The golden rule when contemplating adjudication or when you are on the receiving end is to consider whether the adjudicator has the necessary jurisdiction to decide the dispute.
If the adjudicator has no jurisdiction then the decision will be unenforceable. Consequently, parties will have wasted time and money and be no closer to resolving the dispute.
So what are the necessary ingredients for a successful and enforceable adjudication? Well, the parties must be in dispute and there must also be a written contract between them.
Despite the use of standard forms and squeezy contracts, cases still crop up where the contracting basis between the parties is relatively informal and the question arises as to whether there is a written contract.
If you are on the receiving end of an adjudication where there is no contract in writing, what can you do?
This is exactly the position that arose in Harris Calnan Construction v Ridgewood (Kensington) in 2007. Ridgewood, on the receiving end of the adjudication, challenged the adjudicator’s jurisdiction on the grounds that there was no contract in writing.
After considering the parties’ submissions the adjudicator disagreed and decided there was a written contract. When an award was made in Calnan’s favour, Ridgewood failed to pay.
So Calnan went to the Technology and Construction Court to get its decision enforced. In court, Ridgewood defended its failure to pay on the basis that the decision was unenforceable due to the adjudicator’s lack of jurisdiction as there was no contract in writing.
In this case the court stated that it would examine whether or not, when the jurisdiction point was raised in front of the adjudicator, the parties agreed to be bound by his conclusions.
If the parties agreed to be bound by the adjudicator’s decision, then the adjudicator’s decision on jurisdiction is binding. If the challenger’s position was reserved, and he made it clear that, although he was content for the adjudicator to express a view on the point, he did not agree to be bound by that view, it is not binding.
The court stressed the importance of parties reserving their right to argue at a later stage that the adjudicator did not have the jurisdiction to reach that decision.
In this case, although Ridgewood initially argued that the adjudicator did not have jurisdiction and put these submissions in writing, it failed to reserve its position throughout the adjudication. Consequently, Ridgewood had lost its right to challenge the decision.
Defending against the enforcement of an adjudication is notoriously difficult as the courts strive to uphold decisions of adjudicators.
If there are genuine jurisdictional challenges it is important these are maintained consistently throughout the adjudication to have a fighting chance of resisting enforcement.
This case stresses the importance of maintaining jurisdictional arguments throughout the adjudication even if jurisdictional arguments fail before the adjudicator.
It is also imperative not to give the adjudicator authority to decide his own jurisdiction, as again you will lose your right to challenge the decision on enforcement.
Therefore, it is advisable to make written submissions, expressly reserving your rights in the adjudication to resist enforcement on the basis of those jurisdictional arguments and making it clear that you do not agree to be bound by any decision the adjudicator makes on jurisdiction.
Alastair Young is director of the construction department of HBJ Gateley Wareing