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Jurisdiction Clauses & Enforcing Adjudication Decisions

Icons CourtThe case of Motacus Constructions Ltd v Paolo Castelli Spa [2021] EWHC 356 (TCC) confirms adjudication’s status as an interim-binding measure and reinforces its importance as a dispute resolution forum in the construction industry.

Background

This dispute concerned a contract for fitting-out works at the One Bishopsgate Plaza Hotel in London. While the works were to be carried out in London, the contract was subject to Italian law and gave exclusive jurisdiction to the French courts. However, the Housing Grants, Construction and Regeneration Act (the Construction Act) and the Scheme for Construction Contracts meant that UK adjudication provisions applied, and the right to adjudicate was unaffected by the exclusive jurisdiction clause.

The subcontractor, Motacus, adjudicated and was awarded nearly half a million pounds. When the Italian company defendant, Paola Castelli, did not pay Motacus applied for summary judgment to enforce the adjudicator’s decision. Paolo Castelli argued that the court did not have jurisdiction to determine the application because of the exclusive jurisdiction clause.

The question for the court was, therefore, whether the exclusive jurisdiction clause required enforcement of the decision in the French courts, or whether the UK courts would retain a residual jurisdiction.

The Reasoning

Following the UK’s departure from the EU on 1 January 2021, this question is to be resolved by legislation giving effect to the Hague Convention on Choice of Court Agreements 2005. Under this the parties’ choice on jurisdiction must be honoured unless certain exceptions apply. One such exception, in Article 7, provides that “interim measures of protection are not governed by the Convention” and makes clear that interim measures may be requested by parties and granted by courts in ‘Contracting States’ (which includes EU countries).

The Decision

The judge decided that enforcement of adjudication decisions is an interim measure of protection. This is because a decision is not final and binding on the parties but functions “to protect the position of the successful party on an interim basis pending the final resolution of the parties’ dispute through the normal court process”. As such, the court could accept jurisdiction and grant summary judgment to enforce the decision.

Significance of the decision

This decision is important for the UK construction industry as it emphasises the fact that adjudication is still ‘a speedy mechanism for settling disputes’, and that for construction projects in the UK the courts will not only allow adjudication but will enforce the adjudicator’s decision, whatever the choice of law or jurisdiction clauses in the contract say.

Clare Mendelle is a Professional Support Lawyer and Francesca Gallagher is a Paralegal at Sharpe Pritchard LLP

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