A matter of conflict?

Author: Janet Keeley

The case of Eurocom Limited v Siemens PLC has been widely reported in construction circles but could also have implications for the appointment of third parties on rent review or in other alternative dispute resolution procedures.

The case concerned a construction industry adjudication arising out of the installation of communication systems at Charing Cross and Embankment Underground stations.

The RICS form for the appointment of an adjudicator included a box underneath the question “Are there any adjudicators who would have a conflict of interest in this case?” There was an explanatory note which said “If it is known that specific adjudicators would be unable to act because of a conflict of interest, please give details here. Please note: the form will automatically be copied to the responding party. Where time permits, we will allow 24 hours for a response to be made before making a nomination. RICS reserves the right to copy any correspondence to the adjudicator and to the other party.”

In completing the form, Eurocom’s representative listed a number of individuals who they considered should not be appointed, in some cases giving reasons. The RICS did not send the form to Siemens, but emailed them confirming that they would nominate an adjudicator in response to Eurocom’s application.

The adjudication took place and found that Eurocom was entitled to £1.6 million. Siemens then asked for a copy of the nomination form and said they would oppose enforcement proceedings because of the nomination process (and on other grounds). The matter went to court and the evidence from Eurocom’s representative explained why they had objected to the various names given, which was not always on the grounds of actual conflict.

The judge decided there was a strong argument that the box had been filled in deliberately or recklessly falsely and that as such this was a fraudulent representation to the RICS as nominating body. This in turn made the nomination invalid and the appointment a nullity, so the adjudicator had no jurisdiction and Eurocom was not entitled to enforce the adjudication decision.

It was of some importance in this case that Siemens had not seen the nomination form and therefore had not had the opportunity to challenge why the potential adjudicators were proposed to be excluded from appointment.

In recognition of the decision in this case, the RICS have amended their notes to say that a misrepresentation in filling in this part of the nomination form could invalidate the appointment process and make a decision or award unenforceable.

Although the case was under the statutory adjudication scheme there are potential parallels in the appointment of third parties as expert or arbitrator to determine rent reviews or indeed as part of any other dispute resolution provision in leases or agreements.

So, to avoid any risk of upset after an award or determination:

  • take care in identifying those persons to whom objection is taken;
  • set out the reason for any allegation of conflict; and
  • send a copy of the nomination form to the other party so that they can see to whom objection has been taken and why.

Janet Keeley, Partner, Fladgate LLP (jkeeley@fladgate.com)

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