MDA Law
Jurisdictional Challenges That Can Be Raised Against an Adjudicator
Construction disputes are inevitable. Looking at adjudication as a form of dispute resolution, I thought it might be necessary to refresh and briefly look at some of the jurisdictional challenges which can be raised against an adjudicator and the adjudicator’s decision.
Jurisdictional challenges can be the following:
- that there is no agreement to refer a dispute to adjudication;
- that the adjudicator was not properly appointed in terms of the required adjudication agreement;
- that the dispute, is one not capable of being referred to adjudication;
- the parties to the dispute, are not the same parties that entered into the contract;
- the dispute has been previously decided; and
- breach of natural justice.
It is important (if not crucial), that any jurisdictional challenge should be addressed at the outset as and when it arises. Jurisdictional challenges can be raised at a later stage in the adjudication process by a defeated party, when the victorious party seeks to enforce the adjudicator’s decision. In failing to deal with a jurisdictional challenge, can result in the adjudicator’s decision been found to be null and void, which decision will not be enforceable.
The agreement to refer a dispute
An adjudicator derives his jurisdiction from the notice of adjudication.[1] It is the dispute described in the notice of adjudication that the adjudicator has jurisdiction to determine.[2]
Under the FIDIC, the wording of the Referral Notice should be concise and clearly state what the claimant is asking the DAB to decide. The Referral Notice will define the scope of the dispute and hence the jurisdiction of the DAB.[3]
Appointment of the adjudicator
The adjudicator should confirm and establish that the prescribed procedure for his or her appointment was properly complied with. If not, the adjudicator’s appointment can be challenged.[4]
In Eskom Holdings SOC Limited v CMC-Mavundla-Impregilo JV[5], the adjudicator’s contract was to be renewed on an annual basis. The court found that the adjudicator’s contract terminated when that annual period had expired. Upon such expiration with no renewal of the adjudicator’s term, its jurisdiction ceased to exist and it could not decide on a dispute arising thereafter.
The dispute should be one capable of being referred
The dispute should be one that is capable of being referred to adjudication, which satisfies the requirements of the contract.[6]
In Purton (t/a Richwood Interiors) v Kilker Projects Ltd[7], the judge referred to Court of Appeal case, Percy Trentham[8], stating, “The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter legal relations…”. It was considered that there was substantial “performance” on both sides. While the judge acknowledged that it was theoretically possible for parties to carry out works and receive payments without having entered into a binding agreement, the judge considered that it was unrealistic to suggest that was what happened in this case.[9] The jurisdiction to refer was dependent upon the existence of a construction contract and a dispute arising under it. It was not dependent upon identifying each and every term with complete accuracy.[10]
The JBCC contract requires that a notice of disagreement be issued and only after prescribed period of time, does the disagreement become a dispute. If a dispute was notified before the disputing party followed the process of notifying a disagreement, the adjudicator will not have jurisdiction to decide on the dispute(s) which have not been properly notified.
There is no dispute if the responding party has not had sufficient time to respond to the claim before adjudication was commenced.[11]
Parties to the dispute, the same parties to the contract
The adjudicator should establish that the parties to the dispute, is the same parties that had entered into the contract under which the dispute has been referred.
Dispute previously decided
In Carillion Construction Ltd. v Stephen Andrew Smith[12], the court held that “One needs to consider what is and was the ambit and scope of the disputed claims which is being and was referred to adjudication…One has however to take a reasonably broad brush approach in determining what the referred claims were. The reason for this is to avoid repeat references to adjudication of what is essentially the same dispute.”
In the event the adjudicator is of the view that the dispute(s) referred was already decided on, he/she should rather resign.[13] In the Watkin Jones[14] case, the second adjudicator had resigned because there was no dispute, because it had already been decided.
Rules of Natural Justice:
Audi alteram partem
The extent and scope of dispute referred, is further derived from the applicable procedural rules of the adjudication and the referrals exchanged between the disputing parties.[15] An enquiry into jurisdiction “will usually involve considering the Referral, witness statements and other documents available to the adjudicator at the time that he is making that enquiry.”[16]
In Redwing Construction Ltd v Wishart[17] the court held that an adjudicator had not had jurisdiction to make findings on an issue which was beyond the scope of the dispute referred to him.
Time periods
Time periods prescribed within the adjudication provisions and the procedural rules to the adjudication should be strictly complied with. Failure by the parties and / or the adjudicator to comply with the prescribed time periods, will result in the adjudicator losing jurisdiction. If a referring party fails to issue its referral within the specified / agreed time period then the referral will be irregular and invalid and the adjudicator would have lost jurisdiction to decide the dispute.[18]
However, a failure by the responding party will not necessarily result in a loss of jurisdiction. The adjudicator can still proceed on the referral alone to decide the dispute.[19]
- CONCLUSION
When a party challenges the adjudicator’s jurisdiction, the adjudicator should investigate such challenge at the outset as and when it is raised.
If the challenge has merit, then the adjudicator should refuse to proceed with the adjudication, unless and until it has jurisdiction. If the challenge is without merit, then the adjudicator should notify the disputing parties accordingly and proceed with the adjudication.
The adjudicator should establish the limits of its jurisdiction within the wording of the notice of adjudication, the construction contract, the identity, capacity and authority of the contracting parties, previous decisions and the defences raised during the adjudication. Further, to deal with any jurisdictional objections identified in other documents, such as witness statements.
The adjudicator should not be bias and should adhere to the audi alteram partem principle and give each party fair opportunity to state its case or to respond or comment on important points raised.
The time periods prescribed to the adjudication process (i.e. time for submission of referral/response and the issuing of adjudicator’s decision), should not be undermined to impede the benefit of a speedy dispute resolution process.
An adjudicator who proceeds to issue a decision when his/her jurisdiction limits are not established and complied with, will run the risk that the decision becomes unenforceable. It may even risk the entitlement to any payment of its adjudicator’s fees.
- Construction Law Journal 2014, article titled “Construction Act review: jurisdiction – defences and the scope of the dispute referred to adjudication”, authored by Peter Sheridan (pp1) ↑
- Ibid ↑
- See “The Working of the Dispute Adjudication Board (DAB) under new FIDIC 1999 (New Red Book) by Gwyn Owen (pp 51) ↑
- Eskom Holdings SOC Limited v CMC-Mavundla-Impregilo JV (unreported 15 April 2015) [SGHC] ↑
- (unreported 15 April 2015) [SGHC] ↑
- Radon Projects (Pty) Ltd v N V Properties (Pty) Ltd and Another 2013 (6) SA 345 (SCA) ↑
- [2015] EWHC 2624 (TCC); [2015] B.L.R 754 (QBD (TCC)) ↑
- G Percy Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyd’s Rep. 25; (1992) 63 B.L.R. 44 ↑
- Construction Law Journal, article titled “If it smells like a contract…establishing the existence of a contract and adjudication jurisdiction”, authored by Katie Lee (pp 2-3) ↑
- Ibid ↑
- Carillion Construction Ltd v Devonport Royal Docks Ltd [2005] EWHC 778 (TCC) ↑
- [2011] EWHC 2910 (TCC) (10 November 2011) ↑
- Watkin Jones & Son Ltd v Lidl UK GmbH Unreported December 27, 2001 TCC ↑
- Ibid ↑
- Pilon Ltd v Breyer Group Ltd [2010] EWHC 837 (TCC) ↑
- Aedifice Partnership Limited v Mr Ashwin Shah [2010] EWHC 2106 (TCC) ↑
- [2010] EWHC 3366 (TCC) ↑
- Hart Investments v Fidler and Another [2006] EWHC 2857 (TCC) ↑
- Sasol Chemical Industries Ltd v Odell and Another (401/2014) [2014] ZAFSHC 11 (20 February 2014) (FS) ↑
