PARTIES in dispute have always been able to resolve their differences by
adjudication - if they both wanted to - but such agreement is relatively
rare.
Statutory adjudication under the Construction Act 1996 does not require
the agreement of both parties, and the courts enforce a decision by summary
procedure.
Statutory adjudication is now established as the first formal approach to
resolving disputes in the construction industry. But since the adjudicator
derives his authority from statute it is not surprising that, faced with an
unwanted adjudication, there are challenges to an adjudicator's authority or
jurisdiction. These challenges are now the main vehicle for development of
adjudication law.
There are two types of challenge. The first is that the adjudicator lacks
jurisdiction at all and that any decision will be unenforceable.
The second is an objection to the way in which the adjudicator has
decided the dispute. This does not suggest that the adjudicator has no
authority to act, but that he has acted outside his jurisdiction.
The first type of challenge is a fundamental objection. It may be that
the contract in question is not actually caught by the Act. For example, in
the case of Project Consultancy Group v The Trustees of the Grays Trust
(1999), the contract had been entered into before May 1, 1998, and so was
not caught by the Act. The adjudicator's decision was not enforced.
This type of challenge will also include objections that the adjudicator
is not empowered to decide the particular dispute referred. His power is
limited by the Act to disputes arising under the contract, which are
disputes as to obligations created or incorporated in the contract.
Also, disputes that have been decided by another adjudicator cannot be
referred again to a second adjudicator.
The second type of challenge is presenting the courts with greater
difficulties.
It raises the issue of how far the courts should police the decisions of
adjudicators. If the adjudicator is to be treated the same as any other
statutory decision-maker, then established law in this area will allow the
courts to examine how the decision was taken and either set it aside or
refuse to enforce it.
In the case of Anisminic Limited v Foreign Compensation Commission (1969)
Lord Reid listed matters which nullify the decision of a tribunal. These
included deciding a question not referred to the tribunal; refusing to take
account of something material to the case, and basing the decision on a
matter that was not a matter under the contract.
So will the courts treat adjudication in this way? It would seem that
there is now an English-Scottish divide on this issue.
In the English case of Project Consultancy, Justice Dyson made clear that
an adjudicator's decision could not be attacked for failure to follow the
rules of natural justice.
He went further in Bouygues UK v Dahl-Jensen UK (1999). In that case the
adjudicator had made a mistake of fact, which had the effect that he made a
decision on a matter which was not referred to him. If the case of Anisminic
had been followed, then this would have been considered in excess of
jurisdiction and the decision treated as null or remitted to the
adjudicator. As most readers will know, Justice Dyson decided otherwise and
upheld the decision.
The courts in Scotland have taken an entirely more traditional approach.
In Homer Burgess v Chirex (1999) it was argued that the adjudicator
erroneously interpreted the meaning of the word 'plant' in the Construction
Act 1996. By doing so, it was said, he had decided disputes that were not
within his jurisdiction.
The court examined the views of Justice Dyson in Project Consultancy. It
reserved opinion on the soundness of the distinction drawn between a
decision which the adjudicator was not empowered to make and a decision that
was invalid on some other grounds, such as breach of the rules of natural
justice. It considered that it was difficult to reconcile the views
expressed in Project Consultancy with those in Anisminic. The court made
clear that it would follow a different approach to that of Justice Dyson by
remitting the matter to the adjudicator so that he could modify his
decision, taking out those parts that were outside his jurisdiction.
Clearly, adjudication law is at a critical stage of development.
If it is to be regarded as the same as other forms of statutory decision-
making, then the courts will have greater control of the process and
challenges to jurisdiction will continue to be the usual form of defence.
If a more robust view is taken then adjudication may indeed fulfil its
promise of providing a rapid means of dispute resolution.
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