Legal Developments In Construction Law

• Published date: 04 October 2022
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Arbitration & Dispute Resolution, Construction & Planning
• Law Firm: Mayer Brown
• Author: Mayer Brown

1. Court enforcement of an adjudication award - can a challenge send the decision to arbitration?

An employer applied to the court to enforce an adjudication award for '2.2million, but the contractor asked the court to stay the enforcement proceedings, on the basis that there was a dispute that should be referred to the agreed tribunal, arbitration, under the 1996 Arbitration Act. The court noted that a stay will not be granted under s.9 of the Act if the dispute in question does not fall within the scope of the relevant arbitration provision. The fundamental issue was consequently one of construction. What matters were to be referred to arbitration under the relevant construction contract?

The court ruled that the relevant provisions of both the CIC model adjudication procedure (paragraphs 4, 5 and 31) and the Scheme (paragraph 23(2)) expressly exclude from the matters that can be referred to arbitration, any challenge to an adjudicator's decision. Those provisions are intended to give effect to the requirement in s.108 (3) of the Construction Act that an adjudication decision "is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement". These provisions all make clear that an adjudicator's decision is binding on the parties, and provisionally enforceable, until the substantive dispute is finally determined by litigation, by arbitration (if there is an arbitration provision in the construction contract) or by agreement, and despite the existence of any pending reference to arbitration.

The court does not refuse a stay because of the 'pay now, argue later' policy of the Construction Act but because the parties have agreed (consistently with the Act) that to give effect to that policy, the arbitration provisions of their contract do not extend to any challenge to an adjudication decision. The underlying philosophy of s.9 of the Arbitration Act is the contractual autonomy of the parties, to which the court is giving effect when it refuses a stay for arbitration where the dispute falls outside the scope of an arbitration clause. This conclusion was entirely consistent with the case law and views of leading construction adjudication practitioners .

The Metropolitan Borough Council of Sefton v Allebuild Ltd [2022] EWHC 1443

In The Metropolitan Borough Council of Sefton v Allenbuild Ltd the contractor under an NEC2 based contract...