Picture this scenario: the construction contract provides that, in the event that the parties cannot agree the identity of the adjudicator, the adjudicator will be nominated by the President or Vice President of a named adjudicator nominating body (ANB).
A dispute is referred to adjudication and the ANB nominates Mr Smith as the adjudicator. The referring party appoints Mr Smith and thinks its adjudication is off and running. However, the responding party challenges Mr Smith’s appointment, arguing that he lacks jurisdiction because the nomination was made by a subsidiary body set up by the ANB to administer its adjudicator appointments, rather than by the President or Vice President of the ANB, as the contract specified.
What did I do when this happened to me?
In my case, the construction contract provided for nomination to be made by the President or Vice President of the ANB. However, the ANB had set up a subsidiary organisation to administer the nomination of adjudicators.
After the subsidiary of the ANB had notified me of my appointment, the responding party challenged my appointment, arguing that I lacked jurisdiction because the nomination was made by the subsidiary body. I rejected the challenge, but not before I had reviewed the adjudication clause in the contract and consulted with the subsidiary about its nomination process. I was advised that they act on behalf of the President of the ANB and that the President signed off all the nominations they made. That satisfied me about the nomination process, so I advised the parties that I was not resigning and the adjudication continued.
Just before the responding party served its response, I got a call from the subsidiary. Apparently there was a problem with my appointment after all; due to an administrative error my nomination had not been signed off by the President of the ANB.
As the responding party had already challenged my jurisdiction, it was no surprise that it insisted that I should resign. In the event, I was left with little alternative but to agree with the responding party. Consequently, the referring party had to restart the adjudication, issuing another notice of adjudication and requesting my re-appointment.
How can the parties avoid this in future?
The parties should ensure that the contract is clear about the appointment process and that they understand how the ANB operates. The party applying to an ANB should also make it clear if the nomination is to be made by a named individual within the nominating body. Equally important is how the adjudicator reacts. If there is any doubt, he should resign. This will give the referring party the opportunity to start the adjudication again, this time, without any doubts over the adjudicator’s jurisdiction.
Finally, it is worth noting that if the parties do not name an adjudicator or specify an ANB in their contract then, under the Scheme for Construction Contracts 1998, the referring party may apply to any ANB (paragraph 2(1)(c)).