Interserve Industrial Services Ltd v Cleveland Bridge UK Ltd [2006] EWHC 741 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

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

This case constitutes a reminder that sums awarded in an adjudication are (absent special circumstances) immediately payable.  The losing party cannot withhold sums awarded by the adjudicator on the grounds that it anticipates being awarded a similar sum in a future adjudication with the same party.

Mr Justice Jackson – Queen’s Bench Division, Technology and Construction Court

The Highways Agency employed Nuttall to refurbish a viaduct on the M1.  Nuttall engaged Cleveland to carry out certain works.  Cleveland in turn sub-contracted part of the job to Interserve.  The project was subject to various delays and the parties engaged in a series of adjudications.  Cleveland came under an obligation to pay sums awarded in adjudication no.2, but withheld these sums on the grounds that it reasonably anticipated recovering an equivalent or higher sum in adjudication no.3.  The question arose as to whether Cleveland was entitled to set-off the sums awarded in adjudication no.2 with the sums awarded in adjudication no.3.

Mr Justice Jackson noted that one of the purposes of the HGCRA is to ensure that payments are passed promptly down the line to contractors, subcontractors and suppliers.  Further, the purpose of adjudication is to provide a prompt resolution to disputes.  In his view, where there are a series of successive adjudications, the correct approach is that at the end of each adjudication, the losing party must comply with the adjudicator’s decision.  Cleveland had wrongfully withheld payment on the sums awarded in adjudication no.2. 

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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