The decision in the recent case of ABB Ltd v Bam Nuttall Ltd has bucked the trend of firms struggling against adjudications
It has been a fairly bleak year so far for parties seeking to resist enforcement of an adjudicator’s decision, with efforts to do so proving an uphill battle.The case of ABB Ltd v Bam Nuttall Ltd, though, has bucked the trend.
Bam was engaged by ABB to decommission and remove redundant cables as part of a major power upgrade to the London Underground network.
The subcontract was the well-used NEC3 (Option A) and it contained a clause which is at the heart of the dispute: clause 11.1a provided that no alterations or amendments may be made to the subcontract unless it was recorded in writing in a document that was expressed to be supplemental to the subcontract which both parties had signed.
During the course of the works, Bam notified ABB of a compensation event. Both agreed that £1.5m would be paid to Bam, but it was not clear what the £1.5m payment was supposed to cover.
The parties had different views and Bam commenced an adjudication seeking to clarify the position.
The adjudication proceeded at full speed with a referral, a response, a reply, a rejoinder and a surrejoinder being served. Nowhere in all these documents was clause 11.1A referred to, let alone relied upon.
The first time that clause 11.1A featured was in the adjudicator’s short (in comparison to the documents) 19-page decision. The adjudicator found that there was no binding agreement on the scope of the £1.5m and ultimately ordered ABB to pay just under £1m.
BREACH OF NATURAL JUSTICE
ABB did not pay and the matter ended up in the TCC, where the judge found that the adjudicator had failed to comply with the rules of natural justice.
This was because in reaching his decision he had clearly attached great importance to clause 11.1A when it was clear that neither party had referred to it, and the adjudicator had not invited the parties to comment on it.
The adjudicator acknowledged that in the light of his findings it was not necessary for him to consider all the detailed documents put before him, as they were no longer relevant.
The judge said that this would have been “unexceptionable” if the key findings had been made within the rules of natural justice, but they had not.
Another lesson learnt for adjudicators.
With credit to Construction News.
BDAS specialise in: providing contract advice, resolving construction disputes, managing construction claims & adjudications and will give you competitive, independent advice tailored to your specific construction problems. If you could benefit from this please call Jon now on 07795 231 231 or email:Jon@BDASweb.com