Adjudication case review: recent adjudication enforcement decisions

While disputes referred to adjudication have become increasingly complex, the fundamental principles remain largely unchanged – an adjudicator's decision will be binding on the parties and enforceable unless there is an exceptional circumstance.

We examine below two recent adjudication enforcement decisions, which deal with the position where a party wishes to rely on an exceptional circumstance to dispute the jurisdiction of an adjudicator.

Dispute jurisdiction? Say so (quickly and repeatedly)!

Mrs Justice Jefford's judgment in Imperial Chemical Industries Limited v. Merit Merrell Technology Limited [2016] EWHC B30 (TCC) is a reminder that, when it comes to disputing the jurisdiction of an adjudicator, the party objecting must object early and maintain that objection.

Here, Merit referred to adjudication the question of its entitlement to payment of £816,093.34 pursuant to an application for payment (Application 23). This was the fourth adjudication between the parties and Mr Wright was appointed as adjudicator. A previous adjudicator (Mr Sliwinski) had commented in adjudication 2 that no payment was due to Merit under Application 23 (albeit Mr Sliwinski was considering Merit's entitlement to a lien over documents and not the value of Application 23 specifically).

The parties made their submissions and Imperial raised no challenge as to Mr Wright's jurisdiction. Imperial's defence relied partly on Mr Sliwinski's comments in adjudication 2 that no payment was due to Merit under Application 23. Following the submissions, Mr Wright sought clarification of Imperial's position as to how Mr Sliwinski's comments in adjudication 2 were affected by his finding in adjudication 3 that Imperial fundamentally breached the contract before the final date for payment under Application 23. In response, Imperial argued that Mr Wright had no jurisdiction to determine Merit's entitlement for payment under Application 23 as this had already been decided in adjudication 2.

Mr Wright held that Mr Sliwinski's comments in adjudication 2 were binding on him. However, he found that Mr Sliwinski's later finding in adjudication 3 changed the position (because Imperial cannot benefit from its own repudiatory breach of the contract). Mr Wright went on to decide that Merit was entitled to payment in the sum of £816,093.34 as Imperial had failed to serve a valid payment or pay less notice.

At court, Imperial argued that Mr Wright lacked jurisdiction to decide the dispute in the way he did. Specifically, Imperial considered Mr Wright had no jurisdiction to find that Mr Sliwinski's comments in adjudication 2 were binding on him but then to reach a different conclusion.

This argument was given short shrift by the TCC. Imperial was aware that Mr Wright was being asked to decide Merit's entitlement to payment under Application 23. To the extent Imperial disputed Mr Wright's jurisdiction to do so, Imperial should have objected from the outset and reserved its position as to jurisdiction throughout the adjudication. It did not do so (in fact, it did not raise any argument as to jurisdiction until after the parties had provided their complete submissions).

Jefford J considered it well-established law that a party that does not reserve its position as to jurisdiction (both at the outset and with submissions throughout the adjudication) is taken to have waived any jurisdictional challenge and submitted to the adjudicator's jurisdiction. Accordingly, Merit's request for summary judgment in the sum of £816,093.34 (plus VAT) was granted.

The clear message here is not new but is important – jurisdictional challenges in adjudication must be made at the earliest opportunity and must be maintained. In short, object early and object repeatedly!

No déjà vu here

Mrs Justice O'Farrell in Universal Piling & Construction Ltd v. VG Clements Ltd [2016] EWHC 3321 (TCC) has recapped the principles applicable, when reviewing an adjudicator's jurisdiction, to deciding whether a dispute is the same or substantially the same as one decided in a previous adjudication.

Here, the first adjudication between the parties related to sums owed under Universal's interim payment application dated September 2015. The second concerned the amount due to Universal following the service by VG Clements of payment and pay less notices dated August 2016 (issued after completion of the defects liability period).

Relying on established precedents and particularly the factors set out in Carillion Construction Ltd v. Stephen Andrew Smith [2011] EWHC 2910 (TCC) (see paragraph 56), O'Farrell J had no difficulty concluding that the disputes referred to adjudication were different and dismissing Universal's argument that the adjudicator had no jurisdiction to decide the second dispute.