Ballast Plc v Burrell Ltd [2001] P336/01

This summary was provided by CMS Cameron McKenna LLP.

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Where an adjudicator appointed under section 108 of the HGCR Act 1996 decided the dispute was incapable of resolution by adjudication as the parties had departed from the terms of a JCT contract, he acted outside his jurisdiction and his decision was a nullity.

Lord Reed, Outer House, Court of Session

21 June 2001

BC employed B to act as management contractor for a project under a standard JCT form of management contract. A dispute arose between the parties and it was referred to adjudication under section 108 of HGCR Act 1996. The provisions contained in Part I of the Schedule to the Scheme for Construction Contracts (Scotland) Regulations 1998 (the adjudication provisions) had taken effect as implied terms of the contract.

The adjudicator gave a "not valid" decision to the questions referred to him (relating to the amount of the payment due and payable to B) on the grounds that the parties had failed to strictly abide by the terms of the JCT contract which they had entered into. The adjudicator was of the view that the dispute was incapable of determination by adjudication.

B submitted that the adjudicator was under a duty to decide the matters in dispute and had failed to do so. B claimed it could not have been intended that this constituted a "decision" within the meaning of the Scheme. BC submitted that the adjudicator had implemented his duty under section 20(1) of the Scheme; he could validly decide that he was unable to exercise his statutory jurisdiction.

The judge found that the Scheme should be interpreted as requiring the parties to comply with an adjudicator's decision, notwithstanding his failure to comply with express or implied requirements of the Scheme, unless the decision was a nullity; and it would be a nullity if the adjudicator had acted ultra vires. It was held that the adjudicator was bound to determine the dispute referred to him provided the dispute fell within his jurisdiction. It was not up to the adjudicator to determine with binding effect the extent of his own jurisdiction; the limits of his jurisdiction were determined by the notice of the adjudication and the provisions of the Scheme.

The judge held that the adjudicator, in thinking that it was impossible for him to consider even the possibility that the parties might depart from the terms of the JCT conditions, was wrong in law. As a result of this error, it was found that the adjudicator misconstrued his powers and failed to exercise his jurisdiction to determine the dispute. His decision was held to be a nullity.

Where an adjudicator appointed under section 108 of the HGCR Act 1996 decided the dispute was incapable of resolution by adjudication as the parties had departed from the terms of a JCT contract, he acted outside his jurisdiction and his decision was a nullity.

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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