Assign of things to come?

Construction practitioners are periodically asked to consider the question of whether it is possible for a party that has taken an assignment of a construction contract to refer a dispute under that contract to adjudication. The resultant advice is usually guarded owing to a lack of authority on the point. That is perhaps until now.

In Paragon Group Limited -v- FK Facades Limited [2026] EWHC 78 (TCC), the Court considered whether an assignee of a contract was legally entitled to refer a claim under the assigned contract, to adjudication.

Assignment

Assignment refers to mechanisms by which the benefit of 'things in action' may pass from one party to another.

For example, two parties enter into a contract, Party A and Party B. If the wording of the contract so provides, then Party A can assign the benefit of the contract to a party who is not a party to the contract, e.g. Party C.

It is important to note that Party C does not substitute Party A as the ‘new’ party to the contract. Instead, Party C is assigned the benefits of the contract, including for example, the right of Party C to bring a claim against Party B.

Party C could only become a party to the contract if the contract is novated to it. That is a different legal mechanism, however, and not relevant to the facts here.

The facts

• Pursuant to a JCT Minor Works Building Contract 2016, Office Depot International (UK) Limited (the 'Employer') engaged FK Facades Limited ('FK') to carry out certain construction works (the 'Contract').

• The Contract allowed the parties to assign to another party.

• In 2021, the Employer assigned to OT Group Ltd ('OT Group'). In 2024, the Contract was further assigned by OT Group to Paragon. FK was notified of both assignments.

• In 2025, Paragon commenced adjudication proceedings against FK in relation to alleged delays in FK’s works.

• FK raised various challenges to the Adjudicator’s jurisdiction, including asserting that Paragon had no entitlement to refer a dispute to adjudication as Paragon, as assignee, was not a party to the Contract.

• The Adjudicator issued a non-binding ruling concluding that he had jurisdiction. The adjudication fell in Paragon’s favour, the Adjudicator awarding Paragon the sum of £88,500 and directing that FK pay his fees (the 'Decision').

• Perhaps inevitably, FK failed to comply with the Decision. Paragon subsequently issued enforcement proceedings.

Key issues

Pursuant to section 108(1) of the Housing Grants, Construction and Regeneration Act (the 'Act'), 'a party to a construction contract' has the right to refer a dispute 'arising under the contract' to adjudication.

If the relevant provisions of the contract do not comply with the adjudication provisions of section 108 of the Act (which governs the right to refer disputes to adjudication), then the relevant provisions of The Scheme for Construction Contracts (England and Wales) Regulations 1998 (as amended) (the 'Scheme') apply.

Under the Scheme, 'any party to a construction contract' may give written notice of its intention to refer a dispute to adjudication.

The key issues for the Court to determine centred around section 108 of the Act and were as follows:

• Does an assignee of the benefit of a construction contract have the right to refer disputes to adjudication in accordance with s.108 of the Act and/or the Scheme?

• Is a dispute referred to adjudication by an assignee properly characterised as a dispute 'arising under the contract'?

It follows that if Paragon had no entitlement to refer a dispute to adjudication, the Adjudicator would have lacked jurisdiction and the Decision would therefore be a nullity.

FK’s position

• FK understandably contended that only the original parties to the Contract, i.e. either the Employer or FK, were a 'party to a construction contract' and therefore had the right to adjudicate.

• Even if that position was wrong, since the right to adjudicate only extends to a dispute arising, 'under the contract', a dispute by an assignee could only have arisen under the assignment. Such dispute is not therefore, 'under the contract', and therefore Paragon as assignee had no right to adjudicate.

Paragon’s position

• Paragon contended that the assignment not only assigned rights under the Contract but also all legal remedies, including the right to adjudicate.

• When reading the Contract as a whole, including the express assignment provision, the wording clearly envisaged that a 'party', should be construed as including any assignees of said party.

The judgment

• The Court recognised that FK’s argument benefitted from its simplicity – i.e. if either the Act or Scheme gives the right to adjudicate to a 'party to the construction contract', then only the original parties to the contract can refer a dispute to adjudication.

• However, upon examining the wording of the Scheme, the Court noted the various other references to 'party', 'parties' and 'parties to the dispute' – i.e. not all references were to a 'party to the construction contract'.

• Accordingly, the various references to 'party' in the Scheme, could be read as including the following words after each such reference, 'or any legal assignee of such party'.

• Similarly in respect of the Contract, the Court considered that the references to the 'Employer' and 'Contractor' being permitted to assign, must also be considered in the context of clause 3.1, which expressly permitted the parties to assign the benefit of the Contract.

• Whilst an assignee does not become a 'party' to the contract, an assignment of the benefit of the contract passes all legal rights and other remedies to the assignee, including - absent express provision to the contrary – the right to adjudicate.

• Further, the Court decided that there was no merit in FK’s contention that Paragon had no right to adjudicate as the dispute did not arise 'under the contract'. The Court observed that it was obvious that any claim brought by an assignee is a claim arising under the Contract, as that is the only claim which they can advance in their capacity as assignee.

• Accordingly, the Court concluded that Paragon as assignee was entitled to adjudicate an assigned claim against FK. The Adjudicator therefore had jurisdiction to decide the dispute between FK and Paragon (as assignee of the Employer).

• Paragon was entitled to summary judgment and the Decision was enforced.

• It is worth noting that the Judge granted FK permission to appeal to the Court of Appeal and the industry now awaits the Court of Appeal’s judgment with interest.

Commentary

The Court’s judgment provides much needed clarity to whether an assignee of a construction contract has the right to refer a dispute to adjudication.

It is worth noting however that the Court considered the issue was, 'finely balanced', and that its assessment was based upon, 'an objective interpretation of the contract in question'. This suggests that the judgment may not be applicable to each and every contract, and specialist advice should be obtained in each case. That said, the standard form assignment provisions of the widely used JCT suite were considered in this matter so the judgment is significant.

It is open for parties to negotiate the terms of their contracts including, as the Court noted, the option to remove any proposed assignment clause, or, to make clear when drafting that an assignee is not entitled to adjudicate. It is unclear however whether and to what extent any express contractual prohibition of an assignee’s right to adjudicate would be inconsistent with the Court’s conclusion that the wording of the Scheme can be read as to include any such assignee as a 'party'.

Potential impact on you

A practical example of the implication of this case is this. If a developer sells a site mid or post project and assigns the construction contracts, the purchaser may now pursue adjudication concerning pre assignment works.

Therefore, as a party to a construction contract you can no longer assume that you will only face adjudication proceedings from the party you originally contracted with. Assignees can now adjudicate, absent express restriction.

Assignment clauses may now therefore carry greater risk.

We regularly advise construction companies on assignment risk and drafting strategies as well as acting for parties in construction disputes. We anticipate that we will now be doing so with a renewed focus on assignment issues so please feel free to get in touch if we can support your business with such issues.

This article was co-authored by Paralegal, George Foster.