Sarah Lidgett

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Adjudication Fraud Update!

Construction / 20 May 2019

Following on from our update “Alleging Fraud in an adjudication? Make sure you get in early!” on the difficulties raised with alleging fraud in an adjudication following on from the case of Gosvenor London Ltd v Aygun Aluminium UK Ltd [2018], this issue has been considered again by the court in PBS Energo AS v Bester Generacion UK Ltd [2019] EWHC 996 (TCC).

Again, the fraud allegations were raised for the first time during enforcement proceedings for an adjudication award.  However, notably, the facts giving rise to the fraud were not discovered until after the adjudication, as disclosure of the relevant documents had not been given to them in time.  The allegations could therefore not in fact have been raised any earlier.

The fraud itself involved various false representations made by PBS during the adjudication regarding the existence of parts and equipment manufactured pursuant to the parties’ sub-contract, which were held to Bester’s order, pending payment.  They led to the adjudicator mistakenly rejecting Bester’s arguments and finding in favour of PBS.

In the subsequent enforcement proceedings, the court refused summary judgment, holding that:

“Where, exceptionally, it is properly arguable on credible evidence that the adjudication decision was itself procured by a fraud that was reasonably discovered after the adjudication, the court is unlikely to grant summary judgment.”

Much like the decision in Gosvenor London Ltd v Aygun Aluminium UK Ltd [2018] EWCA Civ 2695, this case again appears to reinforce the court’s position that fraud can be raised as a defence to enforcement proceedings provided the point could not and should not have been taken in the adjudication itself.  No doubt the court will remain cautious when considering such cases going forward.

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