An employer's notice of adjudication asked for a declaration that there was a binding construction contract and that its terms included those of the Joint Contracts Tribunal Intermediate Building Contract with Contractor's Design (ICD) 2011 form. However, the adjudicator held that, as the contractor claimed in its defence, there was a contract on the terms of a letter of intent, rather than the ICD form.

In court proceedings(1) brought by the contractor for a declaration that the decision was enforceable, the employer claimed that the adjudicator had not been entitled to make the decision because the notice of adjudication invited no determination of what the contract terms were, if not including the ICD form. Adjudicators derive their jurisdiction from the terms of the notice of adjudication, but the court held that it is inappropriate to construe a notice of adjudication so as to deprive the responding party of a defence. It was impossible for the adjudicator to decide the dispute identified in the notice as to the existence of a valid construction contract without deciding whether basic terms had been agreed and, if so, what precisely those terms were.

The judge also noted that because (following amendments to the Construction Act) construction contracts need no longer be in writing and adjudicators may have to deal with contract formation issues – as well as underlying claims – within the 28-day period, in such cases the courts should give adjudicators some latitude in grappling with these difficulties. In an ordinary case, and depending on the notice's wording, it may be unduly restrictive to conclude that an adjudicator may decide what the contract is not, but not what the contract is. Similarly, it may be unduly restrictive to say that any notice of adjudication raising issues of contract formation and terms with financial claims somehow involves more than one dispute. The employer's arguments therefore failed.

For further information on this topic please contact Chris Fellowes at Mayer Brown International LLP by telephone (+44 20 3130 3000) or email (cfellowes@mayerbrown.com). The Mayer Brown International LLP website can be accessed at www.mayerbrown.com.

Endnotes

(1) Penten Group Ltd v Spartafield Ltd [2016] EWHC 317.

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