Phooey on the Fowey: The Courts examine the geographical scope of adjudication under the Construction Act.
Background
To go back to the basics, a ‘construction contract’ is defined in Part II of the Housing Grants, Construction and Regeneration Act 1996 (the ‘Construction Act’), as amended by Part 8 of the Local Democracy, Economic Development and Construction Act 2009 (LDEDC Act 2009).
Not only do construction contracts provide for payment and suspension provisions, but parties only have a statutory right to refer a dispute to adjudication if their contract is a ‘construction contract’, as defined by section 104 of the Construction Act.
Whilst it is generally thought that the Construction Act does not apply to offshore work, in fact the relevant sections of the Construction Act do not use the term ‘offshore’. Section 104(6)(b) provides that construction operations (defined in section 105(1)) must be carried out in England, Wales or Scotland, and Section 105(1) makes reference to ‘land’ which statute and case law suggest includes land covered in water but only up to the low water line and not the seabed beyond that line.
Such distinctions have recently been discussed by the Court in Van Elle Ltd v Keynvor Morlift Ltd [2023] EWHC 3137 (TCC).
The Case
The employer, the Royal National Lifeboat Institution (the ‘RNLI’), owns a pontoon at Fowey Harbour in the river Fowey in Cornwall, which is used to moor its lifeboat. The River Fowey is a tidal river or estuary used as an inland waterway, with its mouth some distance from the pontoon. The pontoon is secured to mooring piles driven into the ground below low water level.
The parties entered into a contract for the drilling of four piles into an area referred to in the contract specification as “seabed”. A dispute arose between the parties, which was referred to adjudication, with the adjudicator ultimately awarding the claimant some £335,000.
The defendant maintained a jurisdictional challenge throughout, arguing the adjudicator lacked jurisdiction because the works were carried out below the river’s low water line, which meant this was not a construction operation in England and therefore fell outside of the scope of the Construction Act.
In the enforcement proceedings, HHJ Stephen Davies had to decide where England ends. He concluded that England ends at the mouth of a river and that references to “land” in section 105(1) of the Construction Act 1996 includes land covered with water, including lakes, rivers and inland waters like the River Fowey. This was not inconsistent with the judgment in Staveley Industries plc v Oldebrecht Oil & Gas Services Ltd (2001) 98(10) LSG 46.
Therefore, the court concluded the contract for the piling works fell within the scope of Part 2 of the Construction Act and there was no defence to the enforcement of the adjudicator’s decision.
Whilst obviously a very fact specific judgment, two more general points of note from this case are:
Firstly, it underlines the robust attitude of the TCC in enforcing adjudicator’s decisions wherever possible, with jurisdiction challenges succeeding only in rare cases.
Secondly, that there is little to lose and potentially much to gain for a party that wants the ability to adjudicate to include a contractual right to do so in their construction contract, particularly where there may be any doubt as to whether or not a project falls squarely within the scope of the Construction Act.
As Sebastian may have sung in the Little Mermaid: “down where it’s better, down where it’s wetter, is it under the Scheme (for Construction Contracts, or does the Act apply)”? Catchy.
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