In Adjudication 4 the adjudicator found that whilst he was bound by Award 1, the decision in Adjudication 1 which he could not disturb, had continued to have temporary effect and to bind the parties up to the moment Award 1 was made. At the most basic level, he found that Tecnicas had no power to levy the Contra Charge. He also found that Graham’s failure to carry out the full scope of works was as a result of its entitlement to rely on the decision in Adjudication 1 and did not arise from the breach later established by Award 1 (“the Decision”).
In any event, Tecnicas had waived its right to raise a jurisdictional challenge at this stage by failing to object during Adjudication 4. Tecnicas said it had not waived its right to object to jurisdiction because (i) the jurisdictional error here was “fundamental” and not capable of being waived and (ii) it was in no position to waive its right to object, since it had no actual or constructive knowledge of the jurisdictional error until the Decision was published.
The law
The adjudicator was acting pursuant to s 108 of the Act and the Scheme which applied by virtue of the express general provisions of the Contract. Paragraph 23(2) of the Scheme provided that an adjudication decision was binding and shall be complied with by the parties “until the dispute is finally determined … by arbitration …” After looking at the general principles of enforcement[15], the court turned to the binding nature of a prior decision in both adjudication and arbitration[16]. Drawing the principles from the authorities together, for the exclusion of jurisdiction to apply, the second decision must override or undermine the first, in the sense of deciding again something which had already been decided. There was a distinction to be drawn between the content of the first decision and a second decision which determined the consequences of that first decision: Amey Wye Valley §§14 and 35 (e.g. dispute as to the true construction of contractual terms and a dispute as to the financial consequences of the true construction as found were not the same or substantially the same dispute). Further an error of fact or law in applying the first decision might not amount to an excess of jurisdiction; see Amey Wye Valley, supra.
In effect the breach did not cause the loss suffered.
Graham now sought to enforce the Decision to avoid payment of the Contra Charges.
The issues
Tecnicas said the Decision was not capable of being enforced because the adjudicator lacked jurisdiction for three reasons – namely:
(1) the Decision undermined and in substance overrode Award 1;
(2) the adjudicator failed to act in accordance with the powers granted to him by the Subcontract;
(3) the adjudicator answered the wrong question. In essence. Award 1 had retrospective effect, the adjudicator could not ignore it and by doing so acted without jurisdiction. Graham denied that the Adjudicator acted outside his jurisdiction. Tecnicas’ arguments amounted to nothing more than asserting that the Adjudicator was wrong. He had resolved the dispute referred to him. In doing so he expressly did not reopen any disputes decided in Award 1. Any error made was within his jurisdiction.
[15] Carillion Construction Ltd v Devonport Royal Dockyard Ltd [2006] BLR 15 (at §§52, 84, 85 and 87) [16] Benfield Construction Limited v Trudson (Hatton) Limited [2008] EWHC 2333 (TCC) §34; Balfour Beatty Engineering Services (HY) Ltd v Shepherd Construction Ltd [2009] EWHC 2218 (TCC) 127 Con LR 110 §§41 and 67 and Amey Wye Valley Ltd v The County of Herefordshire District Council [2016] EWHC 2368 (TCC) [2016] BLR 698 §§14, 15, 28, 31, 34 and 35. Court of Appeal in Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2019] 3 All ER 337; [2019] EWCA Civ 27 §§91 to 99; The issue is also addressed in Coulson on Construction Adjudication (4th edn) §7.145.
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