Such an easy question to ask, but how easy is it to answer?
It seems to me that there is no straightforward answer.
An adjudicator is expected to investigate his own jurisdiction when the notice of adjudication is served. It is accepted that he should resign if he concludes he has no jurisdiction to deal with the dispute. An adjudicator may conclude that he has no jurisdiction for a multitude of reasons; over the years parties and the courts have come up with a long list of these.
Even if the adjudicator doesn’t resign, he should at least ask the parties for their views. That is what I always do. It may well be that the parties will be happy to continue with the adjudication, and waive whatever reason gives rise to a doubt over jurisdiction. In the long run, doing so may save the parties significant time and costs. Alternatively, the adjudicator may resign and the referring party can take whatever steps are necessary to correct the problem and start the adjudication over. Again, in the long run, this will save time and money, and may only delay matters by a few days.
But back to my initial question. When does an adjudicator’s jurisdiction begin?
In the above example, since the adjudicator is investigating his jurisdiction before the referral has been served, it is arguable that he does not have jurisdiction. The dispute has not been “referred” to him at that stage (both the Construction Act 1996 and the Scheme for Construction Contracts 1998 require the dispute to be “referred”). (And it is trite law that the adjudicator cannot make a binding decision on his own jurisdiction, unless the parties agree otherwise.)
It is also arguable that if the adjudicator gets the answer to the question wrong, he doesn’t have jurisdiction even if he does continue. It is not until the parties acquiesce in the mistake, that the adjudicator is given something that he didn’t actually have. The most reason example of this was in SG South Ltd v Swan Yard (Cirencester) Ltd (and see my blog post).
So, what happens to the adjudicator’s costs pre-referral?
Generally, any costs that the adjudicator incurs in the period before the referral is served get scooped up as part of the costs of the adjudication. Occasionally, if the adjudicator resigns, there may be an issue as to liability for those costs. If you get re-appointed, fine. It’s when you don’t get reappointed that problems may present themselves.
Recently I was nominated by an ANB on two concurrent adjudications between the same parties on the same contract, where there were separate, but related, disputes. I was asked by the responding party to give directions in relation to the content of both referrals and accompanying documents in the two adjudications. While I dealt with the request and the parties’ competing arguments and gave directions, ultimately the referring party did not refer its disputes and I stood down.
The referring party then asked me to forward a bill for my time. This made me wonder upon what basis I was entitled to be paid. For example, I am conscious that there is one school of thought that says you are not the adjudicator until you receive the referral. Until then you have no obligation to adjudicate the dispute and reach a decision. As the referring party never served a referral in either adjudication, did I have jurisdiction?
I prefer to adopt the logic applied by Ramsey J in Linnett v Halliwells, where he held that the adjudicator could recover his fees from the responding party to the adjudication even though that party raised questions of jurisdiction and refused to sign the adjudicator’s terms of appointment.
On that basis, in my example, both parties were jointly and severally liable for the cost of dealing with the request for directions (it was the responding party who had made the request and it also participated in the arguments as to the form my directions should take).
Thankfully, on this occasion, it won’t be necessary to test this point as the referring party did the honourable thing and settled my bill.