REUTERS | Sukree Sukplang

Who pays for an unsuccessful jurisdictional challenge?

A few weeks ago, I wrote about the timing of when adjudicator’s fees start being incurred. John Redmond commented on my piece, but one thing neither of us mentioned is which party should bear the liability for the adjudicator’s fees incurred specifically on an unsuccessful jurisdictional challenge.

We can look at this question in nice, easy stages.

Does the adjudicator have the power to determine who pays his fees?

I think we have to assume that the answer to this first question is yes. Otherwise, we fail to get out of the starting blocks on this one.

If the adjudicator has the power to determine liability for his fees, he must equally have the power to apportion liability between the parties as he thinks is appropriate. (See paragraph 25 of the Scheme for Construction Contracts 1998 and paragraph 26 of the TeCSA adjudication rules.)

Should the loser pay?

It is usually the case in adjudication (as in other areas of litigation) that the adjudicator will determine that the loser pays the adjudicator’s fees and expenses. I don’t believe this principle should change, just because there has been a jurisdictional challenge.

What if the referring party loses the adjudication, should it pay the wasted costs of the jurisdictional challenge?

I guess there are two sides to this one:

  • On the one hand, the responding party’s unsuccessful jurisdictional challenge has increased the costs of the adjudication. Why should the referring party pick up those costs, as well as all the other costs it will be liable for? After all, the referring party did not make the jurisdictional challenge.
  • On the other hand, if the referring party has lost the adjudication, it is arguable that it did not have a good claim in the first place. It has already put the responding party to the time and effort of dealing with that “bad” claim, and so there should be some respite and it (the referring party) should pay the lot.

As is so often the case in litigation, which argument is right will depend on the facts. Unless the responding party’s jurisdictional challenge was totally devoid of merit, or made very late (and the court has made clear the importance of making jurisdiction challenges timeously), my instinct in this scenario is to hold the referring party liable for all of the adjudicator’s fees.

You have been warned!

2 thoughts on “Who pays for an unsuccessful jurisdictional challenge?

  1. Matt,

    Having attended the RICS’ Diploma in Adjudication course and listened to your talks, I read your blogs with interest. However, I note what appears to me to be a small error. Scheme paragraph 24 refers to s.42 of the AA 1996. So I think above you mean paragraph 25 of Part 1 of the Scheme and not 24.

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