| Date | 4 April 2001 |
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| Judgment | Watson Building Services Limited -v- Graham Harrison and Miller (Preservation) Limited Outer House 13 March 2001 |
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| The Issue | Adjudicator's binding decisions in respect of jurisdiction. |
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| Implication |
By submitting to the adjudicator a dispute concerning the terms of the contract, the parties may be bound by the adjudicator's decision, even where that decision also concerns the validity of the adjudicator's appointment and jurisdiction. |
printOne of the principal grounds for challenge to an adjudicator's decision is where it can be argued that the adjudicator lacked jurisdiction. The Court of Session in Scotland recently had to consider a case in which the adjudicator had himself decided upon his jurisdiction. Watson Building Services Limited were appointed as main contractors to carry out building works at Holycross Church in Glasgow. It entered into a sub-contract with Miller (Preservation) Limited in respect of rot eradication at the church. A dispute arose and Miller referred the matter to adjudication under the 1996 Act. Whilst the parties were agreed that the sub-contract was a "construction contract" within the meaning of the Act, there was disagreement as to the precise terms of that sub-contract. Watson contended that the sub-contract contained relevant provisions of the main contract incorporated by reference. Included within those terms, it argued, was the Scottish Building Contract Contractors Designed Portion Without Quantities (April 1998 revision). This document contains at clause 41A detailed provisions for adjudication, which Watson argued applied to the sub-contract. Miller, on the other hand, argued that these provisions were not clearly incorporated and accordingly that the adjudication should be governed by the statutory Scheme for Construction Contracts (Scotland) Regulations 1998. Taking the view that the sub-contract did not contain appropriate adjudication provisions, Miller had applied to the Academy of Construction Adjudicators for the appointment of an adjudicator in accordance with the statutory Scheme. Paragraph 2(3) of the Scheme provides that an "adjudicator nominating body" means anybody which holds itself out publicly as a body which will select an adjudicator when requested to do so by a referring party. Thus, whilst the Academy satisfied the Scheme, it would not be an appropriate appointing authority where the JCT or SBCC provisions applied. The Academy appointed an adjudicator. Both parties put the preliminary issue of jurisdiction to him for his determination. The adjudicator decided that he did not have jurisdiction and withdrew. Undaunted, Miller applied to the Academy a second time and the Academy appointed another adjudicator. This time round, the adjudicator agreed with Miller that the sub-contract did not contain appropriate provisions for adjudication, and that the statutory Scheme applied. He decided that his appointment by the Academy had been proper and directed Watson to provide a response in the adjudication. His reasoning for this decision brings to mind the old adage often applied by arbitrators; "decide the dispute but rarely give reasons, your decision will be right, but your reasons will almost always be wrong". Watson then served its response in the adjudication. It continued to contend that the Academy of Construction Adjudicators had no jurisdiction as a nominating body to appoint the adjudicator. It argued that the Notice of Adjudication and Referral Notice failed to comply with the express terms of the sub-contract, and as such the adjudicator did not have the necessary authority to adjudicate the dispute. In summing up its response, Watson asked the adjudicator to decide that he did not have jurisdiction to determine the dispute. As a fall back position, in the event the adjudicator determined that he did have jurisdiction, Watson set out its defence to the matters complained of. The adjudicator then proceeded to deal with the merits of the dispute and ruled that Watson should pay Miller a sum of approximately £8,000. Watson made no payment. Miller were on the point of seeking summary judgment for the enforcement of the adjudicator's decision, when Watson raised a petition for the judicial review and setting aside of the adjudicator's decision, a process which would not be available south of the border. The court concluded that it was right and proper that an adjudicator, although not a lawyer, can and should consider the contract terms, form a view about their meaning and import and make decisions and rulings accordingly. In the present case, it had been necessary to determine whether certain provisions of the main contract had been incorporated into the sub-contract. Thus, the adjudicator had the power to determine the meaning and import of the sub-contract terms, even where such an exercise resulted in his determining a dispute about the validity of his appointment and in effect his jurisdiction. Not only did he have the power and authority to carry out such an exercise, but the question relating to the proper construction of the sub-contract terms, and thus the validity of his appointment, had been expressly put to him by the parties. In conclusion, the adjudicator had acted within his powers to decide that he had jurisdiction to act, and the petition for setting aside his decision was refused. In a further comment, the court considered the incorporation of main contract documents into the sub-contract. The standard form in question was designed for use between an employer and a main contractor. It made no sense to try to read those terms into the sub-contract. There were uncompleted blanks in the form, for example in relation to the contract drawings. In any event, scarcely one clause seemed to fit the sub-contractor's circumstances. Moreover, it was established law that arbitration clauses could not be incorporated by a general reference. The adjudicator had been correct in forming the view that the sub-contract did not contain express adjudication provisions and Miller had been correct to revert to the Statutory Scheme. The adjudicator had therefore been validly appointed by the Academy of Construction Adjudicators.
CJ-0113
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