Misrepresentation Invalidates Adjudicator Appointment

As the main contractor for major works on London Underground, electronics giant Siemens retained a subcontractor to install communications equipment at various stations.



When the works did not progress as desired, a dispute arose between Siemens and the subcontractor, which led to Siemens deciding to terminate the contract.



The subcontractor applied for the matter to be dealt with by adjudication, which led to a decision in favour of Siemens. The dispute continued, however, and a second adjudication was sought.



The second adjudication was unusual in that Siemens did not see the subcontractor’s application form until after the process had been completed. This stipulated that the subcontractor would object to the appointment of several persons as adjudicator on the grounds of potential conflicts of interest. One of the persons named was the adjudicator of the original dispute. It is common policy in cases such as this for the original adjudicator to be reappointed in order to save time and costs for the firms in dispute.



The new adjudicator awarded the subcontractor £1.6 million. Siemens refused to pay, however. Having subsequently seen the application form, it claimed that the process of appointment was fundamentally flawed because of the list of objections to potential adjudicators.



The question of the validity of the appointment of the adjudicator led to a hearing at which the court ruled that the list of ‘objectionable’ adjudicators was compiled recklessly or deliberately falsified.



The court concluded that without the misrepresentation, the original adjudicator would probably have been reappointed. The appointment was therefore invalid and the decision was unenforceable.



The ruling illustrates the importance of not seeking advantage in such circumstances and of ensuring that the adjudicator’s jurisdiction cannot be called into dispute by the making of a material misrepresentation in the application process.