Beck Peppiat Ltd v Norwest Holst Construction Ltd [2003] EWHC 822 (TCC)

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The Judge held that the law is as stated in Sindall v Solland: "For there to be a dispute for the purposes of exercising the statutory right to adjudication it must be clear that a point has emerged from the process of discussion or negotiation that has ended and that there is something which needs to be decided". This did not conflict with the approach in Halki, and the word 'dispute' should not be given a specialised meaning for the purpose of adjudication.

Mr Justice Forbes, Technology and Construction Court

20 March 2003

B entered into a sub-contract with N for construction work. N referred three issues to adjudication: (1) whether BP was entitled to a further extension of time, (2) the final evaluation of any loss and expense payable to BP, and (3) the final evaluation of the variation account.

B sought a declaration from the court that the Adjudicator had no jurisdiction to determine these issues, on the basis that there was no dispute between the parties with regard to the claims as at the date of referral to the Adjudicator. B's case was that there was conflict between the decisions of the judges of the TCC in London and those elsewhere. The London judges had departed from the approach set out in Halki Shipping Corporation v Sopex Oils Limited, and the definition of the word 'dispute' in Halki was not appropriate for the purposes of adjudication. B submitted that, following decisions by the London judges, a claim not only has to be made, but a reasonable period of time for it to be considered must elapse before the matter can be said to have crystallised into a dispute. In this case, there had not been any such period for consideration so no dispute had crystallised.

The Judge held that the law is as stated in Sindall v Solland: "For there to be a dispute for the purposes of exercising the statutory right to adjudication it must be clear that a point has emerged from the process of discussion or negotiation that has ended and that there is something which needs to be decided". This did not conflict with the approach in Halki, and the word 'dispute' should not be given a specialised meaning for the purpose of adjudication.

In this case, the issues referred to adjudication had been the subject of discussion and negotiation between the parties for some considerable time. B had indicated its intention to refer the same issues to independent adjudication by letter two months prior to N actually doing so. The Judge said that the letter constituted an ultimatum by B that it would resort to adjudication at the end of the following month if its claims, including those which were ultimately referred to adjudication, had not been satisfactorily dealt with by N by that date. N had served 11 files of documents on B setting out its case in relation to the extension of time claim. B claimed it had not had sufficient and reasonable time to decide on its position between receipt of the files and referral to adjudication, so no dispute had arisen.

The Judge held that the files were N's response to B's asserted position, and service of them was sufficient to give rise to a dispute. It was clear that N was rejecting B's stated position and putting forward its own position. Although N had agreed to give B more time to consider the matter, this did not mean that a dispute had not already arisen. It was clear to the Judge that a point had been reached when the process of discussion and negotiation had ended and that something needed to be decided.

The Judge dismissed B's claim for declaratory relief and said that a dispute did exist as at the date of referral. He refused leave to appeal to B.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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