British Waterways Board [2001] ScotCS 182

This summary was provided by CMS Cameron McKenna LLP.

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In Scotland at least, an interim order preventing for a time the commencement of adjudication proceedings can be obtained, on the basis that there is no dispute which can properly be referred to adjudication at that time. To get such an order a party will have to show that the balance of convenience favours delaying the adjudication

Lord McCluskey, Outer House, Court of Session

5 July 2001

The petitioner sought an interim order to prevent the respondent, for a time, from commencing an adjudication. Lord McCluskey began by saying that, when interim orders in petitions for judicial review are sought, the court must be satisfied that the petitioners have a prima facie case, that is, a case to try. If this succeeds, the court will look at where the balance of convenience lies between the parties in granting or refusing the interim order.

The issue before the court was whether there existed between the parties a dispute which could properly be sent to adjudication at this time. The petitioners submitted there was no dispute as yet between the parties, having regard to the contract between them. The respondents maintained there was a dispute within the meaning of s108 HGCRA 1996 and that any provision in the contract that purported to redefine a "dispute" had to be disregarded in the light of s108(5). The Court found that the petitioner had a prima facie case – that is, there was sufficient evidence of an issue on this to try.

The petitioners contended there was little, if any, prejudice to the respondents in not proceeding with an adjudication at this juncture as the dispute was essentially about money. The contract itself contained provisions about interest payable if payments were late. It submitted that if the provisions in the relevant clause of the contract were followed, the maximum delay would not be likely to exceed 4 weeks. Therefore there was no material prejudice to the respondents in a 4 week delay. The petitioners argued that if the adjudication were to go ahead, the parties would have to go the expense of arguing the "dispute" when they had already engaged in discussions over a period of months that had not resulted in successful resolution.

However, the sum at issue was £4.9million and the respondents would face a substantial loss if the resolution of the dispute was not resolved at an early date - the parties' protracted discussions having proved unsuccessful. The overdraft rate was between 3 and 4% above base rate whereas the interest on any sum to be awarded in an adjudication was only 1% above base rate. The loss to the respondents over 4 weeks would be £9,400. Also, the prejudice the petitioners would suffer if the order was not granted was minimal.

The Court held that the parties would probably not be able to make any more use of those 4 weeks to reach an agreement that had eluded them in the last 5 months or so and that the 1996 Act and indeed the relevant clause of the contract both envisaged the desirability of speedy resolution of matters in issue between such parties. The Court found that for the parties, having had some months to investigate and consider their respective positions, the extra cost of putting these matters before an adjudicator was not likely to be very great and therefore the balance of convenience favoured the refusal of the petitioners' motion.

In Scotland at least, an interim order preventing for a time the commencement of adjudication proceedings can be obtained, on the basis that there is no dispute which can properly be referred to adjudication at that time. To get such an order a party will have to show that the balance of convenience favours delaying the adjudication.

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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