Contractual adjudication provisions

The contract in the next case contained a contractual provision contained in the GC/ Works sub-contract which is equivalent to paragraph 25 of the CIC Procedure. The issue arose as to whether the judge in the Epping case (reported above) was correct in holding that, if an adjudication provision was non-compliant with the Construction Act, the Scheme applied instead of the contract adjudication provisions.

Aveat Heating Limited v Jarram Falkus Construction Limited [2007] EWHC 131 (TCC)

The judge (who had also decided the Epping case) found that the adjudicator had issued his decision (awarding sums to the contractor) in time. However, the judge also held that the adjudication provision in the GC/Works sub-contract (which reflected the terms of paragraph 25 of the CIC Procedure) was non-compliant (for the reasons he gave in the Epping case).

The contractor challenged the judge’s finding (in the Epping case) that the result of including a non-compliant contract adjudication provision was that the Scheme applied in its totality, in lieu of all the other contract adjudication provisions.

Do the contract adjudication provisions become void?

The judge acknowledged that the Construction Act did not state that if the Scheme applied, the contractual adjudication provisions were void. However, the judge affirmed his previous decision - in the Epping case - that the Scheme and the contractual provisions could not co-exist in the contract

The judge approved a footnote in Keating on Construction Contracts (8th Edition at paragraph 17 -014) (and the case cited in the footnote as authority):

“...The extent to which the contractual mechanism does not comply with the [Construction] Act is irrelevant. If it does not comply the whole contractual mechanism is tainted and falls by the wayside to be replaced by the provisions of the Scheme”.

The practical result

The practical result of the judge’s findings was that the court would not enforce the adjudicator’s award of costs and expenses (made pursuant to the contract adjudication provisions) because the adjudicator had no jurisdiction to grant such an order under the Scheme.