A quick guide to responding to a referral notice in adjudication

This note explains what a party should do when it receives a referral notice, including challenging the adjudicator’s jurisdiction.

What should I do when I receive a referral notice?

The referring party should serve the referral notice on you within seven days of the notice of adjudication.

• As the responding party, consider whether you have grounds to challenge the jurisdiction of the adjudicator. Then:
• Raise any challenge to the adjudicator’s jurisdiction at the earliest possible opportunity.
• Make any jurisdictional challenge in writing to the adjudicator and the other party.
• Set out the grounds of the challenge in full.

The seven-day time limit will be applied strictly. If the referral notice is received after seven days, the referring party must start the adjudication again. That means re-serving the notice of adjudication and re-appointing the adjudicator.

What are the grounds to challenge the adjudicator’s jurisdiction?

Grounds to challenge the adjudicator’s jurisdiction include:

The dispute:

• Is there a dispute?
• Has the dispute crystallised?
• Is the dispute referred to the adjudicator the same as the dispute that has crystallised?

The contract:

• Is there a “construction contract”?
• If the contract was entered into before the effective date (that is 1 October 2011 in England and Wales, and 1 November 2011 in Scotland), is the construction contract “in writing”?
• Does the construction contract fall within any of the exceptions to Part II of the Housing Grants, Construction and Regeneration Act 1996 (Construction Act 1996)?
• Is there a contractual right to refer the dispute to adjudication?

The referral:

• Is the referral notice consistent with the notice of adjudication?
• Have the correct parties been named?
• Has the dispute been properly referred to the adjudicator in accordance with the contract or statutory procedure?
• Has the adjudicator been appointed in accordance with the contract or statutory procedure?
• Has more than one dispute been referred to adjudication contrary to the Scheme for Construction Contracts (England and Wales) Regulations 1998 (SI 1998/649) (Scheme for Construction Contracts 1998) or other contract procedure?
• Has the dispute been determined in a previous adjudication?

What steps can I take to challenge the adjudicator’s jurisdiction?

In other words, are there any steps that I can take to stop the adjudication?

As responding party, your options are to:

• Reserve the right to challenge the adjudicator’s decision and proceed with the adjudication. This is the most common course of action.
• Apply for a declaration in the Technology and Construction Court (TCC) using CPR Part 8 proceedings. The application will challenge the adjudicator’s jurisdiction.
• Agree to let the adjudicator determine the dispute about his jurisdiction.
• Refer the jurisdictional dispute to another adjudicator.
• Refuse to participate in the adjudication. The adjudication will continue without you.
• Apply for an injunction to restrain the adjudication.

What happens next?

If you adopt the most common course of action and reserve your right to challenge the adjudicator’s decision but proceed with the adjudication, you should:
Decide on the nature of your case. You can advance an alternative case to the referring party’s case (a positive case) or argue that the referring party’s case is unlikely to be true (a negative case). Advancing a positive case is likely to be a sound tactical move.

Respond to the referral notice. Your response should be carefully and clearly drafted and be supported by evidence. It should:

• set out a full response to the factual and legal basis of the referring party’s case;
• refer to the relevant contractual provisions;
• explain the basis on which the claim is refuted;
• contain a detailed response to the redress sought by the referring party; and
• provide details of any cross-claims or counterclaims.

Reserve the right to challenge the adjudicator’s jurisdiction. Do not waive the right to challenge the adjudicator’s jurisdiction. You should repeat the reservation on all correspondence and in any documents issued during the adjudication process. (See letter to adjudicator challenging jurisdiction.)

Timetable of the adjudication. You must usually respond within seven days of the referral notice. The parties can agree to extend this deadline.

Reply and further submissions. The referring party has no right to issue a reply to the response. However, the adjudicator frequently allows the parties to issue further submissions.