Here is the story.
Keith Wilson is the principal shareholder and company secretary of Gowersand, which was formed to carry out various building projects. One of these was some new dwellings in Sheffield. The builder appointed was Thomas-Fredrics. Things went pear-shaped and the contract was cancelled partway. Nonetheless, a second agreement was made for certain works to be completed. There was a dispute about that agreement, too. It came to an adjudicator. The builder wanted Mr Wilson as respondent to pay him. But Mr Wilson said it was his company, Gowersand, that was in the contract, not him. That would have meant starting the adjudication afresh. For some reason, Thomas-Fredrics dismissed the idea of adjudicating against Gowersand instead of Mr Wilson. I bet it wishes it hadn't.
Mr Wilson asked the adjudicator to stop. The adjudicator looked into it but decided he'd push on. Can I make a point here, please? Asking an adjudicator to give himself the sack is like asking him to take bread out of his mouth or taking cash out of his pocket. He is bound to be biased.
Anyway, the adjudicator pressed on with the adjudication and eventually ordered Mr Wilson to stump up the £12,000.
At the High Court, the judge considered whether the adjudicator had authority to make a binding decision about the identity of the respondent. He said he did have authority, because the adjudicator had been asked to decide so. In any event, he thought the adjudicator was right to say Mr Wilson was the respondent.
Asking an adjudicator to give himself the sack is like asking him to take bread out of his mouth or taking cash out of his pocket.
The important point in this case is whether the parties had in truth somehow agreed to let the adjudicator rule on his own powers. Was he authorised to decide whether the process as a whole was ineffective, to rule that he was wasting everyone's time, to rule that he should pull out?
Sometimes the parties expressly agree to add this power into the adjudicator's authority. Sometimes adjudication rules allow the adjudicator to decide his own jurisdiction. An example is TeCSA Rules. But what is the position if the parties just argue the matter with the adjudicator when it crops up? Does that add up to a sort of implied assent or implied blessing on the adjudicator's authority? If so, then his decision, no matter how wacky, is binding and will oblige the court to enforce his award about the substantive dispute. If he is not authorised, then his decision is merely an "observation", important but open to scrutiny and change at enforcement stage.
The Court of Appeal decided that an adjudicator can decide his own jurisdiction only if the parties gave him that power in "clear and unequivocal" language. On the facts of the dialogue between the adjudicator and the parties, it was impossible to conclude that Mr Wilson was submitting to the adjudicator.
Therefore, said the Court of Appeal, here is the position:
- If a party to an adjudication has submitted to the adjudicator's jurisdiction in the full sense of having agreed that he could rule on his own authority and having agreed to be bound by such ruling, then the adjudication as a whole was binding even if the adjudicator was plainly wrong on the issue of his own authority.
- If a party has not submitted to the adjudicator's jurisdiction, the latter's ultimate award is still binding if the court agrees that the adjudicator's ruling was plainly right.
Mr Wilson was certainly not the proper party in the adjudication, said the Court of Appeal, nor had Mr Wilson agreed to submit that issue to an adjudicator for a binding decision. The adjudicator's award was now void.
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or email him on email@example.com.