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Commercial: One word answer? Limiting the adjudicator’s jurisdiction – AECOM Design Build Limited v Staptina Engineering Services Limited [2017] EWHC 723 (TCC)

In this case the TCC re-visited the question of the extent of the adjudicator’s jurisdiction when deciding a dispute arising from a construction dispute.

AECOM sought a declaration that the adjudicator had acted outsider her jurisdiction, or alternatively in breach of natural justice, in respect of certain parts of her decision. The dispute arose out of the termination of a sub-contract in the NEC Engineering and Construction Short Subcontract form. Staptina applied to the adjudicator for a declaration that AECOM was not entitled to make any deductions against its termination account for alleged defects. The adjudicator held that AECOM were in principle entitled to make deductions. She then went on to hold that those deductions must be confined to the sum it would have cost Staptina to remedy the relevant defect either before completion or during the defect correction period. AECOM challenged this second aspect of the decision, arguing that all the adjudicator was entitled to do was simply to answer the dispute referred to her as either ‘yes’, the deductions could be made, or ‘no’.

Fraser J disagreed. In Amey Wye Valley Valley Ltd v Herefordshire District Council [2016] EWHC 2368 (TCC) he commented that adjudicator’s decisions will be enforced by the courts, regardless of errors of fact or law. Attempting to define a dispute by reference to there being only two permissible answers is one fraught with difficulty, not least because adjudicators are entitled to be wrong. Furthermore, when the issue was ‘deductions for the costs of defects’, the dispute included how such deductions were to be calculated. In any case, the Response had widened the jurisdiction of the adjudicator to encompass the point.

As for the alleged breach of natural justice in failing to allow AECOM to comment on this issue, Fraser J held that she had been entitled to decide this point on a basis for which neither party had contended. The point was one of contractual interpretation: all of the relevant material was available. The adjudicator was not bound to accept only one of two alternatives put by the parties, and was entitled to select an answer that neither had expressly proposed.

David Sawtell / 1st Jun 2017


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