Vinci was a building contractor who, on or about 8 December 2010, entered into a sub-contract with Ecovision under which Ecovision agreed to carry out the design, supply and installation of a ground source heating and cooling system for an office development called Vanguard House on the Daresbury Science and Innovation Campus in Cheshire ("the Sub-Contract").

The Sub-Contract contained 3 sets of terms under which, potentially, either party could request adjudication: (1) Option W2 of the Sub-Contract, (2) Option W2 of the Main Contract as amended by clause Z16, incorporated into the Sub-Contract by Appendix 1 and Document A, or (3) if neither of the first two was operable or applicable, the Scheme in Part I of the Schedule to the Scheme for Construction Contracts (England and Wales) Regulations 1998 (1998 S.I. No. 649)("the Scheme").

The procedure in each of the rules was not identical. Whilst there were similarities, there were also important differences.

Ecovision completed the Sub-Contract works in or around March 2011. Following an operational failure of the ground source heating and cooling system at Vanguard House in December 2012, a dispute arose between Vinci and Ecovision as to the adequacy of the design of the system. Vinci alleged that the design was defective in several respects, in particular that it was not capable of cooling the building to the required standard. Ecovision denied liability.

In June 2014, Vinci resolved to refer the issue of liability (but not valuation and payment) to adjudication.

On 11 June, Vinci's solicitors ("Systech") served a Notice of Adjudication on Ecovision. What Systech did the same day was to inquire whether the President or any Vice-President of the RICS was free to act and, on being told that they were not, to file a request for the nomination of an adjudicator with the Dispute Resolution Service of the RICS. The request was in Form DRS2C. In Form DRS2C, there is a box for the following question to be answered: "Is this application made under the Scheme or Contract?". Vinci left the answer blank. The RICS nominated Mr Jensen on Monday, 16 June.

Mr Jensen wrote at once to Vinci's solicitors and to Ecovision confirming acceptance of his appointment. The initial directions required Vinci to serve the Referral Notice and all supporting documentation within 7 days of the Notice of Adjudication and Ecovision to serve its Response and supporting documentation within 7 days of receipt of the Referral Notice.

The Referral Notice was served on Mr Jensen on 18 June. On 20 June, RPC wrote to Systech asking them to clarify: "(a) the source of your client's right to adjudicate and (b) pursuant to what adjudication procedure". Systech replied on 23 June suggesting that if Ecovision wanted to make representations in that regard, they should be made to the adjudicator. Accordingly, RPC wrote to Mr Jensen on 23 June making a formal challenge to Mr Jensen's jurisdiction. The letter said that Ecovision had not seen a copy of Vinci's request to the RICS for the nomination of an adjudicator and so did not know under what power Mr Jensen had been appointed. RPC said that the Notice of Adjudication and the Referral were silent on the point.

Mr Jensen responded by pointing out that the Sub-Contract was on the NEC3 Form and that in the NEC3 form adjudication was normally covered by Option W2. He went on to say, however, that: "In this contract certain of those clauses have been replaced by Z clauses ..." and concluded by saying: "If this does not answer the Respondent's [Ecovision's] query in total then the Respondent should let me know".

RPC asked Mr Jensen to supply a copy of his nomination. RPC concluded by saying that the only further assistance Mr Jensen could give at this stage was to direct Vinci to clarify the procedure under which it had purported to give the Notice of Adjudication and to provide a copy of the request for the nomination.

On 24 June RPC wrote again to Systech demanding answers to 5 questions, one of which was: "Please explain which adjudication procedure your client considers applies: W2, the Scheme, TeCSA or something else". Systech's response was to suggest that if Ecovision had an objection to Mr Jensen's jurisdiction it should make a submission to that effect. Mr Jensen agreed. So RPC wrote a 4 page letter to Mr Jensen on 24 June setting out its position. The letter did not say what Ecovision believed to be the foundation of Mr Jensen's jurisdiction if any. It simply canvassed the possible alternatives (Option W2, Option W2 as amended by clause Z16 i.e. TeCSA Rules, or the Scheme).

RPC's long letter of 24 June concluded by saying that if the initial direction given by Mr Jensen on 16 June was valid (which RPC made clear was disputed), Ecovision was not going to be able to serve a Response to the Referral Notice by the following day (which was day 7).

Mr Jensen's letter to RPC of 25 June took Ecovision to task for having addressed the challenge to his jurisdiction in the letter of 20 June to Systech rather than to him, and for not having asked him to investigate his jurisdiction when writing to him.

The letter provoked RPC to reply on 25 June with a direct question to Mr Jernsen: "what procedural rules are you applying?". He answered on 26 June as follows:

"In making any decision in the adjudication whether it be the final Decision or a decision as to the procedure, I am entitled to the assistance of both parties. The Claimant has made relevant submissions relying upon its Referral, and now it is for you, if you so wish, to make submissions as to the procedural rules which you consider I should apply. Upon receiving your submissions I will then decide what rules I am applying."

On 27 June, Mr Jensen disclosed a copy of the Form DRS2C to Ecovision. This revealed that, when it had applied to the RICS for the nomination of an adjudicator, Vinci had not stated whether the application was being made under the Scheme or under contract. By now only two days remained for service of the Response. Ecovision did not serve a Response.

RPC then sent a letter, on behalf of Ecovision, advising Ecovision would not be participating in the adjudication, that Mr Jensen was not a validly appointed adjudicator, and that he should resign.

Mr Jensen made his decision on 17 July 2014. He sent it to both parties the same day. He granted Vinci the declaration as to liability which it sought and directed that Ecovision should pay his fees of £4,698.00 plus VAT.

Ecovision commenced Part 8 proceedings in the TCC, seeking a declaration that it was not bound by the adjudicator’s decision.

The TCC held that an adjudicator lacks jurisdiction to determine whether he has jurisdiction and this includes choosing between two or more sets of adjudication rules if the choice makes a material difference to how he should be appointed. Here, Vinci’s notice of adjudication and application for appointment of an adjudicator did not assist the adjudicator in deciding which adjudication rules applied. However, the Court was not prepared to hold that the notice or the application were invalid simply because of this lack of information.

Given the uncertainty by the fact that Vinci did not stipulate the rules on which it was relying in its notice; the potential rules all put forward different routes to the appointment of an adjudicator; and the potential rules all contained real differences of procedure, the court stated that the adjudicator should have asked Vinci to explain its position on the rules to clarify his jurisdictional position. It was, however, acknowledged that his failure to do so was inadvertent and not as a result of bias.

The Court outlined that where there is a dispute as to which procedural rules apply to an adjudication, identifying the right one “goes to the heart of the adjudicator’s jurisdiction and is therefore essential.”

Following a substantial review of the contract the Court concluded that, contrary to Vinci’s position, the second option applied which specified TeCSA as the ANB and the TeCsa adjudication rules as applying. Accordingly, the TCC ruled that the adjudicator had not been properly appointed and he, therefore, lacked jurisdiction.

Commentary

This case acts as a reminder that care should be taken to ensure that the dispute resolution procedure in a contract should be clear-cut and simple to follow. In larger projects where conflict might arise between various contracts as to which dispute resolution procedure applies, this can be particularly important.

Parties faced with any ambiguity as to which dispute resolution procedure should apply, should view the notice and application as an opportunity to explain their position on the applicable procedure. This will both reduce the time and costs of arguing about the issue during the adjudication but also reduce the possibility of declaratory relief proceedings being commenced at a later date.