Jurisdictional challenges: waiver, crystallisation and substantive issues

Published 17 December 2019

The recent case of LJH v Meeres provides another example of a Court rejecting a parties’ attempt to rely on jurisdictional challenges that were not made in the course of the Adjudication. It also acts as a stark reminder not to confuse jurisdictional issues with matters of substance that fall to the Adjudicator to decide and will be enforced by the Court.

The facts

This was a final account dispute in which the Adjudicator decided that Meeres should pay an additional £132,410.83 plus VAT to LJH. Meeres sought to resist enforcement of that Decision on two grounds:

1. The dispute had not crystallised.

      1.1.   This was said to be on the basis that LJH had provided “insufficient information” for its claim to be assessed by Meeres prior to the Adjudication.

2. There were multiple contracts

      2.1.  LJH had wrongly claimed £2,463.75 for works carried out on a different site. Meeres contended that this could not be severed such that the whole Decision should be unenforceable.

Neither point was raised as a specific reservation in relation to jurisdiction within the course of the Adjudication.

The decision

The Court had no difficulty in rejecting these arguments.

As to the ‘crystallisation’ point, it held that:

1. The rejection of a claim on the basis that there is an alleged absence of particularity and / or evidence to support the figures claimed is sufficient to create a ‘dispute’ in relation to that claim.

2. The test – as articulated in Amec Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC) – is only engaged is the claim is “so nebulous and ill-defined that the respondent cannot sensibly respond to it”

3. In this case, Meeres had raised specific questions and requests for further information. The Judge held that it had been able to do so because the claim wasnot nebulous or ill defined.

4. A paying party cannot put off paying up on a claim forever by repeatedly requesting further information; this means that a paying party cannot suggest there is no dispute because the particularisation of the claim is allegedly inadequate.

As to the ‘multiple contracts’ point, it held that:

1. A dispute of fact between the parties as to whether part of the sum was due under a different contract is a substantive issue that was for the Adjudicator to decide. It was not raised nor was it considered as a jurisdictional issue.

2. Further, even if the Adjudicator had got that wrong, it was for the Adjudicator to decide. It is not an error that undermines his jurisdiction.

3. Finally, even if the Court found that the Adjudicator did not have jurisdiction to award that particular element of the award, it could easily be severed from the Decision. It did not follow that the whole Decision was unenforceable.

The Court also made clear that – in any event – Meeres had failed to properly raise these issues in the Adjudication itself. It had therefore lost the right to do so on enforcement.

The lessons

It is important to consider, raise and reserve genuine jurisdictional points in the course of an Adjudication. In doing so, it will be necessary to think carefully about the distinction between substantive issues and those which impact the Adjudicator’s jurisdiction to determine the dispute. Remember: whilst an argument that a dispute has not crystallised is rarely likely to succeed, there may be other challenges to jurisdiction which, if not raised appropriately, will be unavailable when it comes to enforcement.