AMEC Group v Thames Water Utilities [2010] EWHC 419 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

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

Summary

(a) Where an adjudication relates to disputes arising in connection with works carried out under works packages issued under a Framework Agreement, an adjudicator appointed under the Framework Agreement will have jurisdiction to decide those disputes when the claim and counter-claim refer to its provisions.  (b) Where second round submissions are served late in the adjudication process, there is neither an obligation on the adjudicator to consider them in detail, nor a breach of the rules of natural justice if he does not do so.  (c) The requirement for an adjudicator to “respond to the issues” does not impose upon an adjudicator an obligation to provide an answer to each and every issue that may be raised in the parties' submissions..

Technology and Construction Court, Mr Justice Coulson

Background

AMEC Group Limited (“AMEC”) and Thames Water Utilities Limited (“Thames Water”) entered in to a Framework Agreement in February 2005.  Pursuant to that Agreement, Thames Water engaged AMEC to carry out extensive construction and maintenance works. Each separate package of work was subject to a separate order referred to as a works contract.  Disputes arose between the parties. AMEC claimed that they were not being paid in accordance with the Framework Agreement and they made an aggregated claim for the sums due across a wide range of works contracts, pursuant to clause 9.1.1 of Annex 2 of the Framework Agreement. An aggregated withholding notice was served by Thames Water setting off various alleged set-offs and defences to AMEC’s claim, pursuant to clause 9.5 of Annex 2 to the Framework Agreement, including a streetworks claim.  AMEC subsequently commenced an adjudication in respect of its outstanding claims.  The adjudicator awarded a sum of money to be paid to AMEC, which Thames Water partially paid by the specified date. Amec commenced proceedings in the Technology and Construction Court seeking payment of the balance of the adjudicator’s award plus VAT, interest and the adjudicator’s fees.  Thames Water submitted that the adjudicator (1) was appointed under the Framework Agreement and therefore did not have jurisdiction to deal with the disputes, which arose under the individual work package orders, (2) had breached the rules of natural justice by failing to have regard to their further response and dealing with the dispute at all given its complexity, and (3) in failing to expressly address the smaller items in the streetworks claim in his decision, had either failed to conduct the adjudication fairly or had given a decision that went outside his jurisdiction.

Issues

The Court addressed the following issues:

  • Whether the adjudicator had jurisdiction to deal with the dispute referred to him.
  • Whether the adjudicator had breached the rules of natural justice.
  • Whether the adjudicator had made an error and/or failed to deal with Thames Water’s claim in respect of the streetworks.

Decision

The Court held:

  • The dispute arose under the Framework Agreement as both parties had referred to its provisions in submitting the claim and subsequent responses.  The adjudicator therefore had jurisdiction to reach his decision.
  • As defined earlier in CIB Properties Limited v Birse Construction Limited [2005] 1 WLR 2252 the test with regards to complexity is not whether the dispute is too complicated to refer to adjudication, but whether the adjudicator is able to reach a fair decision within the time limits allowed by the parties.  In this case, the dispute was not particularly complex or difficult.  The adjudicator was able to provide his decision by the necessary date (as extended by agreement of the parties).
  • There is no obligation on an adjudicator to consider in detail a second-round submission that has been served late in the adjudication process, and a failure to do so does not constitute a breach of natural justice.  However, as a matter of fact, the adjudicator did have regard to Thames Water’s second-round submission in this case.
  • There was nothing on the face of the adjudicator’s decision that would allow the court to conclude that the adjudicator had made an error in disallowing the majority of the streetworks claim. 
  • If the adjudicator did make an error, it was solely one of calculation that would not affect the enforceability of his decision, following Bouygues UK Ltd v Dahl-Jenson UK Ltd [2000] EWCA Civ 507.
  • The requirement for an adjudicator to “respond to the issues” means nothing more or less than addressing the question that the adjudicator has been asked by the parties to answer, i.e. what, if anything, is due; what, if anything, is the period of culpable delay, and so on.  The requirement does not impose upon an adjudicator an obligation to provide an answer to each and every issue that may be raised in the parties' submissions.

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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