Those of you that are members of the Adjudication Society and/or the Chartered Institute of Arbitrators may well have seen that these two organisations have recently come together again to publish the third update of their guidance note for adjudicators, Jurisdiction of the UK Construction Adjudicator.
I welcome the updated guidance note. It is an interesting and helpful document, which highlights that ensuring:
“…an adjudicator has the jurisdiction to decide the dispute referred to him is of utmost importance to the adjudication process.”
Given the number of reported decisions on jurisdiction over the years, I doubt many would disagree with this opening sentiment.
Jurisdiction of the UK construction adjudicator
The intended purpose of the guidance note is to “provide practical guidance to adjudicators”, which I am sure many adjudicators will appreciate as dealing with jurisdictional challenges can be one of the demanding parts of the adjudication process. Unlike the substantive decisions that adjudicators might have some weeks to make, the conclusions they reach on jurisdiction often have to be formed within a very short timescale at the beginning of the adjudication, and can have potentially dramatic effects on the outcome of disputes.
However, the guidance note will undoubtedly also be of assistance to party representatives, both before, during and after adjudications.
It’s freely available
Previously, the only other publicly available free guidance was published by the Construction Umbrella Bodies Adjudication Task Group (CUBATG) in April 2003, but that is now out of date and doesn’t go into the same amount of detail concerning jurisdiction. As I said last year, it’s a real shame that the CUBATG guidance has not been updated.
The guidance note is concise enough to be read and easily absorbed, but still manages to cover the essential points, drawing on a number of sources (such as case law, Coulson on Construction Adjudication and a Practical Law Construction adjudication practice note).
On the question of threshold jurisdiction, the guidance note recommends that adjudicators ask themselves “Do I have jurisdiction?” when deciding whether to accept an appointment, and then lists 13 questions that adjudicators should ask themselves.
While I agree that adjudicators should ask themselves “Do I have jurisdiction?”, it is rarely going to be possible for an adjudicator to reach a conclusive view on this when deciding whether to take an appointment. This is because all the adjudicator is likely to have to look at is the notice of adjudication. The notice is likely to enable the adjudicator to answer the first question posed, “Is there a conflict of interest preventing the adjudicator from acting?”, but it is unlikely to contain sufficient information to enable the adjudicator to conclusively answer the remaining questions such as whether there is a contract, whether a dispute had crystallised or there is more than one dispute. This might be why the guidance note has been updated to clarify that an in-depth analysis is not necessarily required, and that “an initial and proportional review to flag any issues should be undertaken“.
Have I been appointed correctly?
One question in the guidance note that I think all adjudicators should address immediately on receiving the referral notice is whether they have been appointed in accordance with the contract and/or the Scheme for Construction Contracts 1998. This normally only takes a couple of minutes and can save the parties considerable time and money if it is raised at the outset of an adjudication. We have seen from cases such as Twintec Ltd v Volkerfitzpatrick Ltd that if an adjudicator’s appointment is made under the wrong set of adjudication provisions then it will be invalid and the adjudicator’s decision will not be enforceable.
The updated guidance now includes some commentary on the costs provisions set out in section 108A of the Construction Act 1996, but I am not sure that I entirely agree with it. Paragraph 2.6 states:
“…in respect of costs, the contract cannot state that one party will bear the costs of the adjudication prior to the notice of adjudication being issued unless the contract also confers power on the adjudicator to apportion his fees and expenses between the parties.”
I confess that I still hold the same view as I did five years ago when I wrote about the “great” section 108A debate, that is that I think section 108A should be construed narrowly so that Tolent-type clauses are banned, but clauses allowing adjudicators to allocate their fees and expenses are permitted. I note that in the third edition of his book, Coulson J does not necessarily follow the same line as me on this issue (paragraphs 10.16 to 10.19), but nor does he follow the same line as the authors of the updated guidance note which suggests that, provided a clause permits an adjudicator to allocate his fees, Tolent-type clauses are permitted. However, in fairness the guidance note does state that, consistent with Yuanda v WW Gear, such a clause might be a fetter on a party’s right to adjudicate at any time.
I like the practical guidance in the “Maintaining Jurisdiction” section, in particular the reference to the fact that the referring party is not limited to arguments, contentions and evidence put forward by it before disputes crystallised (Cantillon Ltd v Urvasco). In my experience, responding parties don’t always appreciate this.
Paragraph 3.11 of the guidance note states:
“Although an adjudicator’s jurisdiction derives from the wording of the notice of adjudication, an adjudicator must be aware that his jurisdiction extends to defences to the claim even though it is unlikely that such defences will be mentioned in the notice of adjudication.”
I would have liked to have seen this paragraph clarified to make it clear that this principle only applies to money claims, and will always be subject to the paying party having served a pay less notice in respect of the defences it wishes to raise. As Coulson J stated in in Pilon v Breyer:
“…subject to questions of withholding notices and the like, a responding party is entitled to defend himself against a claim for money due by reference to any legitimate available defence (including set-off), and thus such defences will ordinarily be encompassed within the notice of adjudication.”
I also really like the practical guidance under the heading of “Natural justice“, and the practical pointers on how adjudicators can avoid some of the potential pitfalls. It is very useful reading for adjudicators and parties alike!
To conclude – one suggestion
Finally, one suggestion. The guidance note states that if the adjudicator concludes that a jurisdictional challenge is well founded “he must decline to act”. However, before doing so the adjudicator might want to ask the parties to liaise in relation to the way forward. It may be that the responding party is simply after more time and is prepared to waive a valid “no dispute” challenge subject to it being given more time.