ABB Limited v BAM Nuttall Limited [2013] EWHC 1983 (TCC)

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Reliance by an adjudicator on a clause in a contract which had not been referred to or relied upon by either party or raised by the adjudicator before he published his decision, was a material breach of the rules of natural justice. Although courts should be slow to overturn adjudicator’s decisions as it is not the function of the court to be an appellate tribunal for adjudicator’s decisions, the adjudicator’s breach of natural justice was of considerable importance to the outcome of the resolution of the dispute and could well have been decisive. Therefore his decision was invalid and unenforceable.

Technology and Construction Court, Mr Justice Akenhead.


ABB Limited (“ABB”) was a main contractor engaged by London Underground to carry out a major power upgrade to part of the London Underground network. ABB entered into a subcontract with BAM Nuttall Limited (“BAM”) on 8 November 2009, engaging BAM to carry out, amongst other things, the decommissioning and removal of redundant cables and the design and installation of new distribution cables.

Clause 11.1A of the subcontract stated the following:

“No alterations or amendment may be made to this subcontract except where expressly recorded in writing by a document expressed to be supplemental to this subcontract and signed by the parties.”

Following a notification of a Compensation Event by BAM under the subcontract, it was agreed that BAM would re-survey the route network and that it would base its detailed designs on these surveys. In October 2010, BAM provided quotations for the surveying and design works. On 3 December 2010 there was a meeting between representatives of BAM and ABB during which a price of £1.5 million was agreed for the survey and design works. However a dispute subsequently arose as to the scope of the agreement reached on 3 December 2010. BAM contended that the £1.5 million related only to the work done up to 31 January 2011 and that BAM was to be paid for any work thereafter. However ABB argued that the £1.5 million related to all of the survey and design work and that BAM was only to be paid for further work carried out after 31 January 2011 to the extent that it was required for reasons beyond BAM’s control. Correspondence on numerous issues regarding the Compensation Event continued during 2011 and 2012 but no agreement was reached.

BAM commenced an adjudication on 25 February 2013.

The Adjudicator decided that the parties did not reach a binding agreement on the scope of the £1.5 million lump sum figure as this was contrary to Clause 11.1A of the subcontract. Clause 11.1A had never been mentioned in any of the submissions in the adjudication or in any of the exchanges between the parties and the Adjudicator.

In light of his findings regarding the application of Clause 11.1A, the Adjudicator found it unnecessary to consider much of the parties’ detailed submissions and evidence because he considered them no longer relevant.

The Adjudicator found in favour of BAM and ordered that ABB pay BAM £973,432.18 (plus VAT), interest of £23,135.68 (plus VAT) and £84,777.96 in respect of BAM’s costs and that ABB should pay the Adjudicator £14,715 for the Adjudicator’s fees and expenses.

ABB issued Part 8 proceedings for a declaration that the decision was invalid as being in breach of the principles of natural justice and was therefore unenforceable. BAM issued an application for summary judgment to enforce the Adjudicator’s decision.


The Court was asked to decide the following issue:

  • Whether the Adjudicator’s decision, having been decided on grounds which were not put before him by either party or raised by him with the parties, materially breached principles of natural justice, thereby making it invalid and unenforceable


The Court held:

  • There is no breach of natural justice merely because an adjudicator has got the facts or law wrong.
  • On the facts the Adjudicator failed to comply with the rules of natural justice in that he had regard to Clause 11.1A which had not been referred to or relied upon by either party or raised by the Adjudicator before he published his decision. If the Adjudicator had raised Clause 11.1A during the course of the adjudication, it would have been legitimate for him to have relied upon it to reach his decision, as the parties would have had an opportunity to address it.
  • The next issue was to consider how much a part Clause 11.1A played in the decision. The Court should be slow to speculate upon what the Adjudicator would, should or could have done or decided if he had not referred to or relied upon such a clause because the Court cannot know what the Adjudicator would have done in those circumstances save by reference to the wording of the decision itself. The Court should not substitute its own views for what the Adjudicator should have done because the Housing Grants, Construction and Regeneration Act 1996 dictates (and the contact in this case stated) that it is adjudicators, not the Courts, who should make adjudication decisions. In the present case, it was clear that the Adjudicator attached real importance to the impact of Clause 1.11A in reaching his decision.
  • If the Adjudicator had raised the Clause 1.11A point with the parties, there would have been a very realistic prospect of success for ABB in arguing that the clause did not apply to an agreement about a price for a Compensation Event.
  • If the Adjudicator had disregarded Clause 11.1A, he could realistically have decided either party’s account of the 3 December 2010 agreement was the correct one on the facts. However, if he had decided in favour of ABB and considered how much of the post 31 January design work was necessary only for reasons beyond the control of BAM, the quantum claimed by BAM would have been substantially reduced, if not eradicated.
  • The Adjudicator’s decision was invalid and therefore unenforceable as it was reached in material breach of the principles of natural justice in circumstances where the issue to which the breach went was of considerable potential importance to the outcome of the dispute and could have been decisive. BAM’s application for summary judgment failed.

This summary was provided by CMS Cameron McKenna LLP.

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