Adjudicator Jurisdiction

Friday 15th October 2010

In the recent High Court case of Aediface Partnership Limited v Shah, the Court declined to enforce an adjudicator's decision on the basis that the adjudicator could not decide his own jurisdiction and that the respondent, Mr Shah, had given no express or implied agreement that the Adjudicator had jurisdiction over him.

The facts of the case were that Aediface brought an adjudication against Mr Shah claiming unpaid fees relating to the development of plans for a care home owned by a company of which Mr Shah is the main shareholder and a director. During the adjudication process Mr Shah contested the adjudicator's jurisdiction. However, the Adjudicator issued his decision in Aediface's favour and ordered that Mr Shah should pay his fees. Mr Shah refused to honour the adjudicator's decision as Aediface's contract was with the company rather than him, so that he argued the adjudicator had no jurisdiction. Aediface then issued proceedings against Mr Shah arguing that by continuing to take part in the adjudication Mr Shah had accepted the jurisdiction of the adjudicator.

The question that the Court needed to resolve was whether the parties had expressly agreed to the adjudicator's jurisdiction or whether Mr Shah had reserved or waived his position on jurisdiction. The Court set out the following propositions:

1. The parties may expressly agree to give an adjudicator the power to decide his jurisdiction.
   
   
2. For there to be an implied agreement giving the adjudicator such a power, the material evidence needs to be looked at and in the absence of any clear objection, it may be inferred that the power to determine his own jurisdiction was given.
   
   
3. One way to determine that no implied agreement was reached is if at any stage before or during the adjudication a clear reservation was made by the objecting party.
   
   
4. Although clear words will usually be required, the question to ask is, 'was it or should it have been clear to all concerned that a reservation on jurisdiction was being made?'.
   
   
5. A waiver will arise where a party who knows or should have known of grounds for a jurisdictional objection participates in an adjudication without reserving his position.
   
   

The Court held that the adjudicator's decision did not address the jurisdictional question and Mr Shah had made clear reservations throughout adjudication. It followed that the adjudicator did not have the necessary jurisdiction over Mr Shah and his decision would not be enforced.

If anyone has any queries arising from this article I can be contacted at s.homer@ashfords.co.uk