Hitec Power Protection BV v MCI Worldcom Ltd [2002] EWHC 1953

This summary was provided by CMS Cameron McKenna LLP.

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

An adjudication can only occur if a "dispute" has arisen. If there is no dispute, any decision made by an adjudicator may be rendered unenforceable. Although it is not always easy to do, a critical matter to address before kicking-off an adjudication will be: is there a dispute?

HHJ Seymour QC, Technology and Construction Court

15 August 2002

H entered into a purchase framework agreement with W and its "participating affiliates", under which W could order the design, supply and installation of certain switch gear from H. The framework agreement provided that if a purchase order was placed by W, or any of its "participating affiliates", the resultant contract would be on particular terms, including that the Scheme for Construction Contracts under the HGCRA was to apply. The framework agreement also provided that if an affiliate placed a purchase order, but the affiliate did not pay an amount to H when properly demanded, such amount was to be paid by W to H within 10 days of a demand properly being made to W.

Four purchase orders were made by companies affiliated with W. Disputes arose between H and the affiliated companies as to H's entitlement to payment. H had demanded payment from the affiliates, but it was not forthcoming. H then gave notice to W that, pursuant to the purchase framework agreement, H was looking to W for payment because its affiliates had defaulted on moneys owing to H. The following day, H wrote to W and provided notification of its intention to refer the payment disputes to adjudication.

W objected to the adjudication proceeding on the basis that a dispute had not arisen when the adjudication notice was given. The adjudication notice was given the day after the demand for payment was made. The framework agreement, on the other hand, gave W some 10 days in which to make payment.

The Adjudicator determined (for various reasons) that a dispute had arisen. This decision was found to be incorrect by the Court. Judge Seymour QC held that a dispute could not have arisen, as W had not had an adequate opportunity to consider the claim when the adjudication notice was served. Indeed, the contractual period for making payment by W (if a proper demand was made) had not even elapsed, so it was almost impossible for H to argue that its demand for payment was disputed.

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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