In Clarke v JMD [2012] EWHC 2627 (TCC)  the court found that the parties had not entered into an ad hoc adjudication, contrary to the adjudicator’s finding. As such, the adjudicator had no jurisdiction to make a decision. The judgment raises interesting issues regarding ad hoc adjudications and the conduct required to constitute submission to the jurisdiction of the adjudicator.

Facts

The claimant sub sub-contractor commenced an adjudication against the defendant sub-contractor seeking payment for unpaid sums in relation to works which were (it was agreed) arguably exempt from the Construction Act by virtue of Section 105 (2)(C)(ii) (which contains the exclusions to “construction operations” for the purposes of the Act).  Nevertheless, an adjudicator was appointed and wrote to the parties requesting security for his fees of £6000.  The defendant replied saying that they were unrepresented, unfamiliar with adjudication, and that they required guidance on the procedures, further documentation and more time.  The defendant nevertheless paid the adjudicator’s invoice shortly afterwards.

When claims consultants were instructed on behalf of the defendant, they wrote to the adjudicator stating that he had no jurisdiction and that their client’s position was reserved.  The adjudicator made a detailed (non-binding) decision on jurisdiction stating that, although there was no statutory jurisdiction, there was an ad hoc adjudication agreement arising out of the payment of the fees.  The defendant wrote to the adjudicator challenging his conclusion and stating that they would take no further part in the adjudication.  The adjudicator then made a decision in favour of the claimant.

Before the court, in enforcement proceedings, the claimant submitted that the defendant’s initial letter and payment of fees constituted a submission to the jurisdiction.  The defendant disputed this pointing to the decision in Linnett [2009] where the court ruled that if a party participates in the adjudication process without prejudice to its contention that there is no jurisdiction, then it may nevertheless be liable for the adjudicator’s reasonable fees and expenses.

Decision

The court found in favour of the defendant finding that its initial letter indicated to the adjudicator the meaning which the defendant ascribed to it. The adjudicator’s subsequent ruling on jurisdiction was described as “non-binding” which indicated his interpretation of the letter as not constituting a submission to the jurisdiction.  The Linnett case indicated that there could be liability for fees even if jurisdiction was contested.

Comment

The judgment indicates that, in general, clear wording is needed to constitute a submission to the jurisdiction of an adjudicator and therefore to an ad hoc adjudication. Payment of the adjudicator’s fees will not of itself establish jurisdiction.  An unequivocal statement that a party agrees to be bound is not required, and the court will construe the correspondence and conduct applying ordinary principles of construction. On the facts of this case, the defendant had not submitted to the jurisdiction of the adjudicator despite paying its fees and not contesting jurisdiction formally until external consultants had been instructed. In this case the adjudicator issued a ‘non-binding’ decision on jurisdiction, which influenced the court’s decision. Whilst it will always be a question of fact whether one party submits to the jurisdiction of a third party, rights should at least be reserved and actions taken described as being without prejudice to any other rights. If in doubt a party should formally withdraw as soon as possible as it is unclear whether the defendant’s withdrawal from the process will have protected it from liability for the adjudicator’s fees.