Legal Developments In Construction Law: May 2020

• Published date: 08 June 2020
• Author: Mayer Brown
• Subject Matter: Real Estate and Construction, Coronavirus (COVID-19), Construction & Planning, Government Measures, Reporting and Compliance, Litigation, Contracts and Force Majeure
• Law Firm: Mayer Brown

1. Court says paying the adjudicator's fees did not end its right to challenge the decision

A contractor received an adjudicator's decision finding it liable to make a substantial payment to a subcontractor but told the subcontractor it had been advised that the decision was invalid and unenforceable. It subsequently paid the adjudicator's fees but recorded, in doing so, that payment did not constitute agreement that the decision was correct, valid or enforceable and reserved all its rights to challenge the decision. Was that reservation effective or had it lost its right of challenge?

The court noted that, although there is strong authority that payment of an adjudicator's fees may amount to an election to treat an adjudicator's decision as valid, the question is what is to be inferred from such a payment. As a matter of policy, the judge considered that the court should not do anything to discourage payment of an adjudicator's fees and should perhaps be particularly careful to see whether the inference should properly be drawn that the payer intended to treat the decision as valid. In this case, the contractor's earlier email had made it clear that it regarded the decision as invalid and unenforceable and there was nothing in the payment of fees from which to infer that it had changed its mind.

The contractor also claimed that the adjudicator had breached natural justice in reaching her award on a method of valuation advanced by neither party. In also rejecting that challenge, the judge considered the applicable principles set out in AECOM Design Build Ltd v Staptina Engineering Services Ltd, in particular that there is no rule that a judge, arbitrator or adjudicator must decide a case only by accepting the submissions of one party or the other. An adjudicator can reach a decision on a point of importance on the material before them on a basis for which neither party has contended, provided that the parties were aware of the relevant material and the issues to which it gave rise had been fairly canvassed before the adjudicator.

Platform Interior Solutions Ltd v ISG Construction Ltd [2020] EWHC 945

2. Court provides a refresher on acts of prevention

"Act of prevention" consistently appears in construction contracts as a reason for an extension of time. In a recent dispute under shipbuilding contracts, the court had to decide whether the "prevention principle" applied, and, in considering the relevant case law, provided a helpful reminder of how it works.

Legitimate actions by an employer under a construction contract, which can include...