Fighting Fraud in Adjudication

General Principles

Allegations of fraud can be raised during adjudication in a parties' submissions to the adjudicator and/or in subsequent enforcement proceedings, either to resist enforcement of the adjudicator's decision or in support of an application for a stay of execution of the judgment. 

The general approach is that the court should not enforce an adjudicator's decision if it is reasonably satisfied that to do so would assist in the perpetration of fraud. However, the court will require clear and unambiguous evidence of fraud to persuade it not to enforce.

What amounts to a fraud?

Fraud is very difficult to establish in adjudication proceedings.

One of the common arguments we come across is that a particular application for payment/invoice is "fraudulent" because a party is seeking payment for works that have not been carried out, hours that haven't been spent etc. However the court has confirmed that such conduct will not be sufficient to establish a fraud. The court requires that fraud allegations are spelt out and at least on their face supportable by credible evidence. The court has said that this applies equally if not more in adjudication enforcement proceedings when it would be very easy to "bandy about" fraud allegations to seek to avoid enforcement1 .

Other examples of where the court has rejected allegations of fraud include: 

  • An allegation that the lack of independence of the quantity surveyor had led to an overvaluation of the final account2 ;
  • An allegation of theft raised directly before the adjudicator and taken into account in the course of his decision.3
  • An allegation of collusion to inflate the true value of invoices sent for payment due to no clear and unambiguous evidence to suffice fraud.4

In contrast the Court of Appeal previously accepted allegations of fraud in relation to a party who said that equipment manufactured was being held to the other party's order, which was not true 5 .

We have also seen in practice instances where adjudicators have accepted allegations that a particular witness appears to be less than truthful or that the adjudicator should not give any weight to a particular document on the basis that it has been fabricated.

When should allegations of fraud be raised?

It is an established principle that allegations of fraud raised for the first time in the enforcement proceedings will not be sufficient to resist enforcement if the allegations could have been raised during the adjudication itself.

In previous cases, the court has rejected allegations of fraudulent invoicing6 and allegations of forged timesheets7 on the basis that the allegations could and should have been raised during the adjudication itself.

Key Principles

The key principles to remember about fraud are: 

1.    If you think a document or witness evidence is fraudulent raise this matter with the adjudicator during the adjudication itself. Failure to raise this during the adjudication will likely lead to your allegation being rejected.  

2.    If you only find out about the fraud after the adjudicator's decision has been issued so that you do not have an opportunity to raise this during the adjudication, make sure you explain in your submissions in the adjudication enforcement proceedings why the fraud could not have been raised previously. 

3.    Fraud is a serious allegation so parties should exercise caution before raising it. Clear evidence is required. The fact that a particular invoice might be overstated or that a party might be over valuing their own works is unlikely to amount to a fraud. Note that if you suggest that a particular witness is lying this will likely lead to the adjudicator calling a meeting so that the adjudicator has an opportunity to question the witness. This would increase costs and delay the decision being obtained, so any such request must be exercised carefully.  

Looking Forwards

Going forwards we anticipate that the court will continue to be reluctant to allow allegations of fraud to prevent the enforcement of adjudicators' decisions. 

The court's approach here is no doubt a recognition of the fact that adjudication is a swift interim remedy and there is not the time for forensic investigation and/or cross examination like there is in litigation.  A party faced with an unfavourable adjudicator's decision as a result of a fraud, could seek for the dispute to re-considered in future litigation/arbitration to allow the fraud to be corrected.

If you have any queries in respect of this bulletin or would like to know more about adjudication please contact Carly Thorpe.

Carly Thorpe, Partner, Walker Morris LLP

  • 1SG South Ltd v King’s Head Cirencester LLP [2009] EWHC 2645 (TCC)
  • 2BM Services Inc Ltd v Greyline Builders Ltd [2018] EWHC 3884 (TCC)
  • 3Speymill Contracts Ltd v Baskind [2010] EWCA Civ 120
  • 4Grandlane Developments Ltd v Skymist Holdings Ltd [2019] EWHC 747 (TCC)
  • 5PBS Energo AS v Bester Generacion UK Ltd [2020] EWCA Civ 404
  • 6Gosvenor London Ltd v Aygun Aluminium UK Ltd [2019] EWHC 3619 (TCC)
  • 7Assessmont Ltd v Brookvex IMS Ltd [2018] EWHC 2629 (TCC)