It will be recalled that in Macob Civil Engineering v Morrison Construction Ltd it was argued that a dispute had arisen as to the validity of the adjudicator’s decision that had to be referred to arbitration. It was said that the decision was invalid because the adjudicator had failed to follow the rules of natural justice. However, it was held that a decision, even if invalid for a procedural reason, was still a decision of the adjudicator and, therefore, enforceable.
In the Project Consultancy Group case the issue arose as to whether the adjudicator had jurisdiction to decide the dispute because, so it was alleged by the defendant, the contract had been entered into before 1 May 1998 (the date when the relevant provisions of the Housing Grants and Regeneration Act 1996 came into effect). The adjudicator decided that the contract was made in July 1998 and that he did, therefore, have jurisdiction. The matter came before the court as an application for summary judgment pursuant to part 24 of the Civil Procedure Rules.
Not surprisingly the claimant, relying on the decision in Macob, argued that the decision awarding the claimant monies was a decision within the meaning of the 1996 act and therefore enforceable unless and until revised by arbitration or a decision of the court.
The court rejected this argument. A distinction had to be drawn between a decision that was invalid because of an alleged procedural error and a decision that an adjudicator was not empowered to make under the act. In the latter case the decision would be of no effect, since it would not fall within the act.
The court drew a distinction between a decision that was invalid because of alleged procedural error and a decision that the adjudicator was not empowered to make under the relevant act
So far, so good, but who is to decide that the application made to the adjudicator is outside his jurisdiction? In this case there was a dispute as to whether the contract had been made before or after the act came into effect on 1 May 1998. The judge concluded not that the adjudicator was wrong in finding that the contract was made in July 1998 but that the defendant had a real prospect of defending the claim on the basis that the contract was concluded before 1 May 1998. The decision was, therefore, not enforceable by way of summary procedure. It is therefore clear that the court can decide the issue of jurisdiction and that, provided the point can be sensibly argued, the adjudicator’s decision on the point is not binding.
A comparison of this case and the Macob decision seems to suggest that a challenge of the validity of an adjudicator’s decision can be made where this concerns the validity of the reference to him of the dispute. Thus an issue as to whether the contract in question was “a construction contract” would be a matter capable of being challenged in the court or by arbitration. By contrast, once a dispute had been properly put before an adjudicator, the decision is enforceable, at least on an interim basis, even if the validity of that decision is capable of being challenged because of a breach of the rules of natural justice.
What is an adjudicator to do in such a situation? In arbitrations it has long been the case that an arbitrator can enquire into his own jurisdiction, although any decision will not be binding on the parties. The judge, however, in this case rejected any such analogy to adjudications.