A v B [2002] CA 110/02

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-lawnow.com/adjudication

A decision of an Adjudicator is binding until superseded by litigation or arbitration. The defending party could not rely on rights of set off in the enforcement proceedings (for liquidated damages) as it had not raised these during the adjudication

Lord Drummond Young, Outer House Court of Session

17 December 2002

The Defendant B were main contractors undertaking a design and build project. A were sub-contractors engaged to carry out the design and installation of roofing and wall cladding. A and B had concluded a sub-contract based on the SBCC Scottish Building Contract With Contractor's Design (September 1995 revision) as amended by a standard form of sub-contract provided by B.

During the course of the sub-contract disputes arose and were referred by A to Adjudication under the auspices of the ORSA Rules. The Adjudicator awarded A an extension of time and sums for loss and expense amounting to £639,000. When payment was not forthcoming from B, A commenced an action to enforce the loss and expense aspect of the award.

B refused to pay on two grounds, firstly because of a purported contractual prohibition on enforcing an Adjudicator's award until completion of the Main Contract Works, or termination of the Sub-Contract, (unless parties have consented to such enforcement). Secondly, as the Adjudicator only awarded a partial extension of time rather than the full period claimed A would be liable to pay liquidated damages for its delay which it thus far failed to pay, therefore breaching the Contract. Consequently B submitted that it was entitled to withhold the sums awarded by the Adjudicator on the basis of retention.

In giving Judgment Lord Drummond held that A was now entitled, in accordance with section 108(3) of the HGCRA 1996 to enforce the Adjudicator's decision. In particular he noted that the Act provided that a decision of the Adjudicator is binding until it is superseded by litigation or arbitration. If a decision is binding it must be capable of enforcement.

In relation to the claim for entitlement to liquidated and ascertained damages despite there being an issue as to whether or not the sum claimed was a penalty and thus unenforceable the fact remained that B had not raised the retention argument before the Adjudicator. Accordingly B could not now assert the right of retention in proceedings for enforcement of the Adjudicator's award.

A decision of an Adjudicator is binding until superseded by litigation or arbitration. The defending party could not rely on rights of set off in the enforcement proceedings (for liquidated damages) as it had not raised these during the adjudication.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-lawnow.com/adjudication

 

Click here to read full-screen | Click here to print the case