s office manager, who also happened to be his wife. They discussed the first and second adjudications and then went on to discuss the final account which they had just received. This was to be the subject of the fourth adjudication. After speaking to the parties, the adjudicator’s wife summarised the conversation for him.
When the adjudicator was nominated by the Royal Institution of Chartered Surveyors he indicated on the nomination form that he had not been in contact with the parties prior to the nomination. The telephone call was not mentioned. The unsuccessful party later anonymously received a copy of the adjudicator’s phone records, noticed the telephone calls and alleged apparent bias.
Conversations should be disclosed to both parties
Mr Justice Coulson held that it did not matter that the conversations had been with the adjudicator’s wife, rather than the adjudicator himself, as she had communicated the contents of the conversation to him. The correct approach would have been for the adjudicator to disclose the conversations to both parties immediately.
Two things are evident from this case: first, the best approach seems to be if in doubt, disclose. Then it is for the parties to raise the issue of bias. Second, a prudent adjudicator ensures that their staff are just as conscious of the appearance of bias as the adjudicator himself. The taint can extend to the adjudicator once he is informed by his employee.
The Paice case shows bias arising as a result of the way in which the case was handled by the adjudicator (i.e. not disclosing soon enough).
Another case in this vein is Cofely Ltd v Bingham [2016] EWHC 240 (Comm). This concerned a construction arbitration rather than an adjudication but the lessons derived from it are equally salutary.
In the aftermath of the Technology and Construction Court’s decision in Eurocom Ltd v Siemens Plc [2014] EWHC 3710 (TCC) it emerged that a particular claims consultant was in the habit of manipulating arbitrator nomination forms to try to ensure that the nominating body appointed the desired arbitrator.
Cofely was engaged in an arbitration against this consultant and was concerned about the impartiality of the arbitrator in those proceedings.
It asked the arbitrator to provide records of the number of disputes over the past three years in which he had acted as an arbitrator or adjudicator and in which the claims consultant was a party or representing a party, and the proportion of the arbitrator’s income that was derived from such disputes and disputes in which he had found in favour of the claims consultant.
The arbitrator disclosed the total number of arbitrations and adjudications in which he had been appointed and the income figures. However, he refused to confirm the number of arbitrations and adjudications involving the consultant. The arbitrator then called a hearing to resolve the issue.
At the hearing he persistently questioned counsel for Cofely and refused to confirm the number of appointments which he had received which involved the consultant. The hearing concluded with the arbitrator issuing a ‘ruling’ on the issue of bias even though no such ruling had been requested by the parties.
The matter was then litigated in the Commercial Court where Mr Justice Hamblen removed the arbitrator. He found that both the arbitrator’s relationship with the consultant and his conduct at the hearing were sufficient to give rise to apparent bias.
How others perceive your actions matters
This case demonstrates the importance of handling allegations of bias sensitively and appropriately. It also reinforces the importance of perception in apparent bias. Even though the events of the hearing happened after the original conduct which was of concern to Cofely, it reinforced and provided a separate basis for a finding of apparent bias.
‘Perception’ must therefore be the watchword of the adjudicator. Even though your own conduct may be entirely above reproach the manner in which parties might perceive your actions must always be kept to the fore.
This article was written and published on the internet by the Institution of Civil Engineers on 17/11/16.
This article is intended to provide general information about legal topics. Nothing in this article or in the documents available through it, is intended to provide legal advice. You should not rely on any information contained in this article, or in the documents available through it, as if it were legal advice.
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