Does an assignee of a construction contract have the right to refer disputes to adjudication?

This case clarifies - for the first time - that an assignee of the benefit of a construction contract can refer disputes to adjudication under both:

• The adjudication provisions of a JCT contract, and
• Part I of the Scheme for Construction Contracts 1998 (the “Scheme”)

Focusing on the interpretation of the contract, and whether a “party” in the contract and the Scheme could include an assignee. While the contract defined "Party" as "either the Employer or the Contractor," this had to be considered in the context of amended clause 3.1, which permitted the employer to assign the contract. Reference to “party” in the Scheme could also include a legal assignee without doing "violence to the wording".

• This judgment resolves long‑standing uncertainty within the construction industry regarding the interplay of the rights of assignees and the right to adjudicate under a contract

Background

A JCT Minor Works Contract (2016) was entered into between the original parties, Office Depot International (UK) Ltd (“ODI”) and FK Facades Ltd (“FK”) for the carrying out of remedial works to the roof installation at a commercial property in Ashton Moss, Greater Manchester (the “Contract”). Importantly, the contract had been amended to permit ODI to assign the benefit of the Contract at any time without FK’s consent.

The Employer’s benefit under the Contract was assigned twice from ODI to OT Group Ltd in 2021 and from OT Group Ltd to Paragon Group Ltd (“Paragon”) in 2024.

Paragon terminated the Contract in April 2025. Following this, Paragon (as assignee) commenced a statutory adjudication against FK claiming liquidated damages for delay, pursuant to the right under clause 7.2 of the Contract (which stated that the Scheme applied to any adjudication).

FK disputed the adjudicator’s jurisdiction, on the basis that:

• Paragon, as assignee, had no right to adjudicate; and
• The dispute allegedly did not arise “under the Contract”

Paragon’s position was that a valid statutory assignment under section 136 of the Law of Property Act 1925 transfers not only the legal right to the assigned benefits but also "all legal and other remedies for the same". The right to adjudicate under the Contract therefore passed with the assignment.

The adjudicator rejected the jurisdictional challenge and ordered FK to pay £80,950 of liquidated damages. FK refused to comply with the decision, therefore Paragon commenced enforcement proceedings.

The decision

The court enforced the adjudicator’s decision, providing confirmation that:

• Assignees do have a right to adjudicate – the judge found that the use of the words “Employer” and “Contractor” in Article 6 of the Contract naturally included lawful assignees, especially given that the Contract had been expressly amended to permit assignment without consent

• The dispute did arise under the Contract – the claim for liquidated damages clearly arose from the Contract and the fact that Paragon was an assignee did not change the nature of the underlying contractual rights

This was a matter of contract interpretation. The judge found no reason why either contracting party would have intended to prevent an assignee from adjudicating when expressly agreeing the rights to assign the contract. 

Importance

This is the first direct decision confirming that an assignee steps into the shoes of the original contracting party for the purposes of an adjudication – relying on the principle that assignees receive contractual rights and all remedies, including the right to adjudicate.

This will be welcome a decision for funders, purchaser and tenants who often acquire rights under construction contracts through assignment. They will now have the option of a quicker and relatively cheaper method of dispute resolution.

It also provides clarity for contractors and sub-contractors that, if their contract is assigned, it will likely mean that the assignee has the right to adjudicate. If this is not what the parties want, then express amendments to the contract will be required.

However, FK has been granted permission to appeal to the Court of Appeal, so watch this space.

Authored by Joe Duffy and Jennifer Fitzmaurice