If you have a construction contract for a commercial development, as defined under sections 104-107 of the Housing Grants, Construction and Regeneration Act 1996 ('1996 Act'), or a contract for a domestic construction project, which includes an adjudication provision, you should be entitled to refer a dispute to adjudication.
However, does this include every dispute that may arise between you and the other party you have contracted with?
This issue was the subject of a judgment in the recent case of 'BDW Trading Limited v Ardmore Construction Limited' ([2024] EWHC 3235 (TCC)) ('BDW'), in which the Judge considered whether or not an adjudicator could consider a main contractor's liability under the 1972 Defective Premises Act, as amended by the 2022 Building Safety Act, or can an adjudicator only consider disputes which arise out of the contract.
Where does an adjudicator get his/her authority to rule on a dispute from?
An adjudicator's authority to rule on a dispute ultimately derives from section 108 of the 1996 Act. In particular, section 108(1) of the 1996 Act says:
A party to a construction contract has the right to refer a dispute arising under the contract for adjudication under a procedure complying with this section.
For this purpose "dispute" includes any difference...
In the case of 'BDW', the Defendant argued that the terms 'under the contract' and 'connected with the contract' (which was also used in the specific building contract) referred to disputes which arise as a breach of the contract only, such as not paying a sum due within the contractual payment period. In contrast, claims under statute and/or a tort (such as negligence) were not intended as being disputes that an adjudicator can review and make an award on.
What did the Judge decide?
The Judge, in her judgment, referred to the House of Lords case of 'Fiona Trust & Holding Corp v Privalov [2007] UKHL 40' ([2007] 4 All ER 951), which looked at arbitration provisions, and whether an arbitrator could hear and rule on a bribery/fraud case. The House of Lords ruled that an arbitrator could rule on a fraud case, and that arbitrators should be given a wide remit on the disputes they can rule upon.
The Judge in 'BDW' referred to how contracting parties should be assumed to be commercially minded people and, as such, they would want an adjudicator to handle all possible disputes. An adjudicator should only be deprived of this ability if the parties insert contractual wording which removes his/her ability to rule on a dispute that arises from tort and/or statute.
Therefore, subject to any further appeal of this case, it can be cautiously assumed that any and all disputes that relate to the project work under a contract can be referred to an adjudicator.
Other considerations with regard to a dispute that can be referred to an adjudication
You should always be mindful that you need to refer a dispute which has crystallised in a way which will not give rise to an argument that the adjudicator does not have jurisdiction.
We do not intend to go through those aspects here, but you should be aware that, subject to the terms of the contract, you typically cannot refer more than one dispute to adjudication, unless you have the written agreement of the other contracting party.
Practical considerations
If you are concerned that you do not want an adjudicator to be referred a dispute that relates to statutory and/or tortious liability, then you may want to consider the following:
- Amending your contract to explicitly remove such responsibility to rule on such disputes from the adjudicator; and
- Consider resolving your claim via arbitration and/or litigation.
When referring an adjudication, you should always consider what expertise you require from your adjudicator. If the adjudication relates to legal issues, then you will want to request a solicitor or barrister as your adjudicator. If your claim relates to issues around structural concerns, the amount that may be due to a party, and other technical points, then you will want to request that someone who has an engineering and/or quantity surveyor background is the adjudicator.
If you believe you may want to refer a dispute to adjudication, or you have had an adjudication referred against you, then Barton Legal have the expertise to clarify what you need to do.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
