OPINION - LEGAL COMMENT - WHAT DISPUTE? - PETER HORNE

The ‘top of the pops’ in adjudication cases during the first part of this year has been determining the precise dispute (if any) which has been referred. I have picked this topic as, once again, the principles may also refer to arbitration.

The major relevant difference between these two methods of dispute resolution is that the programme for arbitration is flexible while adjudication under the Act has a very restricted timescale of 28 days, only extendable with the agreement of the referring party. The advantageous flexibility in arbitration has traditionally led to an agreed extension of jurisdiction to encompass all disputes, even if arising after commencement of the reference.

Of course, adjudication following the Construction Act has always required a fully crystallised dispute; uncertainty only existed as to the boundary between evidence in support of the existing dispute and the initiation of a new ‘dispute’. Recent judgments have indicated that the courts may well consider any new approach as being a different dispute, outside the scope of the original notice.

The Arbitration Act 1996 is very uncertain. Section 1 refers only to ‘disputes’?, which requires a rejected (expressly or impliedly) claim. However, s.34(2)(c) makes reference to statements of claim, rather than submission of the dispute.

I suggest that there must be a crystallised dispute in existence before any method of dispute resolution can be commenced. To do otherwise is folly – there is nothing for the tribunal to decide and it is clearly un-economic to identify the dispute while proceedings are taking place (although common practice). In an adjudication to which the provisions of the Construction Act refer, the crystallised dispute, as set out in the notice, defines the jurisdiction of the adjudicator (see later for recent judgments). However, my interpretation of the Arbitration Act is that, save for any provision in the arbitration agreement itself, while it is necessary to have a crystallised dispute in existence before commencement of arbitration proceedings, the Claimant can then submit a claim which, although within the general confines of the dispute, may include matters which have not earlier been put to the Respondent. However, this is by no means certain, and there may be a possible jurisdictional challenge to such a claim.

This interpretation is outside my previous understanding of arbitration (in which the submission of further disputes would require agreement of the parties) and, I submit, is illogical and cannot have been the intention of Parliament.

I suggest that arbitrators would be well advised to examine the adjudication cases and be prepared to refuse jurisdiction in such circumstances if the Respondent submits that ‘this is not the dispute which was the subject of the arbitration notice’. Of course, the parties would be at liberty to re-define the dispute, but it may be proper for the Claimant to be penalised in respect of any wasted costs

The first relevant case in adjudication was Fastrack Contractors Ltd -v- Morrison Construction Ltd (4 January 2000), in which it was clear that, without specific agreement between the parties and under adjudication rules which only talked of a dispute, the adjudicator would only have jurisdiction to consider a single dispute. This relates, in arbitration, to joinder. A single dispute may have many elements but must have crystallised: “A ‘dispute’ can only arise once the subject matter of the claim, issue or other matter has been brought to the attention of the opposing party and that party has had an opportunity of considering and admitting, modifying or rejecting the claim or assertion” (Fastrack judgment para 27).

In Chamberlain Carpentry & Joinery Ltd -v- Alfred McAlpine Construction Ltd further clarification was given in that ten separate issues were characterised as a single dispute as to how much should be paid by McAlpine. I believe the key is to identify the characterisation of the dispute – individual issues which are encompassed by that characterisation will be within the dispute provided that each issue has crystallised.

While there has never been any doubt that the dispute had to be fully crystallised before commencement, there had been debate as to where the line was drawn between production of evidence and the formation of a new dispute. Most readers who are involved with construction disputes will recognise the common situation of preparing additional programmes to demonstrate the cause of extended time. In Edmund Nuttall Ltd -v- RG Carter Ltd (21 March 2001) judge Richard Seymour decided that the production of a programme which had been prepared specifically for the adjudication was a new claim which Carter had not seen before it was annexed to the Referral Notice, formed a new dispute and was therefore outside the adjudicator’s jurisdiction.

Peter Horne