IDE Contracting Ltd v RG Carter Cambridge Ltd [2004] EWHC 36

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

When referring a dispute to adjudication pursuant to Paragraph 2 of the Scheme the notice of adjudication has to come before the referring party can request the person named in the contract to act as adjudicator, unless he has already indicated to the parties that he is unwilling or unable to do so.  If the named adjudicator indicates that he is unable to act then provided the indication is made to all parties, the referring party can proceed under Paragraph 6(1)(b) to request the nominating body to select a person to act as adjudicator.  It was unnecessary for the defendant to show actual prejudice.

Technology & Construction Court. HHJ Havery QC
16 January 2004

A dispute arose between the parties in relation to certain construction works which the claimant, ("IDE"), wanted to refer to adjudication.  The contract provided for disputes to be determined in accordance with s108 of the HGCRA and the Scheme for Construction Contracts (England & Wales) Regulations 1998.  The contract named an adjudicator and provided that if the named adjudicator was unwilling to act then a request could be made to the Chartered Institute of Arbitrators to nominate an adjudicator.

The named adjudicator was contacted by IDE who learnt that he had other commitments.  Consequently, the notice of adjudication was sent to the defendant ("RG Carter") together with a letter saying that a request had been made to the Chartered Institute of Arbitrators for the appointment of an adjudicator.

Having received the notice of adjudication together with the accompanying letter RG Carter submitted to the adjudicator appointed by the CIOA that he had no jurisdiction to act in the matter and reserved its right to raise the issue of jurisdiction during the adjudication and in any subsequent court or arbitral proceedings. Subsequently, RG Carter did respond to the claim, expressly subject to its earlier reservation.

The adjudicator decided that he did have jurisdiction to act and RG Carter subsequently withdrew from the adjudication.

The adjudicator made an award in IDE's favour, which RG Carter refused to pay.   IDE applied to the Court to enforce the award.

RG Carter's defence to the enforcement application was that the adjudicator had no jurisdiction to make the award.

RG Carter submitted that the notice of adjudication, together with the accompanying letter referred to above was dated and received by them on 29 September 2003.  It was only in the notice of adjudication at paragraph 10 that it was stated that the adjudicator named in the contract had declined to act. RG Carter were previously unaware that the named adjudicator had been contacted by IDE and had declined to act. On 3 October 2003 the CIOA nominated an adjudicator who subsequently wrote to the parties on 6 October 2003 to confirm his appointment.

To refresh memories the Scheme provides as follows in relation to the appointment of adjudicators: -

2(1)      Following the giving of a notice of adjudication and subject to any agreement between the parties to the dispute as to who shall act as adjudicator-

(a)        the referring party shall request the person (if any) specified in the contract to act as adjudicator, or

(b)        if no person is named in the contract or the person named has already indicated that he is unwilling or unable to act and the contract provides for a specified nominating body to select a person, the referring party shall request the nominating body named in the contract to select a person to act as adjudicator.

2(2)      A person requested to act as adjudicator in accordance with the provisions of paragraph (1) shall indicate whether or not he is willing to act within two days of receiving the request.

6(1)      Where an adjudicator who is named in the contract indicates to the parties that he is unable or unwilling to act, or where he fails to respond in accordance with paragraph 2(2) the referring party may –

(b)        request the nominating body (if any) referred to in the contract to select a person to act as adjudicator.

IDE submitted that they had complied with the procedure as they had ascertained that the named adjudicator could not act and consequently requested the nominating body to appoint the adjudicator. 

In HHJ Havery's view, although IDE's submission was correct on a literal reading he did not believe this to be the intention of the statutory provisions.  Rather what was intended, in his judgment, was for the notice of adjudication to come first.  Then the referring party requests, in writing, the person specified in the contract to act as adjudicator, unless he has already indicated to the parties that he is unwilling or unable to act.  If he indicates that he is not then, provided that such indication is made to all parties the referring party may proceed to request the nominating body to select a person to act as adjudicator.  Here, however, no request was made under paragraph 2(a) of the Scheme.  The procedure was bypassed.  In HHJ Havery's judgment it is implicit in paragraph 2(b) of the Scheme, as it is explicit in paragraph 6 of the Scheme, that the unwillingness or inability of the person named in the contract to act should be indicated to all parties.  If IDE's submissions were correct it would be possible for a claimant who did not want the person named in the contract to act as adjudicator to ascertain, without the knowledge of the other party, when the named person was unavailable and to serve the notice of adjudication at that time.  In such circumstances the other party would suffer prejudice in that he would be deprived of having the adjudication carried out by the person of his (and the other party's first choice).  This would apply in the absence of any ulterior motive on the part of the claimant.  That said, it was unnecessary for the defendant to show actual prejudice.

In conclusion the provisions of the Scheme relating to the appointment of the adjudicator were not complied with. Non-compliance with those provisions deprives the adjudicator of jurisdiction unless the defendant has submitted to the adjudicator's jurisdiction in the full sense of having agreed not only that the adjudicator should rule on the issue of jurisdiction but also that it would be bound by that ruling. In HHJ Havery's judgment it was "abundantly clear" that RG Carter did not submit to the jurisdiction of the adjudicator, appointed by the CIOA, in the sense of agreeing to be bound by his ruling on the issue of his jurisdiction. Consequently the adjudicator's decision would not stand.

Summary: When referring a dispute to adjudication pursuant to Paragraph 2 of the Scheme the notice of adjudication has to come before the referring party can request the person named in the contract to act as adjudicator, unless he has already indicated to the parties that he is unwilling or unable to do so.  If the named adjudicator indicates that he is unable to act then provided the indication is made to all parties, the referring party can proceed under Paragraph 6(1)(b) to request the nominating body to select a person to act as adjudicator.  It was unnecessary for the defendant to show actual prejudice.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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