Adjudication in Construction Law

Darryl Royce

Document

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CHAPTER 6 Enforcement and court proceedings

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6.1 Effect of decision

6.1.1 Statutory provisions

6.1 Construction contracts governed by Part II of the Housing Grants, Construction and Regeneration Act 1996 are required to provide that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement.1 The parties are entitled to agree to accept the decision of the adjudicator as finally determining the dispute.2 If a construction contract regulated by Part II does not comply with these requirements, the adjudication provisions of the Scheme for Construction Contracts apply.3 The Statutory Scheme provides that the decision of the adjudicator shall be binding on the parties and that they shall comply with it until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement between the parties.4 These provisions of the Act and the Scheme have been described as prescribing ‘temporary binding finality of an adjudicator's decision',5 although some difficulty has been acknowledged with the concept of the ‘temporary finality’ of an adjudicator's decision and as to what, precisely, are the consequences of the provision in the latter that an adjudicator's decision is ‘binding on the parties, and they shall comply with it until the dispute is finally determined by legal proceedings or arbitration'.6

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6.1.2 Nature of proceedings before an adjudicator

6.2 Proceedings before an adjudicator are not legal proceedings. They are a process designed to avoid the need for legal proceedings.7 Legal proceedings result in a judgment or order that in itself can be enforced. If the decision at the end of legal proceedings is that money should be paid, a judgment is drawn up that can be put in the hand of the Sheriff or Bailiff and enforced. That is not the case with an adjudicator. The language of the 1996 Act throughout is that the adjudicator makes a decision. He or she does not make a judgment. Nor does he or she make an ‘award’ as an arbitrator does though he or she can order that his or her decision be complied with. Proceedings before an arbitrator are closer to court proceedings because an award of an arbitrator can in some circumstances be registered and enforced without a judgment of the court. But the decision of an adjudicator, like the decision of a certifier, is not enforceable of itself. Those decisions, like the decisions of a certifier, can be relied on as the basis for an application to the court for judgment, but they are not in themselves enforceable.8 Nevertheless, adjudicators’ decisions are frequently referred to as being ‘enforceable’ in the sense of being capable of being relied upon for the purposes of litigation.

6.1.3 Nature of enforcement proceedings

6.3 The subsequent claim in court proceedings is for the enforcement of the adjudicator's decision. That decision is only temporarily binding but it is to be enforced, he argues, because the contract requires adjudicators’ decisions to be complied with once properly given. That reflects the statutory requirement under the 1996 Act. Thus the cause of action is or follows essentially from the failure on the part of the losing party in the adjudication to honour the adjudication decision. The nature of enforcement of adjudicators’ decisions is contractual and the contract requires the parties to comply with the decision of the adjudicator, the adjudicator's decision may be right or wrong but, whether right or wrong, it is to be complied with.9 A failure to comply with the decision of the adjudicator and pay the sum ordered is a breach of contract. Thus, the cause of action upon which the enforcing party has to rely is the breach of contract and it does not as such sue the other party for a debt or damages said to have arisen as a result of the latter's failure to pay the sum due under the contract.10 6.4 Although an adjudication award in the referring party's favour creates a contractual obligation on an insured responding party to pay the referring party, it is not an absolute obligation. In particular, it will not be enforced by the court if the adjudicator has exceeded his or her jurisdiction. Liability under the insurance policy is not established until the decision is enforced by a judgment of the court or agreement.11

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6.2 Effect of the challenge to the validity of the decision

6.2.1 Purpose and effect of Housing Grants, Construction and Regeneration Act 1996

6.5 Even if there is a challenge to the validity of an adjudicator's decision, the decision is binding and enforceable (in the sense used above) until the challenge is finally determined. The word ‘decision', where it appears in section 108(3) of the Housing Grants, Construction and Regeneration Act 1996 and paragraph 23(1) of the Statutory Scheme, is not limited in meaning to a lawful and valid decision, the validity of which is not under challenge. If the contrary were correct, it would substantially undermine the effectiveness of the scheme for adjudication. The intention of Parliament in enacting the Act was plain. It was to introduce a speedy mechanism for settling disputes in construction contracts on a provisional interim basis and requiring the decisions of adjudicators to be enforced pending the final determination of disputes by arbitration, litigation or agreement: see section 108(3) of the Act and paragraph 23(2) of the Statutory Scheme. The timetable for adjudication is very tight. Many would say unreasonably tight, and likely to result in injustice. Parliament must be taken to have been aware of this. So far as procedure is concerned, the adjudicator is given a fairly free hand. It is true (but hardly surprising) that he or she is required to act impartially (section 108(2)(e) of the Act and paragraph 12 (a) of the Statutory Scheme). He or she is, however, permitted to take the initiative in ascertaining the facts and the law (section 108(2)(f) of the Act and paragraph 13 of the Statutory Scheme). He or she may, therefore, conduct an entirely inquisitorial process, or he or she may invite representations from the parties. It is clear that Parliament intended that the adjudication should be conducted in a manner which those familiar with the grinding detail of the traditional approach to the resolution of construction disputes apparently find difficult to accept. But Parliament has not abolished arbitration and litigation of construction disputes. It has merely introduced an intervening provisional stage in the dispute resolution process. Crucially, it has made it clear that decisions of adjudicators are binding and are to be complied with until the dispute is finally resolved.12

6.2.2 Comparison with arbitration

6.6 It is well known that many, if not most, construction contracts contain arbitration clauses. It is by no means uncommon for such clauses in sub-contracts to state that the arbitration between main contractor and sub-contractor may not be commenced until the main contract works have been completed, at any rate, unless the main contractor decides otherwise. A groundwork sub-contractor to a major development may have to wait years before it can even start to arbitrate its dispute with the main contractor. This was the mischief at which the Act was aimed. In the light of Halki Shipping Corporation v Sopex Oils Ltd,13 the problem from the sub-contractor's point of view in such a situation is even

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more pressing than it was previously thought to be, since it cannot even seek summary judgment for a sum as to which there is no arguable defence.14 6.7 A possible answer to this is that it is open to parties to draft their arbitration clauses in such a way as to exclude disputes arising from adjudicators’ decisions. This would require careful drafting, since standard arbitration clauses expressed in terms of ‘any dispute arising out of or in connection with’ the contract in question might well be wide enough to embrace any dispute arising out of or in connection with an adjudicator's decision in relation to that contract. Also, arbitration can itself be a swift procedure.15 6.8 Arbitration can be swift, but often it is not, and, as already explained, in some cases cannot even be started until long after the dispute has arisen. More fundamentally, if Parliament had thought that resolution by arbitration was a swift and effective procedure, it would surely not have seen the need to enact the Act at all.16

6.2.3 A decision is a ‘decision'

6.9 The suggestion that the word ‘decision’ where it appears in section 108(3) of the Act and paragraph 23(2) of the Statutory Scheme, means only a decision whose validity is not under challenge ought to be viewed with considerable care. It is easy to mount a challenge based on an alleged breach of natural justice even though the challenge may be hopeless. But the fact is that the challenge has been made, and a dispute therefore exists between the parties in relation to it. On this argument, the party who is unsuccessful before the adjudicator has to do no more than assert a breach of the rules of natural justice, or allege that the adjudicator acted partially, and he or she will be able to say that there has been no ‘decision'.17 6.10 At first sight, it is difficult to see why a decision purportedly made by an adjudicator on the dispute that has been referred to him or her should not be a binding decision within the meaning of section 108(3) of the Act and paragraph 23(1) of the Scheme. If it had been intended to qualify the word ‘decision’ in some way, then this could have been done. Why not give the word its plain and ordinary meaning? There is no good reason for not so doing. If an adjudicator's decision on the issue referred to him or her is wrong, whether because he or she erred on the facts or the law, or because in reaching his or her decision he or she made a procedural error which invalidates the decision, it is still a decision on the issue. Different considerations may well apply if an adjudicator purports to decide a dispute which was not referred to him or her at all.18

6.2.4 No stay for arbitration

6.11 The defendant is not entitled to a stay of enforcement proceedings under section 9 of the Arbitration Act 1996 because there is a dispute as to whether it was a decision which has been the subject of a notice of arbitration. If the defendant wishes to challenge the validity of the decision, it has an election. One course open to it is to treat it as a decision

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within the meaning of the construction contract and refer the dispute to arbitration. The other is to contend that it was not a decision at all within the meaning of the contract and to seek to defend the enforcement proceedings on the basis that the purported decision was not binding or enforceable because it was a nullity. But what the defendant cannot do is to assert that the decision is a decision for the purposes of being the subject of a reference to arbitration, but is not a decision for the purposes of being binding and enforceable pending any revision by the arbitrator. This is no more than applying the doctrine of approbation and reprobation, or election. A person cannot blow hot and cold: see Lissenden v CAV Bosch Ltd,19 and Halsbury's Laws 4th Edition Volume 16, paragraphs 957 and 958. Once the defendant elects to treat the decision as one capable of being referred to arbitration, it is bound also to treat it as a decision which is binding and enforceable unless revised by the arbitrator. There is nothing in Halki Shipping Corporation v Sopex Oils Ltd 20 which prevents the court from deciding that the defendant is precluded by its election from seeking a stay under section 9.21

6.3 Methods of enforcement

6.3.1 Summary judgment or mandatory injunction?

6.12 It has been considered whether the appropriate procedure for the enforcement of an adjudicator's decision is by way of a claim form and an application for summary judgment, or by way of a claim for a mandatory injunction. The mere fact that the decision may later be revised is not a good reason for saying that summary judgment is inappropriate. The grant of summary judgment does not pre-empt any later decision that an arbitrator may make. It merely reflects the fact that there is no defence to a claim to enforce the decision of the adjudicator at the time of judgment.22 6.13 The court has jurisdiction to grant a mandatory injunction to enforce an adjudicator's decision, but it would rarely be appropriate to grant injunctive relief to enforce an obligation on one contracting party to pay the other. Clearly, different considerations apply where the adjudicator decides that a party should perform some other obligation, for example, return to site, provide access or inspection facilities, open up work or carry out specified work. This is not to cast any doubt on decisions where mandatory judgments have been ordered requiring payment of money to a third party, for example, to a trustee stakeholder as in Drake & Scull Engineering Ltd v McLaughlin and Harvey plc.23

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6.14 The words of section 37 of the Superior Courts Act 1981 are widely expressed viz: ‘the High Court may by order (whether interlocutory or final) grant an injunction … in all cases in which it appears just and convenient to do so'. But a mandatory injunction to enforce a payment obligation carries with it the potential for contempt proceedings. It is difficult to see why the sanction for failure to pay in accordance with an adjudicator's decision should be more draconian than for failure to honour a money judgment entered by the court. Thus the usual remedy for failure to pay in accordance with an adjudicator's decision will be to issue proceedings claiming the sum due, followed by an application for summary judgment.24

6.3.2 Interim injunction or declaration?

6.15 Where an adjudicator has decided that a party is entitled to certain documents but has made no order for delivery up, the only way in which the position might be preserved on an application for summary judgment, and effect thereby given to the adjudicator's declaration of entitlement, would be by the way of an interim injunction requiring the other party to preserve the documents until further order so that relevant documents, if sufficiently identified, could be the subject of a more focused application for delivery up. If no application is made for such relief and the question of entitlement to the documents is not one that has been explored before the court on the merits, it would be inappropriate for the court to make any declaration of entitlement, but what it can and should do is to declare that the adjudicator's decision is valid and binding. That means that the adjudicator's declaration of entitlement will stand unless and until it is overruled by a decision of the court made on the merits.25

6.3.3 Order under section 42 of the Arbitration Act 1996

6.16 Where the adjudication provisions of the unamended Statutory Scheme for Construction Contracts applied, the adjudicator could, if he or she thought fit, order any of the parties to comply peremptorily with his or her decision or any part of it and, unless otherwise agreed by the parties, the court could make an order under section 42 of the Arbitration Act 1996 requiring a party to comply with a peremptory order made by an adjudicator. An application for an order under this provision could be made by a party to adjudication with the permission of the adjudicator (and upon notice to the other parties).26 It is not at all clear why section 42 of the Arbitration Act 1996 was incorporated into the Statutory Scheme. It may be that Parliament intended that the court should be more willing to grant a mandatory injunction in cases where the adjudicator had made a peremptory order than where he or she had not. Where an adjudicator had made a peremptory order, this was a factor that should be taken into account by the court in deciding whether

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to grant an injunction. But it was for the court to decide whether to grant a mandatory injunction, and, for the reasons already given, the court should have been slow to grant a mandatory injunction to enforce a decision requiring the payment of money by one contracting party to another.27

6.3.4 Statutory demand

6.17 It has been said that ordinarily, the issue of a statutory demand will not be the appropriate means of enforcing an adjudicator's decision.28 Nevertheless, an adjudication decision creates a debt which may form the basis of a statutory demand under section 268 of the Insolvency Act 1986 and falls to be treated in the same way as a judgment or order, so that the court will not go behind it and enquire into the validity of the debt nor as a general rule will it adjourn an application to set aside the demand to await the result of an application to set aside. However, where the debtor claims to have a counterclaim, set-off or cross demand, whether or not it could have been raised in the adjudication, the court will normally set aside the statutory demand if, in its opinion, on the evidence, there is a genuine triable issue. The scheme of the Act is not such that an adjudication decision can be pursued to insolvency no matter the underlying state of account between the parties to the construction contract. Were the contrary so, the court would be required to close its eyes to the overall position, which in the context of insolvency is wrong in principle.29 Similarly, where the successful party has changed the legal basis for the debt demanded, there is an allegation by the unsuccessful party that it has suffered loss and damage, and the evidence as a whole is directed to the issue of whether or not the adjudication process was valid, it would not be right to permit a statutory demand to stand. The threat of insolvency proceedings would not be the proper way to resolve the dispute between the parties.30 6.18 It has also been held, however, that the presentation of a winding-up petition on the basis of a judgment entered in the amount awarded by an adjudication decision, obtained because the employer has failed to serve a withholding notice under section 111 of the Act, could not be said to be an abuse on the part of the petitioner either because the debt was disputed to the knowledge of the petitioner on substantial grounds and in good faith, or because the court could see with certainty that the petition, if it were heard, would bound to be dismissed The petitioner has had the opportunity to serve a withholding notice but has not taken it and has only itself to blame.31 Where a company has had no opportunity to raise the question of defective work by a withholding notice because it was unaware of the defects at the relevant time, but it is probable that an adjudication decision could have been obtained by the date of an application to restrain presentation of the petition, there is at least a significant possibility that a future court hearing a petition may form the view that the company had had a reasonable opportunity to litigate the cross-claim and could properly, therefore, in the exercise of its discretion decide to make a winding-up order and the creditor will be allowed to present such a petition if it wishes.32 The position may be

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the same where an unsuccessful party is unhappy with the adjudicator's determination on the question of jurisdiction and has not chosen to pursue its remedy of applying to the court to have that decision set aside on the basis that it disputes jurisdiction or to seek a declaration on the question of jurisdiction or both.33 6.19 The existence of a Technology and Construction Court procedure for the enforcement of an adjudicator's decision would appear to constitute a filtering process so that an adjudicator's decision is subject to review before being turned into an enforceable judgment or order. In bypassing the TCC filter process and proceeding directly to winding up, petitioning creditors assume the risks attendant on invoking the latter jurisdiction and adopt what has been called ‘a high risk strategy': Re A Company (No. 0012209 of 1991).34 The existence of an adjudicator's decision does not trump the considerations that normally inform the manner in which the discretion to make a winding-up order is to be exercised in circumstances in which the decision concerned has not been through the TCC filter and turned into a binding judgment.35

6.4 Practice and procedure

6.4.1 Proceedings in the Technology and Construction Court

6.20 Building or other construction disputes, including claims for the enforcement of the decisions of adjudicators under the Housing Grants, Construction and Regeneration Act 1996 are appropriate for the Technology and Construction Court36 and the TCC is ordinarily the court in which enforcement of an adjudicator's decision is undertaken.37 Enforcement proceedings normally seek a monetary judgment, so that CPR Part 7 proceedings are usually appropriate. However, if the enforcement proceedings are known to raise a question which is unlikely to involve a substantial dispute of fact and no monetary judgment is sought, CPR Part 8 proceedings may be used instead.38

6.4.2 Issue of claims

6.21 TCC claims must be issued in the High Court in London and in any District Registry outside London, but preferably in the District Registries at Birmingham, Bristol Cardiff, Chester, Exeter, Leeds, Liverpool, Newcastle, Nottingham and Salford.39 TCC claims may also be issued in the County Courts in Birmingham, Bristol Cardiff, Central London, Chester, Exeter, Leeds, Liverpool, Newcastle, Nottingham and Salford,40 but cases involving adjudications, including enforcements, may be started in the High Court, irrespective of the financial amount involved; this is justified by the need to build up a

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body of case law which is consistent in this important area of construction law business.41 It is not unusual for an adjudication enforcement of £150,000 to be started in the High Court. That is the correct place for it to be started and it is dealt with as adjudication business in the TCC and would usually be dealt with by a High Court judge or a Deputy High Court judge. Where a case about the reasonableness of the level of the fees charged by an adjudicator is already in the TCC list at the County Court, it will be dealt with by a designated TCC judge because it is in that list, and is capable of disposal after a two-day trial, it does not remotely justify being transferred to the High Court.42 6.22 The claim form must be marked in the top right-hand corner ‘Technology and Construction Court (QBD)’ below the words ‘In the High Court of Justice, Business and Property Courts [in/of]'. In the County Court, the claim form must be marked ‘Business and Property Courts work'.43 A prescribed fee is payable upon issue of the claim form. For companies, it would, in modern times, be anomalous if a company could never conduct litigation in person (that is, without a legal representative) without necessarily bringing about an infringement of the Legal Services Act 2007. It may well be that if the sole beneficial owner had served the claim form there would have been no invalidity, given that the acts and decisions of all the shareholders or of the whole board of a company may count as the acts and decisions of the company itself. It is, in formal terms, less clear-cut, however, where the activity has been delegated to an individual director or employee. The Civil Procedure Rules are not specific on this. Part 39.6 (read with Practice Direction 39A) permits representation at trial of companies by employees, with the court's permission. It is to be assumed that such authorization impliedly extends to directors, although the rule does not so state, nor is there any reference to hearings other than trial: see the discussion in the White Book, Volume 2 at paragraph 13-7.44

6.4.3 No need to comply with pre-action protocol

6.23 A claimant shall not be required to comply with the pre-action protocol for construction and engineering disputes applicable to Technology and Construction Court claims before commencing proceedings to the extent that the proposed proceedings are for the enforcement of an adjudicator to whom a dispute has been referred to pursuant to section 108 of the Act.45

6.4.4 TCC enforcement applications

6.24 The Technology and Construction Court has adopted a procedure whereby enforcement applications are dealt with promptly. The claim form should identify the construction

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contract, the jurisdiction of the adjudicator, the procedural rules under which the adjudication was conducted, the adjudicator's decision, the relief sought and the grounds for seeking that relief and should be accompanied by an application notice that sets out the procedural directions that are sought. Commonly, the claimant's application will seek an abridgement of time for the various procedural steps, and summary judgment under CPR Part 24. The claim form and the application should be accompanied by a witness statement or statements setting out the evidence relied on in support of both the adjudication enforcement claim and the associated procedural application. This evidence should ordinarily include a copy of the adjudicator's decision. Further pleadings in the adjudication may be required where questions of the adjudicator's jurisdiction are being raised.46

6.4.5 Documents to be lodged

6.25 The claim form, application notice and accompanying documents should be lodged in the appropriate registry or court centre clearly marked as being a ‘paper without notice adjudication enforcement claim and application for the urgent attention of a TCC judge'. A judge will ordinarily provide directions made in connection with the procedural application within three working days of the receipt of the application notice at the courts.47

6.4.6 Procedural application dealt with on paper

6.26 The procedural application is dealt with by a TCC judge on paper, without notice. The paper application and the consequent directions should deal with: the abridged period of time in which the defendant is to file an acknowledgement of service; the time for service by the defendant of any witness statement in opposition to the relief being sought; an early return date for the hearing of the summary judgment application and a note of the time required or allowed for that hearing; and identification of the judgment, order or other relief being sought at the hearing of the adjudication claim. The order made at this stage will always give the defendant liberty to apply.48

6.4.7 Time

6.27 A direction providing for a date by which the claim form, supporting evidence and court order providing for the hearing are to be served on the defendant should ordinarily also be given when the judge deals with the paper procedural application. The directions will ordinarily provide for an enforcement hearing within 28 days of the directions being made and for the defendant to be given at least 14 days from the date of service for the serving of any evidence in opposition to the adjudication application. In more straightforward cases, the abridged periods may be less. Draft standard directions of the kind commonly made by the court on a procedural application by the claimant in an action to enforce the decision of an adjudicator are set out in Appendix F to the TCC Guide. The claimant should, with the application, provide an estimate of the time needed for the hearing of the

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application. This estimate will be taken into account by the judge when fixing the date and length of the hearing. The parties should, if possible jointly, communicate any revised time estimate to the court promptly and the judge to whom the case has been allocated will consider whether to re-fix the hearing date or alter the time period that has been allocated for the hearing. If the parties cannot agree on the date or time fixed for the hearing, a paper application must be made to the judge to whom the hearing has been allocated for directions.49

6.4.8 Preparation for hearing

6.28 Where there is any dispute to be resolved at the hearing, the judge should be provided with copies of the relevant sections of the Act, the adjudication procedural rules under which the adjudication was conducted, the adjudicator's decision and copies of any adjudication provisions in the contract underlying the adjudication. Subject to any more specific directions given by the court, the parties should lodge, by 4 p.m. one clear working day before the hearing, a bundle containing the documents that will be required at the hearing. The parties should also file and serve short skeleton arguments and copies of any authorities which are to be relied on (preferably as an agreed joint bundle). summarizing their respective contentions as to why the adjudicator's decision is or is not enforceable or as to any other relief being sought. For a hearing that is expected to last half a day or less, the skeletons should be provided no later than 1 p.m. on the last working day before the hearing. For a hearing that is estimated to last more than half a day, the skeletons should be provided no later than 4 p.m. one clear working day before the hearing.50 6.29 While there are many circumstances in which the court will entertain an application made orally at a hearing that has already been fixed, permission will be refused to make an application orally and unsupported by any evidence where the failure to file evidence in good time is serious and the reason for the late evidence appears to be simply a decision by counsel who wishes to rely on material that has been available for some time. If admitted, the late evidence would subvert the order of evidence, allowing the party making the application the last word, or would put the hearing at risk in order to allow the other party a fair opportunity to consider and respond to the late evidence.51 6.30 The parties should be ready to address the court on the limited grounds on which a defendant may resist an application seeking to enforce an adjudicator's decision or on which a court may provide any other relief to any party in relation to an adjudication or an adjudicator's decision.52

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6.4.9 Concurrent proceedings

6.31 It sometimes happens that one party to an adjudication commences enforcement proceedings, whilst the other commences proceedings under Part 8 of the Civil Procedure Rules, in order to challenge the validity of the adjudicator's award. This duplication of effort is unnecessary, and it involves the parties in extra costs, especially if the two actions are commenced at different court centres. Accordingly there should be sensible discussions between the parties or their lawyers in order to agree the appropriate venue and who shall be claimant and who defendant.53 Where, however, there is a dispute between the parties as to whether or not the defendant is entitled to resist summary judgment on the basis of its Part 8 claim the defendant must be able to demonstrate that:

• there is a short and self-contained issue which arose in the adjudication and which the defendant continues to contest;
• that issue requires no oral evidence or any other elaboration beyond that which is capable of being provided during the interlocutory hearing set aside for the enforcement;
• the issue is one which, on a summary judgment application, it would be unconscionable for the court to ignore.

6.32 What that means in practice is, for example, that the adjudicator's construction of a contract clause is beyond any rational justification, or that the adjudicator's calculation of the relevant time periods is obviously wrong, or that the adjudicator's categorization of a document as, say, a payment notice when, on any view, it was not capable of being described as such a document. In a disputed case, anything less would be contrary to the principles in Macob Civil Engineering Ltd v Morrison Construction Ltd,54 Bouyges (UK) Ltd v Dahl-Jensen Ltd 55 and Carillion Construction Ltd v Devonport Royal Dockyard Ltd.56 It is axiomatic that such an issue could still only be considered by the court on enforcement if the consequences of the issue raised by the defendant were clear-cut. In Caledonian Modular Ltd v Mar City Developments Ltd,57 it was agreed that, if the document was not a payment notice – and it plainly was not – then the claimant's case failed. If the effect of the issue that the defendant wishes to raise is disputed, it will be most unlikely for the court to take it into account on enforcement. Any arguable interleaving of issues would almost certainly be fatal to a suggestion by the defendant that their challenge falls within this limited exception. The dispute between the parties as to whether or not the issue should be dealt with on enforcement would have to be dealt with shortly at the enforcement hearing itself. The inevitable time constraints of such a hearing will mean that it will be rare for the court to decide that, although the issue and its effect are disputed, it can be raised as a defence to the enforcement application. Many of the applications which are currently being made on this basis by disgruntled defendants (and which are not the subject of the consensual process noted above) are an abuse of the court process. The TCC works hard to ensure that there is an enforcement hearing within about 28 days

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of commencement of proceedings. The court does not have the resources to allow defendants to re-run large parts of an adjudication at a disputed enforcement hearing, particularly in circumstances where the adjudication may have taken 28 days or 42 days, whilst the judge might have available no more than two hours pre-reading and a two-hour hearing in which to dispose of the dispute. In addition, because it is a potential abuse of the court process, a defendant who unsuccessfully raises this sort of challenge on enforcement will almost certainly have to pay the claimant's costs of the entire action on an indemnity basis. Of course, the other side of the coin is that, if the claimant does not agree to the defendant's proposal to deal with the issue on enforcement, but the court concludes that the issue does fall within the limited exception referred to, it is the claimant who runs the risk of being penalized in costs.58 Where the question is one of jurisdiction in the most fundamental sense in that the adjudicator had no jurisdiction to make an award of interest at all because the statute under which he or she purported to act had no application, the case is not one where the Caledonian v Mar type of procedure (with the general need for Part 8 proceedings as explained above) must be followed before the substance of the point can be considered.59

6.4.10 Insolvency proceedings

6.33 Applications under the Insolvency Act 1986 concerning the presentation and advertisement of winding-up petitions in relation to companies registered in England and Wales must be commenced in the Companies Court60 and are governed by the Insolvency Rules and the Practice Direction: Insolvency Proceedings.61 The Bankruptcy Court disposes of applications to set aside a statutory demand and bankruptcy petitions relating to insolvent individuals arising under Parts VIII to XI of the Insolvency Act 1986 and related legislation.62

6.5 Service out of the jurisdiction

6.34 Permission of the court for service outside the jurisdiction is not required where the claim is one which the court has power to determine under the Judgments Regulations and the defendant is a party to an agreement conferring jurisdiction to which Article 23 of the Judgments Regulation refers.63 The Judgments Regulation is Council Regulation (EC) 44/2001 which has direct effect in the United Kingdom. Article 23 provides:

If the parties, one or more of whom is domiciled in a Member State, are agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:

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