Imperial Chemical Industries Limited v. Merit Merrell Technology Limited [2016] EWHC B30 (TCC)

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Imperial Chemical Industries Limited v. Merit Merrell Technology Limited [2016] EWHC B30 (TCC)

Published 14 February 2017

Executive Summary

In summary judgment proceedings, Jefford J upheld an adjudicator's decision on the basis that any objection to the adjudicator's jurisdiction had come for too late in the proceedings. In any event, the adjudicator had not acted outside his jurisdiction.

This case is a good reminder that any objection to an adjudicator's jurisdiction must be made at the earliest opportunity.

The Facts

Imperial Chemical Industries Limited ("ICI") employed Merit Merrell Technologies ("Merit") to undertake steelwork and tank installation works at a new paint processing plant in Northumberland.

The contract came to an end on 17 February 2015 when ICI sought to terminate. A total of four adjudications were commenced in respect of the contract between the parties.

Adjudication no. 2 was issued by ICI in respect of the provision of various documents. Merit's defence was that it was not obliged to provide the documents as there remained an outstanding payment of £816,093.34 plus VAT and interest ("the Sum") pursuant to its Interim Application no. 23, providing Merit with a lien over the documents. Merit made no claim for payment of this money in this adjudication. Nevertheless, the adjudicator (Mr Sliwinski) commented as follows:

  • Merit's interim application became a notified sum and that, in the absence of a valid pay less notice, this sum was payable and become due on 23 February 2015; however
  • Termination of the contract occurred on 17 February 2015, before the payment became due, and therefore the obligation to pay had not crystallised. Accordingly, Merit was due no further payment.

The adjudicator in Adjudication number 3 decided that ICI had not followed the contractual mechanism for terminating the contract and therefore ICI had committed a repudiatory breach.

In adjudication number 4, the adjudicator (Mr Wright) decided that the Sum was payable to Merit and concluded that:

  • Mr Sliwinski's comments on whether ICI's notices were effective were not binding on him.
  • ICI had not issued a valid payment notice.
  • ICI had not issued a valid pay less notice.

Accordingly, Mr Wright concluded that Merit was entitled to the Sum. ICI failed to pay and Merit applied for summary judgment to enforce the adjudicator's decision.

The Decision

Jefford J reiterated the well-established law that a party to adjudication who takes a point that an adjudicator does not have jurisdiction over the dispute must raise that jurisdictional objection and reserve its position as soon as possible (Allied P&L Limited v Paradigm Housing Group Ltd). To do so would enable that party to continue in the adjudication without prejudice to any defence it then raises in enforcement proceedings that the adjudicator lacked jurisdiction. If it does not do so, that party is taken to have consented or submitted to the adjudicator's decision.

Following service of the Referral, Response and Reply and in the course of correspondence between the adjudicator and the parties, ICI stated, for the first time, that "…the Adjudicator does not have jurisdiction to decide whether ICI was obliged to make any payment in respect of application no. 23 because it has already been determined in adjudication no. 2…".

Whilst Jefford J in fact decided that this statement expressed ICI's alternative position, she remarked that if this statement was to be read as an objection to Mr Wright's jurisdiction, it had come far too late.

In resisting enforcement, ICI argued that:

  • ICI's primary position was that Mr Wright had jurisdiction over this dispute and that he was not bound by anything Mr Sliwinski had said about payment or pay less notices in respect of Application No. 23 or about what was payable.
  • ICI did not agree to the adjudicator having jurisdiction to decide whether he was bound by what Mr Sliwinski had said in his Decision in adjudication no. 2.
  • But if Mr Wright did have that jurisdiction, then he decided that he was bound by Mr Sliwinski's comments about payment, and it followed that he then had no jurisdiction to find that a sum was payable. In deciding that he was bound by these comments but in still deciding that MMT was entitled to payment, he had acted without jurisdiction.

Jefford J noted that at no point in adjudication no. 4 or in the enforcement proceedings did ICI assert that Mr Wright did not have jurisdiction over the dispute referred to him.

Jefford J remarked that ICI's primary case must fail on the basis. Had Mr Wright not had jurisdiction to determine that Mr Sliwinski's comments were binding, but had in any event decided that they were, this decision itself would be non-binding on the parties. Mr Wright then would have decided the rest of the dispute (over which he did have jurisdiction) the way in which he did, deciding that payment was due to Merit.

In respect of ICI's alternative case, and particularly no. 3 above, Jefford J decided that if an adjudicator has jurisdiction to decide the extent to which a previous decision is binding on him then it is inherent in that jurisdiction that he has jurisdiction to decide the consequences thereof.

Jefford J concluded by stating "…what ICI is, in reality, seeking to do is resist enforcement of the adjudicator's decision by trying to constrain his jurisdiction in a very particular manner by relying on comments made in earlier adjudications on matters not referred to the previous adjudicator, whilst having itself recognised that the present adjudicator has jurisdiction over the dispute referred to him. That is the sort of argument the Court will approach with caution where there are serial adjudications...".

Authors

Mark Roach

Mark Roach

London - Walbrook

+44 (0)20 7894 6314

Key Contacts

Mark Roach

Mark Roach

London - Walbrook

+44 (0)20 7894 6314

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