Enforceability of Adjudicator's Decision Examined in Battersea Project Dispute

Citation: [2024] EWHC 591 (TCC)
Judgment on

Introduction

In the case of Battersea Project Phase 2 Development Company Limited v QFS Scaffolding Limited, the court deliberated on the enforceability of an adjudicator’s decision in the context of a “conclusive evidence” provision concerning a Final Payment Notice within a construction contract. The Technology and Construction Court’s decision elucidated several legal principles related to the timing and effectiveness of adjudication proceedings, the interpretation of contractual clauses regarding conclusivity, and the concept of abandonment of proceedings.

Key Facts

The dispute arose from a sub-contract for the asbestos scaffolding package undertaken as part of the redevelopment of the Battersea Power Station. It principally revolved around the true value of the Final Sub-Contract Sum, originally set at £6,157,764, which eventually exceeded £30m. Adjudication proceedings were commenced by QFS challenging the Final Payment Notice issued by BPS.

QFS had timely commenced the proceedings with a Notice of Adjudication, but subsequently did not serve the requisite Referral within the agreed upon time extension. This put into question the status of those proceedings, whether it concluded without decision (making the Final Payment Notice conclusive) or continued pending conclusion (which would nullify the conclusive effect of the Final Payment Notice). The parties disputed the proper interpretation of clause 1.8.2 and whether QFS abandoned its pursuit of the dispute.

Several legal principles are at the forefront of this case:

  1. Interpretation of Contracts: The court adhered to principles of objective interpretation of contracts, seeking the meaning a reasonable person would comprehend from the contractual language within the specific context and considering the contract as a whole.

  2. Conclusive Evidence Clauses: The case examined the scope of conclusive evidence clauses, which typically limit disputes post-project completion. The court recognized that parties usually do not intend to relinquish common law rights without clear language specifying such intention.

  3. Commencement and Conclusion of Adjudication Proceedings: The court clarified the meaning of “conclusion” in the context of adjudication proceedings - signaling either a decision, award, judgment, or settlement - and distinguished a nullified adjudication process as not a “conclusion.”

  4. Abandonment of Proceedings: The concept of abandonment was explored, with the court agreeing that adjudication proceedings can be abandoned if not duly pursued, which would deactivate any related saving provisions within the contract.

Cited case laws included Bennett v FMK Construction Ltd, University of Brighton v Dovehouse Interiors Ltd, Trustees of the Marc Gilbard 2009 Settlement Trust v OD Developments and Projects Ltd, and Lanes Group plc v Galliford Try Infrastructure Ltd. These cases provided guidance on handling nullities, the effect of aborted adjudications, and the intended actions following commencement of proceedings.

Outcomes

The court determined that QFS’s failure to serve the Referral on time rendered the specific adjudication null. However, this did not mean the proceedings concluded. Instead, the adjudication as a genre of proceedings on the same dispute matter remained active. Thus, the later adjudicator’s decision, which addressed the same dispute as the original Notice, provided the proper conclusion as per clause 1.8.2, and the Final Payment Notice’s conclusivity was subjected to this decision.

The court dismissed the Part 8 claim and granted summary judgment enforcing the monetary consequences of the adjudicator’s decision in the Part 7 proceedings—a sum of £3,177,462.85 plus VAT. The request for contractual interest backdated was dismissed due to insufficient clarification on the final date for payment.

Conclusion

The court’s systematic analysis in Battersea Project Phase 2 Development Company Limited v QFS Scaffolding Limited has affirmed the obligation of contracting parties to manifest clear intentions throughout proceedings to avoid the conclusive effects of certain contractual provisions. It reinforces the principle that the mere initiation of proceedings does not suffice; what follows—whether it is to pursue the proceedings to a decision or to abandon—determines the enforceability of adjudicators’ decisions and the contractual rights related to conclusive evidence.

Related Summaries