The right to adjudicate can be assigned with the construction contract…for now
It has long been established by the Housing Grants Construction and Regeneration Act 1996 (the Construction Act) that a party to a construction contract can refer a dispute to adjudication at any time. But what about in circumstances where the original party has assigned the benefit of the contract to someone else? As the right to adjudicate been assigned along with the other benefits and rights under the construction contract? This was recently considered by the Technology and Construction Court (TCC) in the case of Paragon Group Ltd v FK Facades Ltd [2026] EWHC 78 (TCC)
Background
- On 17 October 2018 FK Facades Ltd (FK/the Contractor) entered into an amended form of JCT Minor Works Building Contract 2016 with Office Depot Internation (UK) Limited (ODI/the Employer) for some remediation works to a roof installation at a commercial property in Greater Manchester.
- The contract included an adjudication clause, allowing either party to refer a dispute or difference to adjudication in accordance with the Scheme under the Construction Act.
- The contract also included a clause allowing the Employer to assign or charge the benefit of the contract at any time without the Contractor’s consent (although the Contractor was unable to assign without the Employer’s prior written consent).
- There were subsequently two assignments, the first in 2021 from ODI to OT Group Ltd (OTG) and the second in 2024 from OTG to the Paragon Group Ltd (Paragon). Both assignments were notified to FK and included an assignment of “all of [the employer’s] rights, title, interest and benefit in and to” the building contract.
- Paragon terminated the contract in April 2025 and in May 2025 notified FK that it was liable for liquidated damages due to delays. This was disputed by FK who referred the dispute to adjudication.
- The adjudicator awarded Paragon the sum of £80,500 and directed that his fees of £17,787 should also be paid by FK. FK refused to pay either sum on the basis that the adjudicator did not have jurisdiction over the dispute. Paragon issued enforcement proceedings in the TCC.
Who is a “party” to a construction contract?
Neither party disputed that the assignment was valid. The key point raised before the court was the question of who can be a “party” to a construction contract in the context of the assignment of the contract and the wording of Part 1 of the Scheme for Construction Contracts (the Scheme)?
The Scheme (which applied in this case by reference in the contract, but which would otherwise have been implied the absence of any compliant alternative) refers at s.1(1) to “any party to a construction contract”. FK argued that if the “party” in the construction contract is defined as ‘the employer’ or ‘the contractor’ and if the Scheme gives the right to adjudicate to “any party to the construction contract” then only the employer or the contractor can refer a dispute to adjudication. Paragon argued that the Scheme does not differentiate between the position of an original contracting party and that of an assignee when referring to “a party to a construction contract”.
The court confirmed that the right of adjudication (whether by a direct provision in the contract, or whether implied into the contract via the Scheme) is contractual in nature and is therefore subject to the general rules of contractual interpretation. The court also noted that while the rights and benefits under a contract can be assigned, the assignee does not become a party to the contract (and therefore become subject to the obligations of the original party) which would instead require novation.
However, the judge commented that while, “in strict legal analysis” an assignee does not become a “party” to the original contract, the legal rights and other remedies are transferred to the assignee as if they had been theirs from the beginning “and which would thus in my judgment – absent express provision to the contrary – include the right to adjudicate” unless such rights were expressly excluded.
FK also raised some practical objections to the assignee being given the right to adjudicate, along the lines that 1) FK could not bring a counterclaim against Paragon as the assignee, as Paragon has none of the obligations or burden of the contract 2) there would be an issue over whether the findings made between Paragon and FK would be binding against a future adjudicator if FK then were to bring its ‘counterclaim’ adjudication against the original employer party and 3) adjudication is confidential so there would be a difficulty in sharing the outcome with the original contracting party and/or using that against the original contracting party in a future adjudication by FK.
In response, the judge pointed out that adjudication does not usually afford the right to bring a counterclaim anyway, but in any event, FK could rely in defence upon all equities which it could have relied if the claim had been brought by the original party and the confidentiality argument was not a compelling reason not to allow an assignee to adjudicate. In practical terms, the court suggested that any contracting party concerned by this risk could stipulate for any assignment to require consent and/or specifically exclude the assignment of adjudication rights.
Balanced against FK’s practical objections, the judge also noted the practical difficulties and delay that would arise if an assignee were forced to attempt to persuade the assignor (as the original contracting party) to lend its name to an adjudication by the assignee against the other party.
Ultimately, the judge confessed that the point was finely balanced but was ultimately satisfied that on the basis of objective contractual interpretation, an assignee can adjudicate against the other original party to the construction contract. Therefore, the court found that the adjudicator in this case had jurisdiction to decide the dispute and the adjudication award was enforced by way of summary judgement.
Key takeaways
While the decision in each case will, to an extent, rely on its own particular facts and circumstances, the contract used in this case is of a standard type within the construction industry and the wording of the assignment was similarly common. The main questions in this case turned upon the interpretation of the wording of the Scheme which is also in common use as the default adjudication procedure for referring disputes. Therefore, this decision has potentially wide application across the construction industry where a construction contract has been assigned by an original party to an assignee.
Under this decision, an assignee of a construction contract has the right to refer a dispute to adjudication, whether such right is specified in the contract and/or is implied by the Construction Act and/or the Scheme.
If a party wishes to avoid this result, then it would need to insert into the underlying construction contract either the right to object to an assignment or to agree the wording of an assignment (e.g. an assignment can only be made with prior consent) or to specify that the right to refer a dispute to adjudication does not form part of any assignment and is expressly excluded.
However, we understand that the court has granted FK permission to appeal the judgement to the Court of Appeal, on the basis that the arguments were finely balanced and there is no existing direct authority on this point. So, while the TCC’s decision stands for the time being, this could be subject to change on appeal. Ultimately, if a party is really concerned by this issue, the most practical action would be to expressly exclude the right to adjudicate from any future assignment (if the construction contract allows them to do so).
