Jurisdiction   © Daniel Atkinson 1999

Parties in dispute have always been able to resolve their differences by adjudication if they both agreed. Such agreement was relatively rare. The development of Statutory Adjudication under the Housing Grants, Construction and Regeneration Act 1996 has been rapid principally because it does not require the agreement of both parties and also because the Courts will enforce a decision by summary procedure.

Statutory Adjudication is now firmly established as the first formal approach to resolving disputes in the construction industry. Since the Adjudicator derives his authority from statute it is not surprising that when faced with an unwanted adjudication, there are challenges to an adjudicator's authority or jurisdiction. Indeed it is now these challenges which are the main vehicle for development of Adjudication law.

There are two types of challenge. The first takes place when the adjudicator is first appointed. The objection is that the adjudicator lacks jurisdiction at all and that any decision will be unenforceable. The second challenge is an objection to the way in which the adjudicator has decided the dispute; that he has acted in excess or outside his jurisdiction. The second challenge is not that the adjudicator has no authority to act, but an attack on the validity of the decision he has made. The aim is to have the decision declared a nullity or sent back to the adjudicator to reconsider.

The first type of challenge is a fundamental objection. The challenge may be that the contract in question is not caught by the Act. It may for instance be an Excluded Contract under the Construction Contracts Exclusion Order 1998. The Order excludes different types of contract including the head contract in PFI contracts. Alternatively the contract may not fall within the definition of construction contract under the Act. In Project Consultancy Group -v- The Trustees of the Grays Trust (1999) TCC the contract had been entered into before 1^st May 1998 and so was not caught by the Act. The Adjudicator's decision was not enforced.

The first 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, including set-off and breach of contract. Disputes that have been decided by another adjudicator cannot be referred again to another adjudicator. The previous decision is provisionally binding on the parties until finally determined in legal or arbitration proceedings, so for the purposes of adjudication there is no longer a dispute. Indeed the Scheme for Construction Contracts requires an adjudicator to resign when faced with such a situation.

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 the manner in which the decision was taken and either set it aside or refuse to enforce the decision. In Anisminic Ltd v Foreign Compensation Commission (1969) Lord Reid had listed matters which cause the decision of a tribunal to be a nullity. These included matter such as giving a decision in bad faith or failing to comply with the requirements of natural justice. It included deciding a question not referred to him, refusing to take account of something he should have taken into account or basing his 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 and Scottish divide on this issue. In the English case of Project Consultancy his Honour 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 Limited -v- Dahl-Jensen UK Limited (In Liquidation) (1999) TCC. 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 Anisminic had been followed then this would have been considered in excess of jurisdiction and the decision treated as a nullity or remitted to the Adjudicator. His Honour Justice Dyson would have none of this. He refused to treat the mistake as anything other than a mistake of fact which was part of the rough and tumble of adjudication.

The Courts in Scotland have taken an entirely more traditional approach. In Homer Burgess Limited v Chirex (Annan) Limited (1999) Crt of Session it was argued that the Adjudicator had made an error in the interpretation of the meaning of the word "plant" in the Housing Grants, Construction and Regeneration Act 1996. By doing so, it was said, he had decided disputes that according to the Act were not within his jurisdiction to make. The Court examined the views of Dyson J in Project Consultancy. It reserved opinion on the soundness of the distinction drawn by Dyson J 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 was considered that it was difficult to reconcile the views expressed in Project Consultancy with those in Ansiminic.

The Court decided to remit the matter to the Adjudicator, so that he could modify his decision, taking out those parts that were outside his jurisdiction. In making its decision the Court made clear that it would follow a different approach to that of Dyson J.

It is clear that 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 without the procedural problems in other dispute resolution procedures.

In the meantime parties and adjudicators will need to deal with these issues which requires them to be fully appraised of the law in this area. A summary of the grounds for challenges of lack of jurisdiction are:

• The contract is an Excluded Contract.
• The contract is not a construction contract.

It is not an agreement as intended by the Act.

It is an Employment Contract.

It relates to residential dwellings.

It is not an agreement entered into before 1^st May 1998.

It is not an agreement in writing as defined in the Act.

It is not an agreement to carry out construction operations as defined in the Act.

• The dispute is not a dispute under the agreement; which excludes issues such as:

Request for rectification of the contract.

Issues relating to misrepresentation.

Issues relating to negligent misstatement.

Claims under a collateral warranty or contract.

Claims under a contract that is void for illegality.

Decisions on the adjudicator's jurisdiction.

• The dispute has previously been decided in adjudication.

A summary of the grounds for challenges of excess of jurisdiction are (but the law is still developing):

• A decision given in bad faith.
• A decision which the Adjudicator had no power to make.
• Failure to comply with the requirements of fairness or natural justice (but see Project Consultancy).
• Deciding a question not referred to him.
• Refusing to take account of something he should have taken into account.
• Basing his decision on a matter that was not a matter under the contract.