Adjudication and Projects Involving the Assembly and Installation of Power Plants

There are a small number of different types of construction project where parties cannot make use of adjudication, as a consequence of section 105(2) of the Housing Grants Act. These include projects relating to the assembly, installation and demolition of power-related plants. However, sometimes this exclusion can cause difficulties for adjudicators, particularly where the work carried out by a (sub) contractor might arguably only fall in part within that exclusion. What approach should the adjudicator take? And equally, if it transpires that the adjudicator may not have got it right, can that part of his decision which related to non-excluded activities be severed and thereby saved?

These were the questions which came before Mr Justice Ramsey in the case of Cleveland Bridge (UK) Ltd v Whessoe-Volker Stevin Joint Venture (a partnership comprising Whessoe Oil & Gas Ltd and Volker Stevin Construction Europe BV) - [2010] EWHC 1076,

The Facts

Whessoe-Volker, as a joint venture, engaged Cleveland Bridge to carry out works at a Liquefied Natural Gas terminal at Milford Haven. The work was carried out at a site where the primary activity was the production, transmission, processing or bulk storage of gas. The works involved erecting steelwork which was to form an integral part of the plant. There was a dispute over the final account owing to Cleveland Bridge, which Whessoe-Volker had agreed at £4,687,500 with £317,500 plus VAT outstanding. That sum was not paid by Whessoe-Volker. Cleveland Bridge referred the dispute to adjudication and was awarded the full amount.

The Issues

At enforcement, the judge had to determine the following two issues:

Did the work carried out, consist of construction operations under s105(1) of the Act and was any of the work excluded under s105(2)? If the works consisted of construction operations and excluded operations, was the adjudicator's decision severable and/or enforceable? and The Decision

Whilst the work carried out was done so on an excluded site, the work carried out consisted of both construction operations and excluded operations. The judge held in favour of Cleveland Bridge, deciding that he could not include the manufacture and supply of the steelwork in the meaning of erection, so it was only the act of erecting the steelwork which fell within the exclusion. Even though this work only counted for approximately 18% of the final account, the judge considered it should still count as excluded under...