Month: January 2024

NEC3 adjudication enforcement case in Outer House of Court of Session

    This case concerned construction works at an electricity substation near Fort Augustus, a beautiful location at the southern end of Loch Ness. A dispute followed which considered aspects of the Parties’ NEC3 Engineering and Construction Contract (ECC) and the enforcement of an adjudicator’s decision.

    The works finished late and the respective assessments of the costs and delay by the Project Manager and the Contractor varied enormously. An adjudicator decided the dispute. His decision did not meet with Scottish Hydro’s agreement, and it refused to pay the £1.8m to UK Grid/Amey that the adjudicator had decided.

    The enforcement case in the Outer House of the Court of Session considered several issues concerning the adjudicator’s decision including the oft-travelled route of whether he had considered all the Parties’ arguments. The Judge didn’t accept Scottish Hydro’s allegation that the adjudicator had failed in this regard, saying that there was no need for the adjudicator to deal expressly with each argument put to him, provided that he deals with the arguments that are necessary and sufficient to establish the route by which he reached his decision.

    An interesting (NEC) footnote to this dispute is that the Parties cases used different methods of evaluating the delay caused by the various events. One relied on prospective analysis (as demanded literally by the ECC) and the other relied on retrospective analysis (as supported by case law from another jurisdiction and by many pragmatic delay assessors). The judge made no supportive nor critical comment on the two methods. So, we still await some more judicial comment on this subject which continues to polarise adjudicating parties in NEC contracts.

    The adjudicator made two cut and paste errors in his decision and I sympathise with him for this; it’s something that all us adjudicators hope to avoid. But interestingly neither party raised the errors under the slip rule, and the errors only became contentious in this litigation.

    The first error referred to him saying that interest was due on £18m, rather than the £1.8m he had decided. His calculation was based on the correct amount of £1.8m.

    The second typo concerned his cutting and pasting from the ‘redress sought’ part of the Notice of Adjudication, a common approach by adjudicators to ensure that they answer the question put to them and thereby contribute to an enforceable decision. However, he failed to remove some of the superfluous text and ordered a payment of £1.8m, “or such other sum that the Adjudicator may decide…”

    The Judge dismissed Scottish Hydro’s arguments that the order was, “meaningless and unenforceable” and decided that the “reasonably informed reader…would have understood” what the adjudicator had decided notwithstanding the typos.

    This case seems not to have set any new precedents but provided useful reminders of existing procedure to those involved in adjudication.

    UK Grid Solutions Limited and Amey Power Services Limited v Scottish Hydro Electric Transmission plc [2024] CSOH 5
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