REUTERS | Jason Lee

Tripping up over jurisdictional challenges

I have frequently written about adjudicators getting jurisdictional challenges round their ears. Probably too frequently for my liking and here I am again, on the same subject.

This time I’ve gone north of the border. There is nothing wrong with that as the Construction Act 1996 is the same either side of the border and so is the Scheme for Construction Contracts 1998, to all intents and purposes (although this may change later this year…).

Once again I have read about a jurisdictional challenge that the responding party (the contractor) maintained throughout the adjudication process and which, ultimately, the court upheld. What a waste of the parties’ time and money.

In Profile v Elmwood, the parties’ contract did not specify who should act as the adjudicator. Instead, it said that if a dispute arose, the parties should approach the Scottish RICS for an adjudicator. For reasons that are not explained in the judgment (and didn’t seem to be clear to the responding party), the referring party (the sub-contractor) did not do this when a dispute arose over one of its interim applications. Instead it went to the Scottish Building Federation. They nominated Mr Nicholson, who accepted and proceeded to make a decision.

It seems strange to me that when the responding party challenged Mr Nicholson’s appointment (which they did immediately, apparently), he felt able to reject that objection and proceed with the adjudication. The judgment does not elaborate on this point, so we do not know what reasons the responding party gave for its challenge (although that is pretty easy to guess) or what reasons the adjudicator gave for continuing (which is less easy to guess).

With the benefit of hindsight, I’m sure Mr Nicholson wishes he had acceded to the responding party’s jurisdictional challenge and resigned. At the stage that it was made, it would have been cost effective for the referring party to start again, for him to say that the contract required an approach to a different ANB. He may have been on both panels, and could have suggested they asked for him, since he was already familiar with the papers. Alternatively, even if he wasn’t on both panels, the parties would not have spent the time and money involved in obtaining, what turned out to be, an unenforceable adjudicator’s decision. I’d say this was an expensive mistake (even a deliberate one) by the referring party.

As for all the adjudicators out there, I implore you to get this type of challenge right. It gives the profession a bad name otherwise.

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