An adjudicator’s jurisdiction is central to their ability to determine a dispute between two parties; without it, their decision will be invalid and unenforceable by a court. Conversely, if an adjudicator has jurisdiction, then, as the Court of Appeal has repeatedly emphasised, that adjudicator’s decision must be enforced, even if it results from errors of procedure, fact or law.
Typically, challenges to an adjudicator’s jurisdiction will be made by the responding party at the outset of a dispute, but it is also common for them to proceed with the adjudication, while reserving their right to challenge the adjudicator’s decision on jurisdictional grounds at subsequent enforcement proceedings in a court or tribunal.
In the recent cases of Prater Ltd v John Sisk and Son (Holdings) Ltd, and Delta Fabrication and Glazing Limited v Watkin Jones & Son Limited, the Technology and Construction Court (TCC) required to consider two distinct challenges to an adjudicator’s jurisdiction in the context of enforcement proceedings.
In the first of those cases, which is addressed below, the TCC was faced with a ‘novel’ argument that the absence of jurisdiction in relation to one adjudication was capable of rendering a decision in a subsequent adjudication a nullity.
In the second, which we have covered here, the court required to consider whether an adjudicator lacked jurisdiction where a referral concerned disputes under two separate contracts.
Prater Ltd v John Sisk and Son (Holdings) Ltd
The adjudicator’s decision in this case arose out of a dispute under an NEC3 Engineering and Construction subcontract, in terms of which Prater Ltd (‘Prater’) was engaged by John Sisk and Son (Holdings) Ltd (‘Sisk’) to carry out design, supply and installation works to an aircraft hangar at Gatwick Airport.
The parties entered into the subcontract on 25 April 2018, with an agreed start date of 9 January 2018 and a contractual completion date of 22 March 2019. The project was subsequently affected by delays and a series of disputes were referred to adjudication, three of which were commenced by Prater and determined by the same adjudicator (Mr Molloy).
In the first adjudication (‘Adjudication 1’), Mr Molloy awarded Prater an extension to the contractual completion date to 15 July 2019. The second adjudication (‘Adjudication 2’) addressed various issues including provisional sums, the deduction of indirect losses and an entitlement to an extension of time, and in the fourth Adjudication (‘Adjudication 4’), Mr Molloy awarded Prater the sum of £1,757,821.35 plus VAT.
In the enforcement proceedings that followed the fourth adjudication, Sisk challenged Mr Molloy’s jurisdiction on the basis that he relied (at least in part) on his earlier decision in Adjudication 2, which Sisk argued was itself “unenforceable, not binding and a nullity”.
In particular, Sisk argued that the issues raised by Prater in Adjudication 2 constituted three separate disputes, contrary to the well-established principle that only a single dispute may be referred to adjudication in any one referral. According to Sisk, Mr Molloy’s decision in Adjudication 2 lacked jurisdiction which, in turn, had the effect of impugning his subsequent decision in Adjudication 4.
The questions that fell to be determined were:
- whether a lack of jurisdiction in Adjudication 2 was capable of impacting the enforceability of Mr Molloy’s subsequent decision in Adjudication 4; and,
- if so, did Mr Molloy lack jurisdiction in relation to Adjudication 2?
The Technology and Construction Court's decision
As noted in our recent article here, adjudication decisions are binding on an interim basis, unless and until the outcome is reversed by a court or tribunal. It follows that, in this case, Mr Molloy’s decision in Adjudication 2 would remain binding and enforceable on the parties in the absence of a timely challenge by Sisk.
In terms of the parties’ contract, in the event that a party was dissatisfied with an adjudicator’s decision, regardless of the grounds for that dissatisfaction, it was incumbent on that party to “notify the other party of the matter which he disputes and state that he intends to refer it to the tribunal”.
In the circumstances, while Sisk had served a Notice of Dissatisfaction in relation to Adjudication 2 by the time of the Adjudication 4 enforcement proceedings, it had taken no further steps to refer the issue to court. Accordingly, the court concluded that the decision in Adjudication 2 remained binding on the parties in all subsequent adjudications (including Adjudication 4).
In any event, while the court did acknowledge that each of the three matters referred to Mr Molloy in Adjudication 2 could have been decided independently, it did not consider it practicable to require a party to bring a whole series of different adjudications in relation to each and every issue arising out of a dispute as if it was a separate claim.
Instead, it was recognised that “clearly, a single dispute in the context of a construction contract may include several distinct issues… One needs to look at the facts of each case and to use some common sense”.
The court therefore rejected Sisk’s arguments, finding that each of the three matters raised in the context of Adjudication 2 were simply discrete issues going to the determination of a single dispute.
Points to take away
Serial adjudications are common, and this case serves as a useful reminder that where an aggrieved party wishes to avoid findings in one adjudication being relied upon in a subsequent adjudication, it is essential that they take immediate steps to challenge that decision with a view to having it set aside or revised by a court.
In practical terms, this means parties should review carefully the requirements of the dispute resolution clauses in their contracts, and in particular the requirements of any contractual adjudication scheme, to ensure that any objections to an adjudicator’s decision are raised properly and in a timely manner.
For further information please contact Alyson Shaw, Solicitor in our property and infrastructure disputes team, at alyson.shaw@shepwedd.com, or get in touch with your usual Shepherd and Wedderburn contact.