Workspace Management v YJL London Ltd [2009] EWHC 2017

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In this case, where adjudication and arbitration proceedings were proceeding concurrently, the Court held that a party was entitled to set-off a decision in its favour in the adjudication against an award of the arbitrator against it in the arbitration.

Technology and Construction Court, Mr Justice Coulson


Workspace Management Limited (“Workspace”) engaged YJL London Limited (“YJL”) to carry out construction works.  The contract between the parties incorporated adjudication provisions and an arbitration clause.  Disputes were referred to an adjudicator, who found that YJL was liable to pay Workspace substantial sums by way of liquidated damages and previously overpaid loss and expense.  YJL then referred disputes concerning extensions of time, loss and expense and valuation of variations to an arbitrator.  In the arbitration, the arbitrator made an award in respect of an issue raised by YJL concerning estoppel, which the arbitrator decided in Workspace’s favour.  The arbitrator issued an award directing that YJL should pay Workspace the sum of £85k on account of Workspace’s legal costs incurred on that issue.  Meanwhile, Workspace had started another adjudication based upon an architect’s certificate that had been issued shortly after the arbitration was commenced requiring YJL to pay a substantial sum to Workspace.  In his award the adjudicator held that the architect should have included a substantially greater sum in respect of YJL’s loss and expense in its certificate with the result that Workspace was not entitled to a payment pursuant to the certificate.  Of £85k awarded by the arbitrator, YJL paid only £29k, leaving unpaid an amount of £56k.  YJL argued that this further sum was not due by operation of a set-off arising out of the decision of the adjudicator, which predated the arbitrator’s award.   


The Court was asked to decide whether YJL was entitled to set off £56k against the adjudicator’s decision which predated the arbitrator’s award.  The Court was asked to address the following specific issues:

  • Did the adjudicator decide that Workspace owed YJL £56k?
  • If so, did he have the jurisdiction to reach that decision?
  • If so, was the adjudicator’s decision trumped by the arbitrator's award such that the former could not be set off against the latter?
  • Should the arbitrator’s award be enforced and, if so, should there nevertheless be a stay of execution pending the outcome of the arbitration?


The Court found:

  • On the facts, the adjudicator had found that sums were due to YJL.  This was an express finding of the adjudicator or was to be reasonably inferred from the inevitable and logical consequences of the valuation made by the adjudicator when formulating his decision.  The finding of the Court in this regard thus satisfied the criteria for a valid inference from an adjudicator’s decision set out in Balfour Beatty Construction v Serco Ltd [2004] EWHC 3336 (TCC).
  • On a consideration of the wording of the Notice of Adjudication, the adjudicator had jurisdiction to reach the decision that Workspace owed YJL £56k.  This conclusion regarding jurisdiction was different from the conclusion that the adjudicator had come to, but the Court was entitled to consider the adjudicator’s jurisdiction afresh whatever view he or she may have reached.
  • Generally speaking a counterclaim cannot be raised as a means of defeating a claim to enforce an adverse arbitral award.  However, the facts of the present case were different from the leading authorities on the subject.  Firstly, in the case at hand YJL did more than assert the existence of a counterclaim; here YJL asserted that there was a decision by the adjudicator which bound Workspace pending final disposal of the case.  Secondly, the set-off in this case was a simple mutual set-off of debts.  YJL was therefore entitled to raise a counter-claim with regard to the arbitral award.  The mutual debts between the parties arose out of the same transaction and YJL could therefore set off its debts against the sums that it was owed by Workspace by way of equitable set-off.
  • The arbitral award did not trump the adjudicator’s decision merely by virtue of the fact that the arbitral award was final and binding and the adjudicator’s decision was temporary.  One decision did not have greater status than the other.
  • Accordingly, the arbitral award would not be enforced.  It was therefore unnecessary to deal with the issue of the stay of execution.  However, the Court did indicate that if it had found in favour of Workspace then it would have been persuaded to exercise its discretion in favour of a stay of execution pending the outcome of the arbitration, which was expected to be known in the course of the next few weeks. 

This summary was provided by CMS Cameron McKenna LLP.

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