The scope of the adjudication and the right to determine on a question

Part 1: Defining the scope of an adjudication

The Adjudicator’s Jurisdiction and scope is contained within the Notice of Adjudication.

This Notice of Adjudication must clearly state the points of dispute and what is being required to be answered. The Adjudicator only has the jurisdiction and the right to determine the questions arising from the dispute under the contract. This means that the adjudicator can only make a determination on the particular question(s) asked of him in the Notice.

Provided that the adjudicator acts within his jurisdiction and delivers a determination on the questions being put forward in the Notice of Adjudication, his decision will be enforceable on the parties.

This is a position that can give rise to problems and frustration in that:

    • if an adjudicator gives the correct answer to a wrong question, the effect will be that it is not binding, conversely,
    • if the wrong answer is given to the correct question, that position will remain binding.

The adjudicator derives his authority, or jurisdiction, from the contract between the parties. If questioned on his or her jurisdiction the adjudicator has no inherent power to rule on his jurisdiction. Adjudicators must consider challenges to their jurisdiction, unless the parties have provided him with such powers to determine.

Part 2: Case Law

In Sherwood and Casson Ltd v McKenzie Engineering Ltd (2000), the following principles were underlined:

  • A decision of an adjudicator whose validity is challenged as to its factual and legal conclusions or procedural error remains a decision that both is enforceable and should be enforced.
  • A decision that is erroneous, even if the error is disclosed by the reasons, will still not be ordinarily be capable of being challenged and should ordinarily be enforced.
  • A decision may be challenged on the grounds that the adjudicator was not empowered by the Act to make a decision, because there was no underlying construction contract between the parties or he had gone out of his terms of reference.
  • The adjudication process is intended to be a speedy process.

There have been many instances whereby the Adjudicator’s approach has been called into question and a question has arisen from that as to his jurisdiction.

One early case is Balfour Beatty Construction Ltd v The Mayor and Burgesses of the London Borough of Lambeth (2002). This case centred on the approach taken by the adjudicator in making his decision.

This was an example where there were gaps in the information, or certainly where the establishment of the delay was not provided by the party, the adjudicator undertook to develop a collapsed as built delay analysis on his own accord having sought the facts from his enquiries. Without issuing the delay analysis to the respective parties, including the respondent, it was claimed that there was a lack of natural justice.

This was later followed by Costain v Strathclyde (2003) where the rights and roles of the adjudicator was set forth.

It is also important to note that if the parties agree that the adjudicator may determine his jurisdiction, that determination will be held valid. Thomas-Fredric’s (Construction) Ltd v Wilson (2003).

Part 3: The Threshold Jurisdiction

In order for the Adjudicator to be confident of his jurisdiction, he must ensure that the requirements are met to satisfy the Threshold Jurisdiction:

  • There are no conflicts of interest that would prevent him from acting
  • That a valid construction contract exists and concerns construction operations
  • That the contract is oral or written save for prior exclusions previous to the amended Act
  • Whether the contract is with a residential owner?
  • Does it relate to construction operations within the territorial application of the Act
  • Does the Contract provide for Adjudication measures?
  • Procedural requirements of the appointment of the adjudicator and proper procedure involving the referral.
  • Is there a dispute that is crystallised, and does it arise from the Contract?
  • Multiple disputes, is there an issue?
  • Has there been a previous adjudication on the same dispute?

The adjudicator must then decide whether the dispute can be determined within the 28 days’ timeline and whether it is in his contemplation of competence

Part 4: Natural Justice

The adjudicator must remain true to the rules of natural justice.

  • There must be a basis of procedural fairness.
  • Failure to act impartially, to hold a bias or where there is procedural impropriety, these will give cause to be considered under the heading of a breach of natural justice.