Wed, 22 Sep 2010
A very recent TCC decision gives guidance on the position that a responding party to an adjudication should adopt when seeking to (1) raise an issue on the adjudicator’s jurisdiction while (2) taking part in the adjudication without (3) prejudicing its right to raise the issue at any subsequent enforcement proceedings in the TCC.
The Facts
The case is called Aedifice Partnership Limited v. Mr Ashwin Shah [2010] EWHC 2106 (TCC). It is unnecessary to set out the detailed facts of the case. However, the pertinent points are as follows:
(1) Aedifice commenced an adjudication against Mr Shah;
(2) The adjudicator was nominated;
(3) Mr Shah wrote a letter to the adjudicator raising an issue as to who he (Mr Shah) said were the correct contractual parties. He stated, amongst other things, the following:
“With no disrespect to you, in all of the circumstances, I submit that you have no jurisdiction to deal with this matter and I decline to take any further part in this matter. If APL believes that I am in any way personally indebted to it, it has the option of court proceedings.”;
(4) Mr Shah appointed solicitors who produced a response document. In that response document, the solicitors used the following wording in respect of the jurisdictional challenge:
“Ashwin Shah invites the adjudicator to decline jurisdiction, shortly stated for the following reasons:….”.
The solicitors then set out the reasons. In essence, they raised issues as to whether there was a contract at all, the identity of the contracting parties and whether there was a contract in writing. The solicitors then wrote within the response document this:
“If the adjudicator does determine that he has jurisdiction he is respectfully requested to give full reasons for that decision and to rejecting the Respondent party’s submissions… If the adjudicator does accept jurisdiction the questions in paragraph 107 are agreed as questions.”;
(5) Mr Shah lost the adjudication;
(6) Mr Shah did not comply with the adjudicator’s award;
(7) Aedifice then applied to the TCC for enforcement of the award;
(8) Mr Shah sought to resist that enforcement application on the basis of the jurisdiction arguments that were raised during the course of the adjudication;
(9) Aedifice asserted that Mr Shah had agreed to give the adjudicator jurisdiction to decide the contractual issues in light of the contents of the response document and the manner in which Mr Shah dealt with the adjudication.
The Issue
Accordingly, as stated in paragraph 1 of the judgment itself, the case raises an issue of some importance as to the extent to which, and how, reservations as to jurisdiction can and should be made by a respondent to an adjudication.
It is to be noted that in both (1) the letter, written by Mr Shah, referred to above, and (2) the response document (produced by solicitors), there was no express statement saying that the respondent was taking part in the adjudication without prejudice to its right to maintain the jurisdictional points at any subsequent enforcement proceedings.
The Principles
Mr Justice Akenhead after reviewing the various authorities dealing with the points (see paragraphs 15 to 20 of the Judgment) came to the following conclusions:
(1) The key issue is whether the parties have (a) agreed to give the adjudicator jurisdiction to resolve any objections or (b) if they have not agreed, whether the objecting party has (i) effectively reserved or (ii) waived its position on jurisdiction.
(2) An express agreement to give an adjudicator jurisdiction will fall into the normal category of any agreement – it simply has to be shown that there was an express agreement.
(3) For there to have been an implied agreement to give the adjudicator jurisdiction, the Court needs to look at everything material that was done and said during the course of the adjudication. It does this so as to determine whether it can conclude, with conviction, that the parties must be taken to have agreed that the adjudicator had such jurisdiction.
(4) In the context of an implied agreement giving an adjudicator jurisdiction – it will have to be clear that some objection was taken by the responding party in respect of the adjudicator’s jurisdiction – because otherwise one could not imply that the adjudicator was being asked to decide a non-existent jurisdictional issue which neither party had mentioned.
(5) A principal way of showing that there was no such implied agreement is if at any stage shortly before or during the adjudication a clear reservation was made by the party objecting to the jurisdiction of the adjudicator.
(6) A clear reservation can and usually will be made by words expressed by or on behalf of the objecting party.
(7) Mr Justice Akenhead suggested the following wording as being sufficient “I fully reserve my position about your jurisdiction” or “I am only participating in adjudication under protest”. However Mr Justice Akenhead makes clear that those forms of wording were not absolutely essential.
(8) The Court is entitled to look at every relevant thing, said and done, during the course of the adjudication to see whether by words and/or conduct what was clearly intended was a reservation as to the jurisdiction of the adjudicator.
(9) It will be a matter of interpretation of what was said and done to determine whether an effective reservation was made. A legitimate question to ask is: Was it or should it have been clear to all concerned that a reservation on jurisdiction was being made?
(10) A waiver that can be said to arise where a party, who knows or should have known of grounds for a jurisdictional objection, participates in the adjudication without reservation of any sort. Its conduct must be such so as to demonstrate that its non-objection on jurisdictional grounds and its active participation was intended to be, and was relied upon, by the other party (and also the adjudicator) in proceeding with the adjudication
Conclusion
What is the upshot of the decision for responding parties? Quite simply, if you object to the adjudication; say so. Use the suggested wording put forward by Akenhead J i.e. “I fully reserve my position about your jurisdiction” or “I am only participating in adjudication under protest”. In addition, even if wording to that effect is not used, all is not lost. It may be possible, by looking at all that was said and done before and during the adjudication, to try and show that an objection was raised by words or by conduct.
Furthermore, it would appear that the key is the ability to be able to answer yes (or at least argue that the answer would be yes(!)) to this question: “Was it, or should it have been, clear to all concerned that a reservation on jurisdiction was being made?”
In any event, the decision is a useful summary of the key important points to note when acting for a responding party to an adjudication.
Omar Ensaff completed pupillage at Atkin Chambers and joined No5 Chambers in 2004. He is the only junior of around the 10 year call mark in the Midlands with a significant building and construction practice. He regularly appears in the TCC and is familiar with the type of issues that are frequently encountered in construction disputes. For more information visit his profile at the No5 website
