No overlap between substance and jurisdictional issues

Clare Mendelle and James Goldthorpe examine the implications of Ex Novo Limited v MPS Housing Limited [2020] EWHC 3804 (TCC)]

Case Background

In this case Ex Novo sought to enforce an adjudicator’s decision in its favour. MPS Housing, resisting enforcement, argued that the adjudicator did not have jurisdiction because the adjudication reference related to multiple contracts and an adjudicator does not (without the parties’ agreement) have jurisdiction to determine disputes under multiple contracts. The adjudicator had addressed the single vs multiple contracts issue and determined that the allegedly separate contracts were in fact a single contract that was subsequently varied.

Questions for the Judge

The two questions for the TCC judge were:

• Whether the adjudicator had jurisdiction. This turned on whether there was a single contract with multiple instructions or multiple contracts.
• Whether the adjudicator’s decision that there was a single contract was a decision he had jurisdiction to make. If it was, then the decision would be enforceable even if incorrect.

Reasoning

After considering the authorities, the judge determined that the proper approach to take would depend on whether the reference to the adjudicator necessarily involved the adjudicator having jurisdiction to determine jurisdiction. In other words, if that decision was an integral part of the substantive reference then the decision was unchallengeable. However, if that decision was only a preliminary matter to be decided before determining the reference proper, then the decision was challengeable. As such, the court needed to look at all of the circumstances and decide whether the reference entitled the adjudicator to determine jurisdiction as part of the substantive reference, or whether it was a necessary preliminary matter.

Decision

While the adjudicator did have to decide whether there was a single contract or multiple contracts, he did not have to answer that question in order to make a decision on the substantive issue between the parties, which was regarding payment and the effect of the absence of a pay less notice from MPS Housing. Rather, he had to answer the question for the purpose of deciding whether he had jurisdiction and should proceed with the adjudication. As such the decision was a preliminary matter and, therefore, non-binding and potentially challengeable.

The judge then considered the single vs multiple contracts issue, and whether MPS Housing had a real prospect of defeating the argument that there was a single contract. Looking at the parties’ intentions and their dealings, he considered that there was no real prospect of finding that there were multiple contracts. Accordingly, the adjudicator’s decision that the reference to adjudication was under a single contract was correct, and the decision was enforceable.
Commentary

While substance and jurisdiction were not found to be overlapping in this case, there may be instances where they are. As such, courts will need to consider the purpose for which it was necessary for an adjudicator to make a particular decision.

Clare Mendelle is a professional support lawyer and James Goldthorpe a paralegal at Sharpe Pritchard LLP

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