You wouldn’t think that it would be possible to squabble about whether or not an adjudication had been ‘commenced’. However, in a recent case* the parties to a dispute managed to do just that.
The squabble arose out of a clause in the JCT contract meant that the Final Certificate would be conclusive unless “adjudication, arbitration or other proceedings commenced… not later than 28 days after the Final Certificate has been issued”. Crucial then, was the issue of whether the adjudication proceedings had been ‘commenced’ in time to avoid the conclusive effect of the Final Certificate.
Did they get the nominating body to appoint the adjudicator right?
The short answer is ‘no’.
The contract provided that the nominating body for appointing the adjudicator was the Chartered Institute of Arbitrators. The claiming party’s Adjudication Notice stated (wrongly) that the contract did not refer to a nominating body, and instead the Royal Institution of Chartered Surveyors (RICS) was selected to nominate an adjudicator.
As such, an adjudicator was subsequently appointed through RICS, although he later resigned on jurisdictional grounds.
A Second Adjudication Notice correcting the nominating body error was then issued.
Was this mistake fatal?
The responding party brought proceedings against the claiming party asking the court to order that, because the claiming party got its Adjudication Notice wrong, it had not effectively ‘commenced’ adjudication proceedings.
In fact, the responding party came up with a number of arguments as to why the Adjudication Notice was invalid:
- An adjudication did not commence until the referral (the document setting out the detail of the claim) was served on a properly appointed adjudicator.
- The referral was not served on the responding party at the correct address stated in the contract.
- No adjudication was commenced as the claiming party applied to the wrong nominating body and the first adjudicator resigned.
- The defects in the first Adjudication Notice and the adjudicator’s resignation could not be cured by simply serving a second Adjudication Notice, which was ‘out of time’.
- As a result, the Final Certificate had become conclusive and the claiming party was stuck with its lot.
The claiming party came out fighting its corner stating that, once the adjudication proceedings had been triggered (i.e. an Adjudication Notice served), that could not be reversed. It didn’t matter if the adjudication proceedings connected to that notice could not proceed.
What did the court think?
The judge agreed with the claiming party. It said that not every breach means a notice of adjudication is invalid. The purpose of the notice of adjudication is to inform the other party (and the nominating body) of the nature of the dispute.
The court decided that the first Adjudication Notice was not invalidated merely because of technical rather than fundamental non-compliance.
So, the slightly surprising outcome is that, as long as a valid notice of adjudication is given, that is enough to trigger the saving proviso regardless of what happens thereafter to bring about an end to the adjudication.
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