REUTERS | Jason Lee

The adjudicator, challenging jurisdiction and rule 4.90 of the Insolvency Rules

It’s not always easy being an adjudicator. It sometimes feels like you are damned if you do, and damned if you don’t. Ask Mr Shawyer, the poor chap who came in for rather a lot of harsh words from Couslon J last week (in Enterprise v McFadden). In Coulson J’s eyes, he was damned because he didn’t do something. He didn’t address Enterprise’s jurisdictional challenge; he “refused to grapple at all with the jurisdiction issues being raised”.

We are all familiar with the concept that an adjudicator cannot make a binding decision on his own jurisdiction (unless the parties agree or the adjudication rules allow). We are equally familiar with adjudicators making non-binding decisions on their jurisdiction, which one of the parties refuses to be bound by, and that often ends up before the TCC on enforcement.

To an outsider reading the judgment in Enterprise v McFadden, it looks like the adjudicator ducked the issue on this occasion. I can understand how Mr Sawyer must have felt when he received the papers. This was a large final account claim for £7 million, with extensive papers (at least 40 lever arch files), plus issues of novation, assignment and four sub-contracts to deal with. On top of that, the adjudicator had to get to grips with the insolvency aspects. Insolvency is a complex area of law, especially to those who do not practice it everyday. Hands up all those who were aware of the Rule 4.90 procedure before last week??

Enterprise’s grounds for challenging the adjudicator’s jurisdiction are not set out in the judgment, but I think we can assume it focused on Rule 4.90 and what had been assigned to Utilities.

So what happens when the adjudicator doesn’t want to, or feels unable to make a decision about his jurisdiction?

On more than one occasion I have found myself in a similar situation to Mr Shawyer, with a jurisdictional challenge that involved an insolvent party. Relying on the principle of adjudication law that allows me to seek advice from a third party, and where I was not overly familiar with the specialist area, I have taken advice from an insolvency specialist on the issue before me. I was open with the parties and disclosed a copy of the advice to them for comment. This way, I dealt with the jurisdictional challenge at the time it was made and presented the parties with my view. Even if that view is non-binding, and ultimately not enforced by the court, at least I dealt with the challenge properly and timeously.

With hindsight, it is easy to say that if the adjudicator had taken advice on the insolvency issues, he would have known there was no claim that could be referred to adjudication, that he had no jurisdiction, and that he should have resigned, saving the parties considerable time and costs (at least £240,000 just for the Part 8 application). But hindsight is a wonderful thing and who is to say that the advice received would have been consistent with Coulson J’s view in any event?

Leave a Reply

Your email address will not be published. Required fields are marked *

Share this post on: