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J Murphy and Sons Ltd v W Maher and Sons Ltd [2016] EWHC 1148 (TCC)

The jurisdiction of an adjudicator to hear a dispute about a settlement agreement arising from a construction claim is not clear cut.

Sir Robert Akenhead, sitting as a judge of the TCC, held in this case that the adjudicator did have jurisdiction to deal with the matter, but the point is far from closed.

Murphy was a sub-contractor and Maher was a sub-sub-contractor engaged pursuant to an NEC3 contract. Option W2 for the NEC3 Conditions provided that: “Any dispute arising under or in connection with this subcontract is referred to and decided by the Adjudicator”. A dispute arose and Maher threatened to refer it to adjudication. In the event, a final account sum was agreed. No payment was made and Maher issued a notice of adjudication. Murphy issued a Part 8 claim seeking a declaration to the effect that the adjudicator had no jurisdiction under the Scheme’s provisions to entertain a dispute arising out of the alleged final settlement.

There was considerable reference to authority. Sir Robert in particular relied on Premium Nafta Products Ltd v Fili Shipping Co. Ltd “The Fiona Trust” [2007] UKHL 40, an arbitration case, and held it would be ‘commercial common sense’ [31] for the adjudication scheme to survive the settlement agreement.

This is unlikely to be the last word on the issue. At [37], Sir Robert stated ‘I would be sympathetic to an application for permission to appeal, albeit only on the basis that it would be helpful for there to be an appellate decision on the issues raised and that it is arguable that previous decisions may leave some uncertainty in this arguably important area of construction law.’ Given the number of challenges to the jurisdiction of the adjudicator lately, such as in Complete Building Solutions Ltd v Brown [2016] EWCA Civ 1; [2016] B.L.R. 98; [2016] 164 Con. L.R. 21, this will remain an important and controversial area.

David Sawtell / 14th Jul 2016


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