RG Carter Ltd v Edmund Nuttall Ltd 2

The Court held that a clause providing that a difference was not a dispute capable of reference to adjudication until mediation had taken place did not comply with Section 108 because a party has a right to adjudicate disputes (including differences) at any time. Such a clause attempts to postpone the right to adjudicate.

HHJ Thornton QC, Technology & Construction Court

21 June 2000

C entered into a sub-contract with EN, incorporating the standard terms of sub-contract DOM/1. These contained an adjudication clause, clause 38A. A dispute arose concerning the appropriate method for valuing the work, which EN referred to adjudication.

An adjudicator was appointed by the RICS, but C applied to the Court for an injunction to stop the adjudication proceeding, relying upon 3 different arguments to say that the adjudicator had no jurisdiction.

Firstly, C said EN was obliged to identify all of the documentation comprising the sub-contract before the right to adjudicate arose, which EN had not done. The Court found that as the parties had agreed that there was a contract, to which the Act applied, and which incorporated the DOM/1 standard conditions, it was unnecessary for the Court to investigate further. EN did not have to state which documentation formed part of the contract as a pre-condition to adjudication. Indeed, that could be a dispute under the contract, although the Court did not wish to comment further on this.

The sub-contract provided for Geoff Brewer to be the named adjudicator. C said that this was a contractually binding agreement, and therefore the adjudicator appointed by the RICS had no jurisdiction. The clause naming Brewer referred to clause numberings from the previous version of DOM/1, providing for contractual adjudication on matters of set-off. C said there was a clear intention that the clause was intended to be an amendment to DOM/1 1998. The Court found there was a potential conflict: it could be thought that the parties were intending to add on an additional tier of adjudication for set-off disputes analogous with the 1980 DOM/1 conditions. Since there was confusion, the Court applied the contra proferentem rule, and construed the agreement against C who had drafted it.

The sub-contract also contained a bespoke clause stating that until a difference had been mediated, it could not be a dispute capable of being referred to adjudication (similar to clauses in ICE and NEC). No mediation had taken place, so C said there was not yet a right to adjudicate, and the adjudication was premature. The Court found that this approach conflicted with Section 108 of the Act, which provides that a party has a right to refer a dispute to adjudication at any time, and states that a dispute includes any difference. The Court viewed the clause as an attempt to postpone the right to adjudication.

Therefore, C's application for an injunction was refused.

The Court held that a clause providing that a difference was not a dispute capable of reference to adjudication until mediation had taken place did not comply with Section 108 because a party has a right to adjudicate disputes (including differences) at any time. Such a clause attempts to postpone the right to adjudicate.