Transco engaged McAlpine to carry out work in respect of 37 km of steel pipeline between Farningham and High Halden in Kent for approximately ?15?m. The contract was based on the NEC form priced with an activity schedule, option A. An adjudicator was named in the contract. There was a lengthy series of events dealing with a variety of claims during and after completion of the work. McAlpine referred to adjudication the dispute relating to Transco’s liability to pay interest to McAlpine.

Transco argued that the adjudicator made a decision in respect of a much wider range of issues than that which had arisen during the course of the adjudication. There was, therefore, an issue about what constituted the dispute, and also an issue as to whether there had been a breach of natural justice.

HHJ Toulmin CMG QC considered that while the dispute appeared to relate to the payment of interest, it was important to consider not just what the parties referred to adjudication but on what basis those issues had been referred to adjudication. He considered a series of adjudication cases relating to the issue of what constituted a dispute, but noted that many of them did not consider the precise point addressed by the Court of Appeal in Halki Shipping Corporation v Sopex Oils [1998] 1 WLR 727. This was because the key point in adjudication was the nature and scope of the dispute that had been referred at a particular time, rather then whether a “Halki” dispute had arisen such that the parties were bound by the arbitration clause. In order to determine what the parties had referred to adjudication, and thus what constituted a dispute in this case HHJ Toulmin CMG QC asked the parties 9 questions:

1. What were the issues discussed at the meeting before the referral.
2. What dispute was referred to the adjudicator, after the defendant had had the chance to respond to claims made?
3. What was the basis upon which the dispute was referred?
4. Was the adjudicator’s decision responsive to the issues referred?
5. Were the issues raised during the adjudication?
6. If so, were they objected to by the other party?
7. Was any objection fundamental to the nature of the dispute referred?
8. If so, did that objection go to the fairness of the procedure?
9. If there was a breach of procedure does it “significantly affect the fairness of the decision?”.

During the course of the adjudication a large quantity of new material was served on 18 December 2003 on Transco. Transco responded under protest on 23 December 2003. His Honour held that the case originally put forward by McAlpine changed substantially during the course of the adjudication. The service of this and further information should not have been considered by the adjudicator because, first, the information should have been served with the referral notice and second, it was new evidence in support of a new case which did not afford Transco a fair opportunity of responding.

As a result the adjudicator had dealt with a different dispute, and Transco had not been given a fair opportunity to respond. He, therefore, declined to enforce the decision.