Thermal Energy Construction v AE&E Lentjes UK [2009] EWHC 408

This summary was provided by CMS Cameron McKenna LLP.

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Although adjudicators’ decisions are only temporarily binding, it is important that, where reasons are required and given, they enable the parties to understand what has been decided and why.

His Honour Judge Stephen Davies, Queen’s Bench Division, Manchester District Registry


Thermal was engaged by AE&E under a sub-contract to provide mechanical erection services in the context of desulphurisation works at a power station.  A dispute arose over AE&E’s valuation and certification of Thermal’s claims for payment under the sub-contract, which Thermal referred to adjudication under the TeCSA Rules, requesting that the Adjudicator provide reasons for his decision.  The TeCSA Rules required the Adjudicator to give reasons if requested by any party.

In its Response to Thermal’s Referral, AE&E argued by way of defence that it had a counterclaim for £3.75m, representing AE&E’s liability for liquidated damages under the main contract (which AE&E claimed was due to delays by Thermal), against which AE&E was entitled to set off the payments claimed by Thermal.  Thermal’s Reply asserted that the Adjudicator had no jurisdiction to consider this defence and that, in any event, the contract precluded liquidated damages for delays to completion of the works (a point AE&E refuted on the basis that the delays at issue were delays to individual tie-in dates under the programme not to overall completion of the works). 

The Adjudicator decided in favour of Thermal, issuing a decision that ran to some length but did not expressly deal with AE&E’s set-off and counter-claim or Thermal’s jurisdictional challenge in respect of it.  The only mention at all connected with these issues was the comment (made in a different context) that liquidated damages were not applicable on the instant contract.

Thermal sought enforcement of the Adjudicator’s decision by means of summary judgment, which AE&E opposed on the grounds that the Adjudicator had failed to comply with his obligations by neglecting to give reasons in respect of the set-off and counterclaim defence, causing substantial prejudice to AE&E.


The Court had to consider:

  • whether the Adjudicator did give any or any intelligible reasons in relation to AE&E’s set-off and counterclaim and


  • if not, whether AE&E had suffered substantial prejudice as a result.

Thermal claimed that even if it was found that the Adjudicator did not give reasons and this caused substantial prejudice, the Court ought to enforce the Adjudicator’s decision because AE&E was obliged to (and did not) first request the decision to be corrected as it was entitled to do under TeCSA Rule 32.


The Court held that although Adjudicators’ decisions are made under an expedited process and are only temporarily binding, it was nonetheless necessary for reasons to make it clear that all the essential issues properly put before the Adjudicator had been decided and to enable the parties to understand what the Adjudicator had decided and why.  In this case, it was important for the Adjudicator’s reasons to show whether or not the Adjudicator had purported to decide the set-off and counterclaim and if so, on what grounds.  The Court held that it was impossible to construe the lengthy and carefully-structured decision as doing this, given that there was no express reference to the issue at all.  The Adjudicator had therefore failed to comply with his obligations.

The Court held that this did cause substantial prejudice to AE&E, as it resulted in AE&E losing the opportunity to have the set-off and counterclaim point decided in its favour, plus the uncertainty on the face of the first decision as to whether the point had previously been decided could lead to a second adjudication on the issue being declined on the grounds of no jurisdiction.  Summary judgment should therefore be granted.

In relation to the TeCSA Rules, the Court noted firstly that Rule 32 was expressly limited to correction of “clerical mistakes or errors arising from an accidental slip or omission” and could not logically apply in a case such as the present where the Adjudicator had simply not dealt at all explicitly with a substantial element of the Responding Party’s defence.  In any event, the Court held that very clear words were required for the Court to conclude that a party should lose the right to raise an otherwise legitimate jurisdictional challenge on the basis that it was first obliged to exercise a remedy, and there was nothing in Rule 32 to suggest that it was a pre-condition to resisting enforcement or that it imposed any obligation on the parties at all.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit




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