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 JCT ICD 2011 form. The adjudicator decided, however, that, as claimed by the contractor in its defence, there was a contract on the terms of a letter of intent, rather than the ICD form. In court proceedings by the contractor for a declaration that the decision was enforceable, the employer claimed that the adjudicator was not entitled to reach it, because the notice of adjudication did not invite any 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 said that it is not appropriate 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 added his view that because, since the Construction Act amendments, construction contracts no longer have to be in writing and adjudicators may have to deal with contract formation issues, as well as underlying claims, in the 28 day period, the courts should, in such cases, 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 could decide what the contract was not, but not what the contract was. Similarly, it may be unduly restrictive to say that any notice of adjudication raising issues of contract formation and terms with financial claims somehow involved more than one dispute. The employer’s arguments therefore failed.

Penten Group Ltd v Spartafield Ltd [2016] EWHC 317