Subscribers have recently asked two related questions about starting an adjudication:
- What should the referring party do if it thinks it will miss the deadline for serving the referral notice?
- Can a referring party start an adjudication, then stop and start the process over again? Does this also apply to the responding party?
The starting point for referring a dispute to adjudication is to make sure you are familiar with the time limits in section 108(2) of the Construction Act 1996. This requires the referral notice to be served within seven days of the notice of adjudication. (Paragraph 7 of Part I of the Scheme for Construction Contracts 1998 mirrors these time limits.)
In general, the courts have interpreted these provisions strictly. If the adjudication proceeds and there is an issue over the timing of the notice of adjudication and the referral notice, in enforcement proceedings, it is likely that the court will find that the adjudicator did not have jurisdiction and so will refuse to enforce his decision.
This is subject to the proviso that the responding party must make the appropriate jurisdictional challenge at the time, and maintain that challenge throughout the adjudication. If not, the right to challenge the decision on enforcement will be lost (for example, see Akenhead J’s judgment in Allied P&L Ltd v Paradigm).
What if I’m going to miss the deadline for serving the referral?
If the referring party is unable to meet the deadline for serving its referral notice, the best course of action will be to inform the responding party that it is going to re-serve its notice of adjudication. This sets the clock running again and allows the referring party to avoid any jurisdictional challenges about the seven-day limit.
The referring party will also need to start the adjudicator’s appointment process again.
Alternatively, the parties could agree that the responding party will not take a jurisdictional point about late service of the referral notice. (Although, typically, there would be no incentive for the responding party to do this.)
But can a referring party withdraw and start again?
Generally, the referring party can withdraw from an adjudication at any time, even at the eleventh hour, and will only be liable for its own costs and the adjudicator’s fees. See:
- The Court of Appeal’s decision in John Roberts Architects Ltd v Parkcare Homes (No2) Ltd.
- Jackson J’s judgment in Midland Expressway Ltd v Carillion Construction Ltd.
For a discussion of this from the adjudicator’s perspective, see Matt Molloy’s Blog post, To resign or not to resign: that is the question.
But isn’t stopping and starting forum shopping?
Some commentators have suggested that stopping and starting again is forum shopping and they cite Akenhead J’s judgment in Lanes Group plc v Galliford Try Infrastructure Ltd. However, in that case the TCC considered whether the referring party could withdraw in circumstances when it did not want the nominated adjudicator because it alleged there was bias. Again, the court said the referring party could withdraw and refused the responding party’s injunction application.
What happens if the responding party stops?
In short, if the responding party withdraws at any time, the adjudication will continue in its absence and the adjudicator’s decision will be enforceable against it (assuming it loses). There is nothing inherently wrong with a one-sided adjudication, and Matt Molloy discussed this recently: see Blog post, What if…? Could the adjudicator’s decision have been different?.
If the responding party’s refusal to participate takes place before it has taken any steps in the adjudication proceedings, it should reserve (and maintain) its position on jurisdiction, so that it can challenge the adjudicator’s decision at enforcement.
The timing of when the responding party stops being involved in the adjudication will affect its liability for the adjudicator’s fees. In Linnett v Halliwells, the court held that the parties are jointly and severally liable for the adjudicator’s reasonable fees, even if the responding party did not sign the adjudicator’s terms and conditions of appointment. Only if the responding party challenges jurisdiction from the outset and refuses to participate in the adjudication, without asking the adjudicator to give a non-binding decision on his jurisdiction, will it escape this liability.
This was subsequently confirmed in Fenice v Jerram Falkus.