ZVI Construction v The University of Notre Dame

[2016] EWHC 1924 (TCC)

In this case, one of the issues between the parties was whether or not ZVI had submitted to the jurisdiction of an expert to make a determination under the contract and so lost the right to object.  In considering the issue, Deputy Judge Furst QC referred to the decision of Mr Justice Akenhead in the case of Aedifice Partnership Ltd v Shah [2010] EWHC 2016 (TCC), a decision about adjudication. The Judge summarised five relevant principles, which we set out here, by way of a reminder:

(i) If it is said that there is an express agreement to give an adjudicator jurisdiction to make a binding decision on his jurisdiction, it simply has to be shown that this was the case.

(ii) For there to be an implied agreement giving the adjudicator such jurisdiction, you need to look at everything material that was done and said. It will have to be clear that some objection is being made in relation to the adjudicator’s jurisdiction.

(iii) One principal way of determining that there was no such implied agreement is if at any material stage shortly before or, mainly, during the adjudication a clear reservation was made by the party objecting to the jurisdiction of the adjudicator.

(iv) A clear reservation can, and usually will, be made by words expressed by or on behalf of the objecting party. It is legitimate to ask: was it or should it have been clear to all concerned that a reservation on jurisdiction was being made?

(v) A waiver can be said to arise where a party, who knows or should have known of grounds for a jurisdictional objection, participates in the adjudication without any reservation. This will again be a matter of fact. It would be difficult to say that there was a waiver if the grounds for objection were not known or capable of being discovered at the time.

In the case here, the Judge felt that not only did ZVI not advance any reservation, it took an active part in the expert process about whether and to what extent, if at all, ZVI were liable for certain major defects and the remedial costs of those defects. Indeed, it did so for a period of some six months from about the middle of December 2014 to June 2015. Clause 17.1 of the Development Agreement noted in respect of the individual appointed to determine the dispute that:

“such person shall act as an expert and his decision shall be final and binding on the parties hereto”.

The Judge concluded:

“Having impliedly agreed to submit the dispute as to whether there were defects for which ZVI ... were responsible under the Development Agreement, ZVI is now bound by Clause 17.1.1 which renders the expert’s determination final and binding on it. There is nothing unfair or illogical about this. ZVI had every opportunity to argue these points but for whatever reason it either chose not to deploy those arguments or did not consider them.”

Whilst this case is very different from adjudication, in that the timescales were far longer, the essential principles are very much the same. 

As an aside, there was also a clause in the contract stating that it could not be varied unless the agreement to vary was in writing and signed. Following the Globe and MWB cases (Issues 192 and 193), the Judge accepted that the parties could vary the contract in other ways.

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