Adjudication update: jurisdiction

Adjudication is available as a dispute resolution process for any dispute ‘arising under’ a construction contract.  As some of you will be aware, whether a dispute arises ‘under’ or ‘in connection with’ a contract is a matter which was put to rest way back in 2007 in “The Fiona”.  The case decided by the House of Lords (now the Supreme Court) meant that an arbitration clause would mean that a dispute could be referred to as arbitration regardless of whether the dispute arose pursuant to the contract or in connection with the contract.  Given this decision, the matter is therefore closed and this article is now finished.  

However earlier this year a matter fell to be decided by the Technology and Construction court in the case of Hillcrest Homes Ltd v Beresford and Curbishley Ltd [2014] EWHC 280 (TCC) – an adjudication enforcement case.  The Claimant asked the court to decide that the decision of an adjudicator was unenforceable for want of jurisdiction.  The dispute arose from alleged misrepresentation during negotiating the contract.  This of course means that the dispute was ‘in connection with’ rather than ‘arising under’ the contract (as the misrepresentation had arisen prior to the contract being signed).  However, rather than following ‘The Fiona’ the court held that the adjudication provisions contained within the JCT contract were not wide enough to include for the referral of disputes arising ‘in connection’ with the contract.  This decision was reached based upon the wording of the JCT adjudication provisions when compared to the arbitration provisions. 

In relation to adjudication, the JCT provides that disputes ‘arising under the contract’ may be referred to adjudication whereas in relation to arbitration the clause provides ‘any dispute or difference.. of any kind whatsoever’ may be referred to Arbitration.  The court felt that the difference in wording was intentional and as such a claim for misrepresentation could not be referred to adjudication.

There are a number of disputes which may arise in connection with any contract, not least those which concern the formation of the contract itself.  However, what is of most interest is that this wording in the JCT is verbatim to that set out at s108 of the Housing Grants, Construction and Regeneration Act 1996 (as amended) (“HGCRA”).  The importance is that the Local Democracy, Economic Development and Construction Act 2009 repealed s107 HGCRA which means that now construction contracts do not need to be evidenced in writing.  Contracts may now be oral, fully expressed in writing or a combination of both.  This means that there are likely to be more disputes over what the terms of the contract actually are, but if you cannot refer a dispute to adjudication which arises ‘in connection with’ the contract, how can the adjudicator have jurisdiction when it’s the actual agreed terms which are disputed? 

I think we might have just opened the door to another jurisdictional challenge.  Only time will tell.

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These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.