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Adjudication and Construction Operations in Relation to Plant

The Housing Grants, Construction and Regeneration Act 1996 ("the Act") excludes the installation of plant in relation to a site where the primary activity is water treatment from the definition of a "construction operation" under the Act. As a result statutory adjudication does not apply.

In the case of Comsite Projects Limited –v- Andritz AG, Andritz sub-contracted to install plant on a site carrying out water treatment works, and also to install services in the building of the plant. Andritz in turn sub-contracted the wiring to the plant and the installation of lighting and alarm systems in the plant building to the Claimant, Comsite.

Disputes arise between Comsite and Andritz. Comsite wanted to refer its claim to adjudication. Andritz argued that it could not do, because Comsite's sub-contract was not a "construction operation" within the meaning of the Act. Comsite went to court for a declaration, amongst other things, that its contract was a construction contract for the purposes of the Act. A further complication was found that Comsite's contract contained a clause conferring jurisdiction in relation to the settlement of disputes arising from the interpretation or execution of the contract on the Austrian, rather than English courts. Perhaps not surprisingly, Andritz argued also that the English courts could not deal with the matter because of that jurisdiction clause.

The court held that the jurisdiction clause concerning the Austrian courts did not apply to adjudication proceedings under the Act. This was because such proceedings did not concern the interpretation or execution of the contract.

Further, the court held that because none of the services supplied by Comsite was connected to the plant, or used to enable the plant to operate, that Comsite were not installing "plant" and, therefore, their works under the contract were construction operations for the purposes of the Act and they could, therefore, adjudicate.

Despite the ruling in the court, the English courts will only have a temporary right to be involved in this matter, in that they can only deal with any enforcement of the adjudication decision. Andritz has the right to refer the matter back to the courts for final determination, in which event the jurisdiction of the courts would apply and the matter would have to be dealt with by the Austrian courts. However, until that time, the decision of the English courts in relation to the adjudication issues, must be complied with. The significance of this case is that parties to a contract should not assume that simply because there is a jurisdiction clause to a foreign court contained within that contract, that they have no right to adjudicate in England under the Act.