COVID-19 UK: Litigation – High Court rules that adjudication must proceed despite COVID-19 difficulties – Update

April.06.2020

The show must go on. A recent decision of the English High Court demonstrates the courts' commitment to carrying on in the face of the COVID-19 outbreak – and their expectation that parties and clients will do the same. In MillChris Developments Ltd v Waters, the court refused to grant an injunction preventing a home owner from proceeding with adjudication of a construction dispute, despite the contractor's argument that it would be unfair for the adjudication to go ahead.

This decision underscores the need for any claim for force majeure or the like to show a detailed causal impact between the global pandemic and why a contractual obligation cannot be performed. See our recent update on force majeure and frustration of contract under English law for more details.

Adjudication is a type of alternative dispute resolution which is compulsory under UK statute for certain types of construction dispute. It is informal, and operates something like a fast track arbitration. In this case, the home owner commenced adjudication, alleging overcharging by the contractor and defects in the construction works. In late March, the contractor wrote to the adjudicator arguing that the COVID-19 outbreak made it impossible to comply with the adjudicator's proposed timetable, which included submission of evidence in early April and a site visit in mid-April. The contractor rejected the adjudicator's suggestion of a two-week extension and instead applied to the court for an injunction restraining the adjudication.

The contractor claimed that it did not have enough time to prepare for the adjudication due to the COVID-19 outbreak and the fact that it had ceased trading. The contractor therefore argued that the adjudication, if it proceeded, would be conducted in breach of natural justice. However, the court was not persuaded by this argument. While the contractor had experienced difficulties in obtaining evidence, this was largely for reasons unconnected with COVID-19. The fact that the contractor's solicitor was self-isolating would not stop them receiving papers related to the matter. Other difficulties resulting from COVID-19, such as the fact that the contractor's representative could not be present at the site visit, could also be mitigated. In any event, the court said that the contractor could have helped matters by accepting the adjudicator's offer of a two-week extension.

The court's ruling in this case is fact-specific. In particular, it reflects the extremely high bar for the grant of an interim injunction in respect of an adjudication. However, the decision has lessons for parties to English dispute resolution proceedings in general. First, parties should not expect the courts to accept COVID-19 as a blanket excuse for postponement. Second, if a party is unable to comply with the timetable, it will need to be very precise and specific as to why its inability to comply is a consequence of COVID-19. Lastly, parties should accept reasonable proposals to mitigate the effects of COVID-19 on proceedings, including proposed extensions.