John Graham Construction Limited (“JGCL”), the Claimant in the proceedings, sought enforcement of an adjudicator’s decision against the Defendant, Tecnicas Reunidas UK Limited (“TRL”) for the payment of sums, of which £346,101.18 (including interest) remained unpaid by the Defendant in respect of a disputed contra charge (“Adjudication 4”). The Claimant brought this action on the basis of the Adjudication 4 decision that TRL was not entitled to apply the contra charge. The Defendant sought to resist the claim by arguing that the adjudicator had exceeded his jurisdiction by deciding that an earlier adjudication decision regarding the scope of JGCL’s works, which had been subsequently overturned by an arbitration award, still had effect and continued to protect the Claimant against liability for an alleged failure to complete its scope. 

The parties entered into a subcontract for the construction of the Tees Renewable Energy Plant Biomass Power Station. A number of disputes arose between the parties, resulting in four adjudications, and two arbitrations, one of which is ongoing. The main dispute concerned JGCL’s scope of works. It was decided by the first adjudicator in favour of JGCL that the scope was limited to works necessary to achieve certain milestones. JGCL responded to this by refusing to carry out certain works which, according to the terms of the first decision, were outside JGCL’s scope of works.

The decision in the first adjudication was subsequently overturned in the first arbitration award: the works which JGCL had refused to carry out were in fact within its scope. On the basis of that award TRL sought to levy a contracharge against JGCL for costs and damages associated with employing other contractors to complete the works. 

That contracharge was the subject of Adjudication 4, in which JGCL said that it was not liable for the additional costs incurred by TRL in relation to completion works, because at the time it refused to carry out those works, JGCL and TRL were bound by the terms of the decision in the first adjudication.   In Adjudication 4, the adjudicator agreed with JGCL: the parties were bound by this decision until the date of the arbitration award, which provided a legitimate basis for JGCL’s refusal to carry out the disputed works before the award date. It followed that TRL had no right to levy the contra charge against JGCL.  

In the enforcement proceedings, the Defendant maintained its right to apply the contra charge, and argued that the adjudicator had exceeded his jurisdiction by undermining the arbitration award. TRL argued that the arbitral award was declaratory and retrospective in its impact: the award was, in effect, saying what the correct position always had been, notwithstanding the decision in the first adjudication. 

Finding in favour of the Claimant, the Judge ruled that the adjudicator knew he was bound by the arbitration award, and that he did not answer the wrong question because he decided that the Defendant’s loss was caused by the Claimant’s compliance with the first adjudicator’s decision, rather than any breach of contract by the Claimant in refusing to carry out works. That was a finding the Adjudicator was entitled to make (whether or not it was right) and, critically, the Judge made clear that Adjudication 4 did not undermine or override the preceding arbitration award. His Lordship distinguished decisions on a dispute as to the construction of contractual terms, from decisions on disputes as to the application of such construction – the latter decision would not affect the former decision, nor be in excess of jurisdiction, even if it was wrong in substance. The Judge agreed with the Defendant’s submissions on non-waiver of its jurisdictional challenge. The court ordered that the balance of Adjudication 4 (the contra charge) must be paid to the Claimant. 

This judgment provides helpful guidance on how the court may analyse whether an earlier adjudication decision or arbitration award has been undermined or overridden by an adjudicator. Notably, the court will not take into account whether the later decision is wrong in substance. Parties should bear in mind that in applying an earlier decision or award, an adjudicator will not be viewed by the court as automatically undermining or overriding a later decision or award in the timeline of disputes. In relation to jurisdiction, the court confirmed that any jurisdictional challenge can be waived – there is no class of jurisdictional challenge which is so fundamental that it cannot be waived by the challenging party.