REUTERS | Adrees Latif

The terms of an ad-hoc adjudication

Parties are free to agree that a dispute will be referred to adjudication, even if the Construction Act 1996 does not apply to their contract or there is no contractual adjudication clause. Such ad-hoc adjudications are nothing new. As HHJ Gilliland QC said (in Nordot Engineering Services Ltd v Siemens PLC, CILL September 2001), when drawing an analogy with arbitration:

“I can see no reason, as a matter of law, why parties cannot agree to abide by the decision of a third party if they so wish… why should it not be appropriate in the case of adjudication.”

Although the parties may actively agree to use adjudication to resolve their dispute, it is more likely that an ad-hoc adjudication will be considered in the context of a jurisdictional challenge. For example, if the responding party argues that there is no written construction contract but nevertheless participates in the adjudication (including providing submissions on the jurisdiction point), whether the responding party is subsequently bound by the adjudicator’s decision will, largely, depend on whether it reserved its position on jurisdiction.

Adjudicators commonly get involved in ad-hoc adjudications

I was recently faced with a “no construction contract” argument from the responding party in a final account claim. Somewhat unusually, the responding party agreed to give me jurisdiction to determine the dispute insofar as the value of the final account was concerned (but not jurisdiction to decide my own jurisdiction).

This gave rise to a number of issues, not least what to do about the alleged failure to comply with the payment/withholding notices provisions of the Construction Act 1996. It was important, as a significant part of the dispute turned on that point. To answer the question, I had to unravel the events that lead to the (alleged) contract formation and consider the parties’ conflicting evidence on what was agreed or not agreed. As it was an issue that went to the heart of the dispute, I had to decide it first.

In my view, this demonstrates that:

  • Adjudicators are capable of dealing with legal and evidential issues. Some may be more capable than others, but that comes down to party choice when the adjudicator’s appointment is made. If you are involved in an ad-hoc adjudication, you decide who to appoint or which ANB to go to. If you know you have a legal issue at the heart of your dispute (like a “no construction contract” argument), consider carefully whether a legally trained adjudicator would be more appropriate.
  • Parties should consider whether it would be more cost effective to limit the scope of the adjudication simply to determining the contract issues. There is also the option of asking the TCC to do so, seeking a declaration under CPR Part 8. As it is ad-hoc, the parties make the decisions and are not restrained by the limitations in the Act or the Scheme for Construction Contracts 1998. They can keep the question simple.

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