Air Design (Kent) Ltd v Deerglen (Jersey) Ltd [2008] EWHC 3047 (TCC)

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There may be cases where the substance of the dispute which the Adjudicator has been asked to decide overlaps with the question whether the Adjudicator has jurisdiction, such that in deciding the substance of the dispute referred to him, the Adjudicator necessarily has to decide whether he has jurisdiction.  In such cases, provided that on analysis there exists a dispute capable of being referred to adjudication, his jurisdiction as decided by him cannot be challenged merely because it transpires that the Adjudicator has answered that necessary question incorrectly: his conclusion on the question and thus on his own jurisdiction will be upheld.

Mr Justice Akenhead, Queen’s Bench Division, Technology and Construction Court


Deerglen engaged Air Design as mechanical services subcontractor for a Jersey building project on which Deerglen was the main contractor.  In April 2007, the parties signed a written contract containing an adjudication clause (“the Basebuild Contract”).  A letter incorporated into the contract made it clear that the agreed price for the works contemplated under the Basebuild Contract did not form part of the “CPA fit-out” (a reference to CPA, one of the future tenants of the building). 

Over subsequent months, Deerglen entered into “the further agreements”, namely:

  • The CPA works, instructed under a letter of intent
  • Certain Building Management System works (“the BMS works”) instructed by letter “in extension of the existing contract” and
  • A supplementary agreement which specified a contract sum including the base build, CPA works and the BMS works and referred, among other things, to a number of variations to the works.

Disputes arose over whether Air Design had finished the works, what was due to it and whether there were any remaining defects.  Air Design referred the matters to adjudication.
Deerglen disputed the Adjudicator’s jurisdiction to decide the matter, claiming there were three or four separate contracts between the parties and the Adjudicator had no jurisdiction to decide disputes arising out of the further agreements since they did not contain adjudication clauses.  Air Design argued that the further agreements were merely variations to a single contract between the parties.  The Adjudicator agreed with Air Design, deciding that he did have jurisdiction to decide the dispute but noting that, as he had no power to decide his own jurisdiction, his view must necessarily be non-binding.  The Adjudicator decided the dispute in favour of Air Design, who subsequently applied for summary judgment to enforce the decision.


Deerglen resisted enforcement on the basis that there were, as it had argued before the Adjudicator, multiple contracts and multiple disputes and therefore the Adjudicator had no or insufficient jurisdiction.  If the decision was held to be enforceable, Deerglen sought a stay of execution on the basis that there was a serious concern that Air Design would not be able to repay any sum paid pursuant to the Adjudicator’s decision.

Air Design argued that the parties had given the Adjudicator jurisdiction to decide whether he had jurisdiction.


The Court disagreed that the parties had given the Adjudicator jurisdiction to decide his own jurisdiction, as Deerglen had repeatedly reserved its position and the Adjudicator had made it clear that he believed he lacked the power to decide his own jurisdiction.  The fact that his non-binding views on jurisdiction were included in his final decision did not alter this. 

Nonetheless, the Court considered that the Adjudicator was acting within his jurisdiction.  The substantive decision-making process required of him in determining the dispute properly referred to him involved him deciding whether or not and if so to what extent the Basebuild Contract had been varied.  This necessarily involved a consideration of whether or not there was more than one contract.  It was therefore within the Adjudicator’s jurisdiction to decide (as he had) that there was only one contract between the parties, albeit one that may have been varied by agreement.  This consideration also led the adjudicator to form the view that he had jurisdiction to determine the dispute.  In those circumstances, it could not be a valid challenge to the Adjudicator’s jurisdiction to say he got the conclusion as to the number of contracts wrong in fact or in law (i.e. that there were in fact multiple contracts between the parties, by reason of which he in fact lacked jurisdiction).  This was a case in which the substance of the dispute referred to the Adjudicator and the question of his jurisdiction overlapped.

In addition, the Court observed that the adjudication clause was drawn widely and should be construed in the same pragmatic and commercial way as an arbitration clause, starting from the assumption that the parties intended any dispute arising out of their relationship to be decided by the same tribunal.  The Adjudicator could thus be taken to have had jurisdiction to decide all the disputes in the present case as they could all properly be said to have arisen under the Basebuild Contract.

The Court refused to stay execution as Deerglen had shown no evidence that Air Design was insolvent and on the evidence provided Air Design was in no worse financial position than it was at the time the contract was made.

This summary was provided by CMS Cameron McKenna LLP.

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