Parliament provided that every party to a construction contract should have the right to resolve its disputes by adjudication at any time.
However, the jurisdiction of the adjudicator derives from the agreement of the parties, as represented by the terms of their contract. A dispute cannot be validly resolved by an adjudicator unless the adjudicator is appointed in accordance with:
– the terms of the contract; or
– (if it is incorporated into the contract either expressly or by operation of law) the Scheme in Part I of the Schedule to the Scheme for Construction Contracts (England and Wales) Regulations 1998 (“the Scheme”).
Unless the adjudicator is appointed under the correct contractual (or Scheme) provisions, his appointment would be null and void.
An adjudicator cannot be validly appointed under a non existent contractual provision. He or she would have no jurisdiction, So any decision that he or she might make could not be enforced.
In the High Court case of Ecovision Systems Ltd v Vinci Construction UK Ltd (Rev 1)  the Sub-Contract contained 3 sets of terms under which, either party could request adjudication: (1) Option W2 of the Sub-Contract, (2) Option W2 of the Main Contract, incorporated into the Sub-Contract by Appendix 1 and Document A, or (3) if neither of the first two was applicable, the Scheme.
The procedure in each of the appointment provisions was not identical.
The court extrapolated the following principles from case law:
1. an adjudicator has no jurisdiction to determine whether he has jurisdiction, even on a temporarily enforceable basis; and
2. a choice between two sets of adjudication provisions will amount to such a determination if the choice makes a material difference as to how the adjudicator should be appointed, what rules he is obliged to follow or the effect of his decision.
However, in practice if the adjudicator purports to decide what rules governed his appointment and govern the conduct of the adjudication, his decision will be enforced if his decision turns out to be correct.
So the foregoing principle is subject to one pragmatic exception: an adjudicator can inquire into his jurisdiction and make such a determination with temporarily binding effect if:
1. his conclusion coincides with the claimant’s contentions as to the contractual terms; and,
2. the claimant is right.
This is because the defendant would not be able to establish, either:
1. with any real prospect of success when seeking to resist enforcement of a summary judgment; or,
2. on a final basis in the circumstances of a Part 8 claim,
that the adjudicator actually lacked jurisdiction because the adjudicator will have determined that the rules he was purportedly appointed under were the correct rules and the court will have gone along with his conclusion.
Even where it is common ground that a construction contract exists under which there is a right to have adjudication, the adjudicator has no power to decide what rules of adjudication apply if:
1. there is a dispute about those rules; and
2. the dispute affects (i.e. makes a material difference as to):
2.1 the procedure for the adjudicator’s appointment;
2.2 the procedure to be followed in the adjudication; or
2.3 the status of the adjudicator’s decision.
Specifically there was no rule that the court will not interfere with an adjudicator’s conclusion as to a matter affecting his jurisdiction when considering whether to enforce a decision by summary judgment.
The choice of the correct adjudication rules was fundamental to the jurisdiction of the adjudicator.
1. The referring party (Vinci) had not told the adjudicator what adjudication rules it was saying applied or why.
2. The different adjudication provisions involved different nominating bodies and were likely to involve different adjudicators being nominated. It was possible but improbable that the adjudicator would have been nominated by one of the other bodies.
3. The different rules contained real differences of procedure. In previous precedent cases these may or may not have been significant.
Neither the Scheme nor the contractual adjudicator appointment rules in this case prescribed that the Notice of Adjudication or any request to adjudicate should specify the contractual terms as to adjudication or (if the Scheme) the power under which adjudication was being pursued, so it was not fatal to the defendant’s case that the Notice of Adjudication and the request for a nomination had failed to identify the contractual terms or the power under which adjudication was being invoked.
Were it otherwise, it would mean that even where:
1. the referring party’s contention as to the applicable contractual terms was correct (or there was no real prospect of the respondent being able to prove otherwise); and,
2. the adjudicator had been appointed in accordance with those terms,
the court could still decline to enforce the decision because, at the time the Notice of Adjudication was served or the nomination was requested, those terms were not stated as being the terms applicable.
The court would be loath to reach that conclusion.
The substantive validity of the Notice of Adjudication depends on whether it can be shown that the correct rules are or have been applied. It does not depend on what was said in the Notice. The same applied to the request for a nomination of an adjudicator.
However the adjudicator had been wrong to decide that the governing adjudication rules were those in Option W2, and his appointment had been made by the wrong body. On both counts, the adjudicator lacked jurisdiction to make the decision. If the defendant wanted adjudication, it must start again. If the President or any Vice-President of the RICS was not available to act, the adjudicator must be appointed by the Chairman of TeCSA. The Chairman could appoint the same adjudicator and the Adjudication Rules of TeCSA would govern the adjudication.
This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.