Celtic employed Rok as a sub-contractor to provide an in-vessel composting facility at a site in Devon. The sub-contract incorporated the NEC3 contract. In December 2008 Rok submitted a claim for time and money resulting from flooding. Celtic did not allow anything for this claim. Rok referred the dispute to adjudication.

 

The adjudicator found that the flooding was a “Compensation Event” under the sub-contract entitling Rok to an extension of time and Rok should be paid in respect of the Compensation Event. Celtic declined to pay the sums due on the basis that the decision did not require payment to be made within a set period of time and that the sums awarded could be taken into account in subsequent certificates. In these proceedings it was further argued by Celtic that it would be unfair for it to pay Rok in a situation where it would be difficult or impossible for it to recover such sums from its own client.

 

The judge restated that the policy of the Act is that decisions are binding. The adjudicator’s decision was enforced as it was clear that the adjudicator was directing Celtic to pay Rok in respect of the Compensation Event as:

 

1           The dispute revolved around Celtic’s refusal to acknowledge the Compensation Event in its assessment of Rok’s application, but had it done so then money relating to the Compensation Event would have been paid;

 

2           Rok framed its “Redress Sought” in terms that were not declaratory but actively requesting payment of these sums;

 

3           Rok had taken care to include in its Redress Sought that the sums requested should be net of retention and include VAT, as if it were paid via the regular certification process;

 

4           The adjudicator’s decision was in terms in which it was effectively saying that what Rok had applied for, it should be paid.

 

Simply because the adjudicator had not specified a period in which payment should be made did not suggest that payment should not be made. In fact it would require clear wording to suggest that the matter should be dealt with in later certificates.

 

Following David McLean, the judge also stated that courts must interpret adjudicators’ decisions not only from the words used by the adjudicator, but also the context of the dispute that was referred to adjudication. Looking at the factual background and the words used in the adjudicator’s decision, it was clear that the adjudicator was directing that payment was to be made to Rok.

 

As to the point of unfairness of making Celtic pay in a situation where it may struggle to recover the same from its client, the judge stated that broadly speaking section 113 of the Act had prohibited “pay when paid” provisions. Unfortunately it might be the case that there might be a disparity between what a main contractor can recover from its employer and that which it has to pay its sub-contractor, but it is for the contractor to make appropriate arrangements for this in its contract with the sub-contractor.