Aedifice Partnership Ltd v Shah

An adjudicator may inquire into his own jurisdiction, but his conclusion is not binding unless the parties expressly or impliedly agree that it will be. An implied agreement requires clear evidence that the parties intended to be bound by the adjudicator’s ruling on jurisdiction. A respondent preserves the objection by making a clear reservation, assessed objectively in the context of the adjudication. Participation after such a reservation does not waive the objection where the reservation is maintained. The adjudicator’s provisional assessment of whether he probably has jurisdiction is distinct from a binding decision on jurisdiction.

Aedifice sought to enforce an adjudicator’s decision requiring Mr Shah to pay sums said to be due for project coordination and related services. Mr Shah disputed the existence of a contract with him personally, the terms of any agreement, and whether the contractual terms were evidenced in writing as required by section 107 of the Housing Grants Construction and Regeneration Act 1996.

He objected to the adjudicator’s jurisdiction at the outset, later participated through solicitors, and repeated his objection in his Response. The adjudicator considered that it was more likely than not that he had jurisdiction and proceeded to decide the financial claim. The issue before the court was whether Mr Shah had agreed to give the adjudicator binding jurisdiction to determine his own jurisdiction, or had waived his objection.

1. The claim was dismissed. The adjudicator’s decision was not enforceable because Mr Shah had not agreed that the adjudicator should make a binding determination of his own jurisdiction.
2. An express agreement to confer that jurisdiction is governed by ordinary contractual principles. An implied agreement requires the court to consider everything material and to be satisfied with conviction that the parties must be taken to have agreed to be bound by the adjudicator’s ruling on jurisdiction. Such agreements are rare.
3. A clear reservation is the principal indication that no such implied agreement arose. The reservation is assessed objectively, by reference to what was said and done in context. No particular formula is essential, although words expressly reserving the position or stating that participation is under protest will ordinarily suffice. Participation in the adjudication does not itself waive the objection if the reservation is maintained.
4. There is a distinction between an adjudicator’s power to inquire into his own jurisdiction and a power to decide that jurisdiction conclusively. An adjudicator may examine the referral, witness statements and documents to determine whether he probably has jurisdiction. That inquiry does not bind the parties unless they agreed that it would.
5. Mr Shah’s letter of 31 March 2010 clearly reserved his jurisdiction objection. His Response, read as a whole, continued that reservation while explaining why there was no contract with him and why section 107 was not satisfied. His request for reasons if the adjudicator accepted jurisdiction, and his conditional participation, were consistent with the reservation.
6. The adjudicator expressly proceeded on the basis that he could not decide conclusively that he had jurisdiction. His assessment that he probably had jurisdiction was therefore only part of his inquiry. Aedifice remained free to bring contractual or quantum meruit proceedings against Mr Shah or the Company. Aedifice was ordered to pay Mr Shah’s costs, summarily assessed at £5,000.