Homer Burgess Ltd v Chirex (Annan) Ltd [1999] CA137/99

This summary was provided by CMS Cameron McKenna LLP.

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An adjudicator does not have jurisdiction over parts of a contract that are not for construction operations" although other parts may fall within that definition and be within his jurisdiction. An adjudicator's decision on his jurisdiction is not binding on the parties.

Lord MacFadyen, Outer House, Court of Session (Scotland)

10 November 1999

H entered into a contract with C to carry out works at C's site. Disputes arose in relation to the sums due in respect of invoices which C refused to pay. H therefore issued a notice of adjudication, and, as the contract contained no adjudication provisions, believed that the Scheme would apply (although there was a debate over whether the Scottish or English Scheme applied which was not pursued in court).

H argued that its works were "construction operations" within Section 105 of the Act, and therefore it had entered into a "construction contract" and was entitled to adjudication. C argued that since the primary activity on site was the production, transmission, processing or bulk storage of pharmaceuticals and since the works or a high proportion of them were the assembly and installation of plant on the site, or the erection of steelwork for supporting or providing access to the plant, the works fell within the exception at Section 105(2)(c)(ii), and the contract was therefore not a "construction contract" and no right to adjudicate existed. Therefore C said the adjudicator had no jurisdiction to make a decision.

The practical issue was whether "plant" included pipework linking various pieces of equipment. The adjudicator preferred H's submissions on the definition of "plant" and found that he did have jurisdiction. He made an award in favour of H. H issued proceedings to enforce that decision on the grounds that it was a binding decision, and that even if the adjudicator had misconstrued the word "plant" this error did not take him outside of his jurisdiction. C argued that a decision was only binding if it was within the scope of the adjudicator's jurisdiction, and that as he misdirected himself on the scope of his jurisdiction his decision fell outside it, and was not enforceable.

The court decided that the adjudicator was entitled to make enquiries as to his jurisdiction if this was raised by the parties. However, a decision as to jurisdiction by the adjudicator is not related to a dispute arising under the contract, and is not exempted from review by the court in enforcement proceedings. The court found that the adjudicator was in error in his findings on the meaning of "plant." There was nothing to indicate that plant was intended to have a narrow meaning and exclude pipework. The pipework was clearly part of the plant being installed as without it, the individual pieces of machinery would not have been able to operate.

Therefore, the disputes relating to the invoices were not disputes on which the adjudicator had power to make a decision. However, both parties acknowledged that some of the contract works did not fall within the exemption (although they were a minor part) and the adjudicator's decision in relation to those small parts was allowed to stand.

An adjudicator does not have jurisdiction over parts of a contract that are not for "construction operations" although other parts may fall within that definition and be within his jurisdiction. An adjudicator's decision on his jurisdiction is not binding on the parties.

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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