Discain Project Services Ltd v Opecprime Developments Ltd No1 [2000] BLR 402 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

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

An adjudicator can decide that a dispute has arisen, even if the due date for payment has not arrived. The Court may not enforce the adjudicator's award if the manner in which it has been reached breaches the rules of natural justice.

HHJ Bowsher QC, Technology & Construction Court

9 August 2000

A dispute arose between the parties, and an adjudicator was appointed. The Scheme for Construction Contracts applied in the absence of any adjudication provisions in the contract.

The adjudicator awarded sums to D, but O did not pay. D therefore applied for summary judgment of the sum awarded. O challenged the jurisdiction of the adjudicator, and raised arguments relating to natural justice.

Firstly, O said the notice of adjudication was premature, as it was served 3 days before payment was actually due. The Court said that a dispute could arise before the due date for payment if the paying party states clearly that he will not pay on the due date.

O also said that the letters that were sent indicating a dispute did not come from it, but from an associated company. This was said to conflict with the adjudicator's finding that a notice to withhold payment was invalid because it came from the associated company (a finding with which the Court disagreed, but could not set aside). Little was said by the Court except that it was against O on this point.

The remaining point concerned natural justice. D had had two conversations with the adjudicator, which were not communicated to O until 2 days later. The Court believed that there was a serious risk of bias because of the clear failures by the adjudicator to consult with one party on important submissions that were made by the other party. D submitted that this was irrelevant because the matter would only go to jurisdiction.

The Court said it found it distasteful, and could not bring itself to enforce an adjudication decision that had been arrived at in this way. The adjudicator should have ensured that O was informed of the content of the telephone communication, which he failed to do. The Court found that there was an issue to be tried as to whether the adjudicator "overstretched" the rules of natural justice.

The Court noted that the speedy nature of adjudication made the rules of natural justice more rather than less important. As there is no appeal from a decision, the way in which it is reached should be beyond reproach. However, in order to make the system work, in practice some breaches of the rules of natural justice which have no demonstrable consequence could be disregarded. Finally, the Court noted that although it was considering aspects of natural justice, the same principles will apply when the Human Rights Act 1998 comes into force.

An adjudicator can decide that a dispute has arisen, even if the due date for payment has not arrived. The Court may not enforce the adjudicator's award if the manner in which it has been reached breaches the rules of natural justice.

This summary was provided by CMS Cameron McKenna LLP.

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

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