The case of Hitachi Zosen Inova AG v John Sisk & Son Ltd, has provided clarification when challenging the jurisdiction of an adjudicator, where it is claimed that the same or substantially the same question has already been decided in an earlier adjudication.

Comment

When challenging jurisdiction of an arbitrator, parties should examine the decision previously made by an adjudicator rather than the issues of referral themselves. Whether a subsequent dispute is substantially the same as the previous one is a question of fact and degree.

It was not the intention of parliament when constructing the Scheme for Construction Contracts (England and Wales) Regulations 1998, Sch.1 Pt 1 para.9 that where several disputes or issues had been referred to adjudication and the arbitrator had not given decisions on all of them, that future adjudications concerning those outstanding matters should be prohibited.

The Parties and background to the dispute

The Claimant had employed the Defendant to provide design and construction services. When additional work was carried out by the Defendant under the contract, an “event” was created. These proceedings related to one of these events, event 1176.

During the course of the contract, a number of disputes were referred to adjudication. Event 1176 was included in the 2nd and the 8th adjudication referrals.

In the 2nd Adjudication, the defendant had sought a decision confirming that event 1176 (amongst others) was a variation of the contract and required a valuation. The adjudicator decided for the defendant but due to insufficient evidence put before him, could not provide a valuation for event 1176.

In the 8th adjudication brought by John Sisk & Son Ltd, a valuation was sought for event 1176. The adjudicator valued event 1176 at £826,000 and decided that sum was payable by Hitachi Zosen Inova AG. The Claimant in these proceedings subsequently challenged the jurisdiction of the adjudicator for the 8th adjudication, on the basis that the same question had already been decided in the 2nd adjudication. However, the claimant’s challenge was unsuccessful and Stuart-Smith LJ gave judgment for the Defendant.

Deciding on whether an arbitrator has jurisdiction

When reaching the decision that the 8th adjudication should be enforced, the judge said it was a question of fact and degree whether the dispute was the same or substantially the same as the other, referring to the Court of appeal’s judgment in Quietfield ltd v Vascroft Construction Ltd [2006] EWCA Civ 1737.

Rather than looking at what was referred in each adjudication (which he said could lead to a misleading and irrelevant similarity between the two disputes), the judge examined the decisions made in both adjudications. Stuart-Smith LJ found that the decision made by the adjudicator in the 2nd adjudication had only concluded that event 1176 was a variation of the contract and required a valuation - the value of “£nil” was not a valuation. The adjudicator had left open whether there was any value for event 1176, as at that time it was not possible to calculate a valuation due to insufficient evidence and was to be decided at a later date on a subsequent application.

Stuart-Smith LJ found that the subject of the 8th adjudication was precisely what the adjudicator had declined to decide in the 2nd, and therefore the dispute in the 8th was not the same or substantially the same as the dispute decided in the 2nd. Therefore it was found that the adjudicator in the 8th adjudication had jurisdiction.