As you were

The Court of Appeal heard its second adjudication enforcement case on 14 December last year in the appeal against the first finding in C&B Scene Concept Design vs Isobars, made on 20 June 2001. Although judgment was reserved, the matter was heard in open court and therefore it can be reported that the appeal was successful and the original adjudication result has been held to be enforceable. Before considering where this decision leaves adjudication challenges based on jurisdiction, let's recap on the case.

The essence of the original challenge in Isobars was that the adjudicator had exceeded his jurisdiction. The contract was the JCT with contractor's design. In fact, the contract had not been completed as to which of the two payment options in the contract – periodic or staged – should apply. The VHE vs RBSTB decision (13 January 2000) tells us that applications under that contract become payable in the absence of notices. The adjudicator held that the application for payment made was still valid. At first instance, the judge held that the adjudicator should have applied the government's Scheme for Construction Contracts instead. In that regard, the court held that the adjudicator had exceeded his jurisdiction.

We all are now familiar with the decision in Bouygues that if the adjudicator asks himself the right question but gets the wrong answer, the decision reached is still enforceable. Isobars seemed to chip away at that principle. The judge found that the error of law as to the application of the contract and the scheme had lead to the adjudicator asking the wrong question, and so he was not bound by the principle in Bouygues. This represented a considerable U-turn by the courts because it effectively allowed judicial scrutiny of the adjudicator's findings. Previously the courts had made it very clear that their function was not to act as a mechanism for reviewing the legal correctness of the adjudicator's findings. This was the first of three grounds on which the decision went to the Court of Appeal.

The second issue before the court was whether the judge was right that failure to complete either appendix A or B of the JCT contract means that the whole of the payment obligations falls away and the scheme applies instead. It was argued on appeal that only part falls away and the scheme only fills in the gaps.

Here are two interesting aspects of this case. First, the respondent to the appeal did not attend (and apparently the respondent's solicitors had come off the record before the appeal was heard). Despite this, the court wanted to hear full argument from the appellant. Second, the court indicated halfway through that the appeal was successful and that they did not need to hear argument on the third point. The result of this is that when the decision is finally available, it is unlikely to contain an answer to the third point.

So what was this third point of appeal? It was the whole issue of notices and the consequences of failing to serve them. This was in the broader context of failure to serve such notices under Section 111 generally and not the narrow context of VHE, where the contract says what the consequences of such failure are.

This issue requires resolution. There is a lack of consistency between adjudicators as to what the consequences of such failure are. The recent proposed amendments to the scheme and the review of adjudication was an opportunity missed; this may be another opportunity missed.

Whatever the detail of the court's judgment might reveal, it is unlikely that it is yet prepared to allow judges to review adjudicators' findings. In this respect, the first instance decision in Isobars may prove to be a step too far in scrutinising the findings of adjudicators. The jurisdictional challenge thus remains a narrow ground of challenge rather than a roving review of the adjudicator's decision-making process.

I am grateful for the assistance of Adam Constable of 2 Temple Gardens, who appeared for C&B Scene in the Court of Appeal.