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The case

Ove Arup & Partners International Ltd vs Coleman Bennett International Consultancy plc

Before Mrs Justice O鈥橣arrell in the Technology and Construction Court

Judgment delivered 29 January 2019

The facts

During April 2016 Coleman Bennett International Consultancy (CBI) engaged Arup to provide engineering services on a feasibility study for a hyperloop transport link between Manchester and Leeds. The hyperloop project was being promoted by Direct Cities Network (DCN). The contract sum was 拢350,000 plus VAT and in May 2016 CBI paid the first instalment of 拢75,000. 

On 11 October 2016 DCN acknowledged a debt of 拢350,000 for work undertaken by Arup but asked for time to pay. DCN offered 拢75,000 in 30 days, another 拢75,000 within three months and the balance to follow according to cash availability. In the event no further payments were made and during September 2018 Arup commenced adjudication. 

On 11 October 2018 CBI emailed the adjudicator contending that there was more than one dispute and more than one contract and that the wrong parties had been identified. CBI disputed jurisdiction on these grounds and in relation to further jurisdiction issues it said it had not yet had an opportunity to investigate. In its response in the adjudication CBI relied upon this email but did not elaborate further on its jurisdictional case.

In a letter dated 12 October 2018, having noted CBI鈥檚 failure to explain its arguments, Arup set out its case that the April 2016 agreement related to construction operations, that Part 2 of the Construction Act thereby applied and that the 11 October 2016 arrangement was made with DCN. CBI did not respond.

In a decision dated 19 October 2018 the adjudicator ordered CBI to pay 拢275,000 plus VAT, interest, statutory compensation and his fees. 

In November 2018 Arup commenced enforcement proceedings. 

CBI disputed enforcement on three grounds:

• That the April 2016 agreement was neither a construction contract nor related to the carrying out of construction operations; alternatively, it included matters that were not construction operations and which were not severable from the dispute referred to adjudication. 
• That the referral was concerned with more than one contract, namely the April 2016 agreement and 11 October 2016 arrangement.
• That the disputed jurisdiction issues turned upon questions of fact that could not be properly determined in adjudication or decided in court on a summary basis.

The issue

Was Arup entitled to enforcement of the adjudicator鈥檚 decision?

The decision

The judge agreed with Arup that CBI was precluded from raising any jurisdictional points. Applying the Court of Appeal鈥檚 recent decision in Bresco Electrical Services Ltd (in liquidation) vs Michael J Lonsdale Electrical Ltd and Primus Build [2019] EWCA Civ 27, the judge decided: (i) that where the 11 October email and response had failed to provide substantiation of CBI鈥檚 arguments, the adjudicator as a result was unable to understand or address CBI鈥檚 jurisdictional objections; (ii) albeit raised without sufficient elaboration, the adjudicator had still disposed of CBI鈥檚 objections and CBI could not now raise any new form of jurisdictional challenge in order to resist enforcement; (iii) with its general reservation in the 11 October email CBI had tried to keep its jurisdictional options open, contrary to the Court of Appeal鈥檚 ruling; and, (iv) where in its response, CBI had denied jurisdiction but admitted paragraph 15 of the referral, which asserted that Arup鈥檚 appointment was a construction contract and the services to be performed by Arup were construction operations, this amounted to a positive admission of jurisdiction. 

The judge went on to consider the alternative position had CBI been entitled to challenge jurisdiction but concluded that none of the three arguments advanced were sustainable. 

Commentary 

In Bresco the responding party made a general reservation as to jurisdiction that was then repeated, supplemented by two specific objections that were subsequently rejected by the adjudicator. The Court of Appeal decided the responding party could not be permitted to rely upon its vaguely worded original general reservation of position in order to be able to raise new objections. Lord Justice Coulson went on to set out some principles applicable to waiver and general reservations in the context of adjudication.

Each case will be judged on its own facts. Here, CBI had made a general reservation of position, given some brief indication of the principles upon which it opposed jurisdiction by means of 鈥渉eadline鈥� points but failed to provide any substantive explanation by reference to the particular facts that it would have been aware of. Applying Bresco, the judge found that the 11 October email did not substantiate CBI鈥檚 jurisdictional challenges clearly and appropriately. Having participated in the adjudication without an effective reservation, CBI had therefore waived its jurisdictional objections.

Ted Lowery is a partner in Fenwick Elliott