NEC Dispute Resolution Procedure

• Published date: 10 May 2023
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Arbitration & Dispute Resolution, Construction & Planning
• Law Firm: Weightmans
• Author: Faraz Naqvi

The topic of this insight is the requirements of a valid 'Notice of Dissatisfaction' under the NEC contract.

Dissatisfactory notice of dissatisfaction - comment on Ravestein BV v Trant

The topic of this insight is the requirements of a valid 'Notice of Dissatisfaction' under the NEC contract, as highlighted in the case of Ravestein BV v Trant Engineering Ltd [2023] EWHC 11 (TCC) (9 January 2023).

First, a recap on the adjudication process. Adjudication has transformed the resolution of disputes in construction since its introduction in the Construction Act 1996 (Housing Grants Communities and Regeneration Act 1996) (as amended). It offers a swift option for dispute resolution. An adjudication decision is classed as interim and binding unless finally determined. Specifically, the decision is binding subject only to procedural irregularities - lack of jurisdiction to decide the decisions reached or breaches of natural justice - or a reference to the final dispute resolution forum - usually arbitration or litigation in the courts.

The default position is that an adjudication decision should be reached within 28 days of referral, however, this may be extended. To ensure adjudication decisions have teeth, the judiciary policy towards adjudication decisions is pay now, argue later. Therefore, adjudication is often seen as an efficient but 'rough and ready' alternative to arbitration or litigation.

What happens if either party is dissatisfied with an adjudication decision and e.g. refuses to pay the sum awarded or wishes to seek to overturn the decision?

1. A winning party who has not been paid by the losing party can seek enforcement of the adjudication decision through a swift court enforcement procedure
2. Subject to the contract terms (see points 3 and 4), a party may 'appeal' an adjudication decision by commencing arbitration or litigation within the relevant limitation period
3. Under the JCT suite of contracts, assessments of payments become final and conclusive unless proceedings are commenced within a short period of issuance of a notice of final determination of sums due
4. Under the NEC suite of contracts a Notice of Dissatisfaction may need to be issued promptly, but it needs to be valid, as the parties in Ravestein BV v Trant Engineering Ltd discovered - see below.
   

Background

In 2010, Ravestein B.V., a shipyard and construction company (the claimant), and Trant Engineering Limited (the defendant), entered into a subcontract based on an amended NEC3 form of...