Fair Opportunity To Comment - Van Oord UK Ltd v Dragados UK Ltd

• Published date: 09 May 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Shepherd and Wedderburn LLP
• Author: Mr Iain Drummond

A recent case demonstrates the importance of an adjudicator allowing parties fair opportunity to comment on important points before deciding them.

Van Oord UK Limited v Dragados UK Limited, decided in April 2022 by the Outer House of the Court of Session, considered whether an adjudicator's decision to award an extension of time (EOT) for completion, and related costs due to a compensation event, was enforceable where it had been reached on a basis not discussed with the parties. The court refused to enforce the adjudicator's decision.

The court's decision will reassure parties who are concerned that an adjudicator may decide a dispute on a point not argued or discussed.

Background

Van Oord carried out sub-contract work for Dragados on a harbour expansion project in Aberdeen, under NEC conditions. Almost two years after contracting, Dragados gave Van Oord notice to terminate the sub-contract. There were various disputes between the parties. These led to seven adjudications.

In the sixth adjudication, Van Oord argued it had been denied access to carry out open quay excavation works due to Dragados' lack of progress in carrying out piling works, causing critical delay. On expert evidence, Van Oord contended that as a result, and by reference to a particular baseline programme, it had suffered critical delay from 2 August 2019. Dragados argued that it was Van Oord's failure to start certain works on time that caused the delay, and founded on a different baseline programme. Both parties' experts had considered and rejected a programme from March 2019 as the baseline programme.

The adjudicator found in favour of Van Oord, awarding it an extension of time for completion and delay-related costs for a specific compensation event. However, crucially, the adjudicator did so on the basis of the March 2019 programme and a critical date for the particular compensation event of 31 July 2019. Neither that date nor the consequences of it being the critical date was advanced by, or discussed with, either party.

Did this render the adjudicator's decision unenforceable?

Arguments

Dragados argued the adjudicator should have told the parties what he was contemplating, so they could address him on it. If that had happened, Dragados would have argued the matter was time-barred because, based on the adjudicator's chosen date of 31 July 2019, the particular compensation event had not been notified within the seven-week period required by the subcontract required. If correct, this...