Paragraph 20 of the Scheme for Construction Contracts states that an adjudicator “shall decide the matters in dispute”. The adjudicator may also take into account “any other matters” that are within the scope of the adjudication or are matters “under the contract”, which he considers are “necessarily connected with the dispute”. This extends, at paragraph 20(a), to opening up, revising and reviewing decisions or certificates unless they are stated in the contract to be “final and conclusive”.
It is all a bit of a mouthful. Basically, the Scheme gives an adjudicator very wide discretion indeed!
But in this context, have you ever wondered what “final and conclusive” actually means?
Coulson J had to consider this point recently and, although his comments were obiter, they still make interesting reading.
In Banner Holdings Ltd v Colchester Borough Council, the parties’ contract (GC Works/1 standard form) limited the types of dispute that the adjudicator had jurisdiction to decide. This included the employer’s (Colchester BC) notice of determination, which the adjudicator could not “vary or overrule” (condition 59(8)).
The contractor (Banner) argued that the employer’s decision to terminate its employment under the contract was final and binding on the adjudicator and “as against the adjudicator”. It argued that paragraph 20 should be construed by reference to condition 59(8). By contrast, the employer argued that the effect of condition 59(8) was simply to prevent the adjudicator from “overruling or modifying the decision”, but it did not confer any finality to that decision.
Coulson J had difficulty with the contractor’s argument and could see no justification for holding that “final and conclusive” meant “as against the adjudicator”. He thought this would be a strained construction and would lead to a situation where a contract condition was not final and conclusive as between the parties, but was binding on the adjudicator. He described this as a novel concept.
I have seen a sub-contractor try to use a similar argument on “final and binding” (this time on the DOM/2 standard form). In that case, the sub-contractor argued that while it could not challenge in adjudication the validity of an interim payment certificate (because the contract said it was “final and binding”), it argued that disputes arising under the final account could be referred to adjudication. Since a final account dispute will deal with all the issues between the parties that arose during the project, this argument, in effect, enabled the sub-contractor to get around the “final and binding” nature of the interim decisions.
In adjudication it is not unusual for parties to demonstrate creativity when it comes to the arguments they raise to challenge jurisdiction or resist enforcement. Even when you think there can be no more new arguments, a party surprises you.
