Arguments on jurisdiction

Arguments upon the jurisdiction of an adjudicator continue to cause difficulty. I have reported through this column a number of cases where the question of jurisdiction has been examined.

In Project Consultancy Group -v- The Trustees of the Gray Trust it was held that failure to establish on clear evidence the existence of a contract within the meaning of the Construction Act would deny a party the means of conferring the necessary jurisdiction upon an adjudicator. The judge held that an adjudicator could not, simply by issuing his decision, create jurisdiction where none existed in the absence of clear agreement between the parties.

In Palmers -v- ABB Power Construction Ltd the Court held that when matters of jurisdiction were raised it was clearly appropriate for the Court to intervene, since only when the Court had declared that the relevant contract was a construction contract within the meaning of the Act would an effective adjudication be possible. This was particularly so given that there was no statutory power available to an adjudicator if appointed to resolve disputes about his jurisdiction. In Fastrack Contractors -v- Morrison Construction the Court was asked to examine the question of whether a pre-existing dispute was necessary to confer jurisdiction upon an adjudicator. It was commented that a dispute could only arise once the subject matter of the claim, issue or other matter had been brought to the attention of the opposing party and that party had had an opportunity of considering and admitting, modifying or rejecting the claim or assertion. It was recognised that a genuine jurisdictional challenge would occur when it was contented that there was no dispute at all, where for example the whole of the subject matter of the proposed adjudication had not been claimed, notified or rejected. In Latham Construction -v- Cross the Court held that an adjudicator lacked jurisdiction when he had looked into the terms of a settlement agreement between the parties. That agreement, although arising under the contract, was not of itself a construction contract within the meaning of the Act. In Atlas Ceiling & Partition Company -v- Crowngate Estates the Court was prepared to take the question of jurisdiction one step further. The judge ordered that the Summary Judgment Application for enforcement of the adjudicator's decision be transformed into a trial of the issue of the adjudicators' jurisdiction in open court, including cross examination of the parties' witnesses. Having heard the evidence, the judge held that the adjudicator had the necessary jurisdiction and ordered that judgment be given for the sum found by the adjudicator to be due.



This decision endorsed the correctness of the approach of many adjudicators when faced with a challenge to their jurisdiction. The adjudicator will be expected to investigate the contentions being made and if in his view the challenge is unjustified, he will proceed with the adjudication. This leaves the parties free to continue their challenge to the jurisdiction if they so wish.

A further case which looked into the options available in respect of a contested adjudication was the case of Workplace Technologies Plc -v- E Squared Limited heard on 16 February 2000. The parties were a trade contractor and sub-contractor for a building management system to be installed at the Bluewater Shopping Centre in Kent. Adjudication was started but a dispute arose between the parties as to the date when the contract was entered into.

The adjudicator continued to deal with the substantive disputes between the parties. Meanwhile, Workplace made it clear that it disputed the jurisdiction of the adjudicator and its participation in the process of adjudication was to protect its interest and clearly under protest. Workplace was also making an application to the Court for a declaration that the contract pre-dated the coming into force of the Act and that the adjudicator had no jurisdiction in the dispute between the parties. Moreover, it sought an order restraining and preventing E Squared or the adjudicator from continuing the reference to adjudication.

This latter request for an injunction to prevent the adjudication from proceeding was in the event dropped by Workplace, but nevertheless His Honour Judge David Wilcox QC considered it appropriate to give guidance as to whether or not the Court would have power to grant an injunction in such circumstances.

Judge Wilcox concluded that while an adjudication may proceed and prove to be ultimately unenforceable, there is no clear legal or equitable interest which required to be protected by such measures as injunction. Doubtless the initiation of unenforceable adjudication proceedings might be regarded to be a source of harassment, pressure or needless expense, but this was not considered sufficient for the Court to intervene.

In a situation where the existence of a relevant construction contract is disputed, if the Court granted an injunction without determining the question of the existence of the contract, then would it follow that the Court might be interfering in a valid adjudication to its detriment. The balance of convenience, accordingly, favoured allowing the adjudication process to continue.



BOXTEXT: INBRIEF



The Case: Workplace Technologies Plc -v- E Squared Limited, TCC, 16 February 2000.



The Issue: Whether the Court will order an injunction restraining an adjudication pending resolution of a jurisdictional challenge.



The Implication: The Court will not grant an injunction to prevent adjudication from continuing and thus jurisdiction will normally only be challenged by way of defence to enforcement proceedings.