Provisions of this type have been considered in some well known cases. First there was Crown Estate Commissioners vs John Mowlem in 1994, a decision on the traditional JCT contract (then the 1980 version). More recently there has been the decision in London Borough of Barking and Dagenham vs Terrapin Construction (2000) on the design-and-build (WCD) form. These decisions have, broadly, upheld the concept that the parties can agree to the final certificate being conclusive evidence of certain matters and, as such, is binding.
The matters described as "final" in the contract may include design, extensions of time and compliance with law. Unless a party to the contract initiates arbitration or court proceedings within a prescribed period, then the final certificate will be conclusive evidence in any subsequent proceedings.
Matters such as entitlement to an extension of time are the very things that the parties may wish to dispute, and so most arbitrations or litigations are commenced within 28 days of the final certificate to allow the court or arbitrator to consider what extension of time is appropriate.
The difficulty with contracts that prescribe such finality is section 108 of the Construction Act, which entitles a party to adjudicate "at any time". The JCT has obviously been conscious of this statutory right when drafting its 1998 family of contracts, which seek to marry this right with the general approach of finality in the JCT's standard clauses. Whether this is achieved is questionable, but is currently untested in the courts.
Parties have a further 28 days to take proceedings Issuing a notice to adjudicate gives a get-out period Lack of substance would give no jurisdiction for the adjudicator
The JCT contracts seek to give parties a further 28-day period from the date of an adjudicator's award to take further proceedings, such as arbitration or litigation. For instance, clause 30.8 of the WCD contract provides that where "either party wishes to have a dispute or difference on which an adjudicator has given his decision on a date which is after the date of submission of the final account and final statement … finally determined by arbitration or legal proceedings, either party may commence arbitration or legal proceedings within 28 days of the date on which the adjudicator gave his decision".
This might suggest that a party who missed the initial 28-day period has a get-out – it can simply issue a notice to adjudicate, and even if the adjudication doesn't produce the desired result, either party has the option of arbitration or court proceedings.
It might be argued that such an adjudication is bound to fail, as the final certificate is conclusive evidence. But even if the adjudication fails for that reason, clause 30.8 gives a further period of grace to start litigation or arbitration. It does not appear to matter whether the adjudication claim was successful or not. To that extent, it may be possible to defeat the 28-day period from the final account/statement. However, again it may be argued in such litigation or arbitration that there is an evidential bar – the matter is already final.
It may be that an adjudication launched for such a purpose would suffer from a lack of substance, perhaps to the degree that there would be no jurisdiction for the adjudicator. The answer may be found in the Court of Appeal's dicta in Crown Estates. The court expressed the view that if a claim was brought outside the 28-day period, the final certificate is not open to challenge. The court went on to say that it could be said that such claims are barred. Therefore, an adjudicator would be bound to dismiss the claim.
James Bessey is a partner specialising in construction dispute resolution at Hammond Suddards Edge, Birmingham.