A dispute was referred to me recently that involved an alleged repudiatory breach of contract and an alleged wrongful suspension of work. I had to decide whether these matters, which the contractor argued were central to the dispute (and the parties’ resultant entitlements), were within the scope of what had been referred to adjudication and therefore fell within my jurisdiction.
On the facts, both parties alleged that the other had repudiated the contract, and both were claiming damages:
- The sub-contractor was claiming that the contractor had repudiated the contract by engaging an alternative sub-contractor. It claimed it had properly suspended its works as a consequence.
- The contractor alleged that the sub-contractor had wrongly suspended its works, and that constituted a repudiatory breach of contract. As a result, it had a counterclaim for damages arising from the repudiation and argued that the sub-contractor was not entitled to any payment.
The TeCSA adjudication rules applied to the adjudication. The relevant paragraphs are 13 and 14:
“13. The scope of the Adjudication shall be the matters identified in the notice requiring adjudication, together with
(i) any further matters which all Parties agree should be within the scope of the Adjudication, and
(ii) any further matters which the Adjudicator determines must be included in order that the Adjudication may be effective and/or meaningful.
14. The Adjudicator may decide upon his own substantive jurisdiction, and as to the scope of the Adjudication.”
The contractor argued that paragraph 13 allowed me to deal with these matters as they either fell within the matters identified in the notice (paragraph 13(i)), or were further matters that must be included to make the adjudication effective (paragraph 13(ii)).
I agreed with the contractor. As the question of repudiation was central to the determination, it was a straightforward issue to deal with. If it didn’t fall with paragraph 13(i), it most definitely fell within paragraph 13(ii). Paragraph 14 gave me the power to make this decision.
Although it wasn’t strictly necessary, I also held that I had the power to direct payment from the sub-contractor to the contractor (if I found it was in repudiatory breach). I relied on Coulson J’s judgment in Workspace Management Ltd v YJL London Ltd to support this.
I was the adjudicator in Workspace, so I was acutely aware that the scope of my jurisdiction was held to be wider than I had concluded. Coulson J held that I had the flexibility to reach a decision that reflected the full extent of my findings, even if that went beyond the strict literal wording of the notice of adjudication. He described me as “too modest” when deciding that I didn’t have jurisdiction to direct payment from the referring party to the responding party!
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In FIDIC -Red book, has the adjudicator the right to decide to terminate a construction contract?
Please, take into consideration that the right to terminate is solely the parties’ right as described in Chapter 15.