A recent case in the Technology and Construction Court has decided that an adjudicator's decision made partly without jurisdiction rendered the whole decision unenforceable.
The relevant legislation
Section 104 of the Housing Grants, Construction and Regeneration Act 1996 (the "Construction Act") defines a "construction contract" as an agreement with a person for the carrying out of "construction operations". The Construction Act also provides that where an agreement relates to construction operations as well as other matters, the adjudication provisions only apply to the construction operations.
Section 105 defines "construction operations" and details certain items of work which do not fall within the definition.
Cleveland Bridge ("Cleveland") was the steelwork subcontractor to the Whessoe-Volker Stevin Joint Venture ("the JV") at the Dragon Liquefied Natural Gas terminal at Milford Haven. A dispute arose in relation to Cleveland's final account and Cleveland referred it to adjudication. The JV submitted a jurisdictional challenge, arguing that the adjudicator did not have jurisdiction because some of the works fell within the exceptions detailed in s105 and therefore there was no construction contract. The challenge failed and Cleveland continued with the adjudication. Cleveland sought a decision both on the whole of the dispute and, in the alternative, on the part of the dispute which related to construction operations.
The adjudicator held that she had jurisdiction over the whole dispute and found in favour of Cleveland. The decision did not indicate which portion of the sum awarded was in respect of the works falling within the definition of construction operations and which related to the works falling under the exceptions.
The JV refused to pay and Cleveland promptly raised an action for enforcement of the adjudicator's decision.
Arguments before the court
The JV argued that the adjudicator did not have jurisdiction in relation to the elements of work which were excepted by s.105 and, as the decision was made partly without jurisdiction, it could not be enforced.
Although part of the work carried out by Cleveland did fall within the exceptions, a large part of the works fell within the definition of construction operations. As the adjudicator's decision was made in relation to the whole contract, the court was effectively asked to decide whether it was entitled to sever the section of the adjudicator's decision over which there was jurisdiction from the remainder of the decision, and make an award in respect of that section only.
The Court held that because the adjudicator's decision was made partly without jurisdiction, the whole decision was unenforceable.
The adjudicator had considered only one dispute and had written a single decision, on the incorrect understanding that she had jurisdiction to address the whole dispute. Those parts of the decision which were made within jurisdiction could not be severed from those that were made without jurisdiction.
This judgment does not alter the need for an adjudicator's jurisdiction to cover the whole of the dispute to which his/her decision relates. However, some comments from the judge suggest that a carefully worded decision which is separated out into distinct parts may allow the courts to sever that part of the decision for which there is no jurisdiction and enforce the remainder.
Where a Referring Party has referred a dispute to adjudication which may raise issues of jurisdiction over part of the dispute, the Referring Party should be careful to seek a decision which deals separately with that problematic part. There is no guarantee that the courts will be prepared to partially enforce a decision, but this case indicates a willingness to consider such a course of action in the right circumstances.