MW High Tech Projects UK Ltd (“MW”) was the main contractor on a project for the construction of a gasification power plant.  They engaged Engie Fabricom UK Ltd (“Engie”), the Claimant, as a subcontractor under an EPC Contract dated 31 March 2017.  Under the terms of the Sub-Contract, the contractual right to adjudicate only applied to disputes “arising under construction contract as defined in the Housing Grants Construction and Regeneration Act 1996”.  A dispute arose between the Parties and was referred to adjudication. 

MW argued that the adjudicator had no right in this instance to determine the decision since their jurisdiction did not fall under Section 105(2)(c)(i) and (ii) of the 1996 Act. This was because they contended that the primary activity at the site was power generation and the works could therefore not be classified as construction operations. This, in turn, would mean that the right to adjudicate would be excluded as would the corresponding right to enforce.  Engie argued, however, that whilst generation of electricity was a purpose of the site, it was a secondary purpose rather than a primary purpose.  They argued that, as in Conor Engineering Limited v Les Constructions Industrielles de la Mediterranee SA [2004] BLR 212, the primary purpose was the thermal treatment of waste as an alternative to landfill for the purpose of disposing of waste. 

However, the adjudicator agreed with Engie’s position.  As such the adjudicator awarded Engie £27,062.25 as well as interest and VAT. MW failed to pay this prompting Engie’s enforcement proceedings and application for summary judgement. 

In the application for summary judgement Engie argued that you could tell the plant’s primary activity was the thermal treatment of waste from the site owners memorandum which they used to attract investment, as well as a permit from the Environment Agency.

The judge ruled that it was not appropriate to grant a summary judgement since M+W has a real prospect of success. This was down to the wording of the main contract and subcontract which in this instance was consistent only with power generation.  There will be a Part 7 trial as to what constitutes “primary activity”.

This case demonstrates that the exclusions under the HCGRA are unclear and it is not always easy to establish if the HCGRA applies.  It emphasises the need for the Referring Party to be clear (both generally and in the notice of intention to refer a dispute to adjudication) about the contractual/statutory right that they are relying on.