This case was an application by the claimant (“NWL”) for summary judgment to enforce an adjudication decision directing the defendants, an unincorporated joint venture (“the JV”), to pay to NWL £22,458,540. The JV applied for the proceedings to be stayed pursuant to section 9 of the Arbitration Act 1996.

The JV and NWL entered into a contract in March 2016 based on the NEC3 Engineering and Construction Contract Option for the design and construction of the ‘Phase 2 Horsley Water Treatment Works’ (“the Contract”).

In the Contract Data, “the tribunal” is specified as “arbitration” and the dispute resolution procedure Option W2 applied. Option W2 provides that a dispute arising under or in connection with the Contract is referred to and decided by the Adjudicator, and that a party my refer a dispute to the adjudicator at any time. The adjudicator’s decision is binding on the parties unless and until revised by the tribunal.

Disputes arose between the parties due to cost-overruns, delays to the work and quality issues, culminating in NWL terminating the Contract. In March 2022 NWL served a Notice of Adjudication on the JV. The parties jointly appointed the adjudicator who, on 23 May 2022, found that the termination by NWL was valid. The adjudicator declared that the JV should pay NWL £22,458,540.04 plus interest (“the Decision”). The JV failed to pay the sums directed by the adjudicator to be paid to NWL.

In June 2022, the JV served a Notice of Dissatisfaction pursuant to clause W2.4(2) of the Contract stating that the JV is dissatisfied with the Decision (save for a handful of items) and does not accept that the sum of £22,458,540.04 is due and that it intends to refer the Decision (excluding the handful of excepted items) to the tribunal for the final determination of the Dispute.

NWL issued enforcement proceedings for the payment of £22,458,540.04. On 27 June 2022 the JV served an application to stay the proceedings under section 9 of the Arbitration Act 1996 on the grounds that the parties have agreed that their disputes should be decided in arbitration.

In her judgment O’Farrell J referred to the Notice of Dissatisfaction in which “it was implicit in the JV’s stated intention to accept parts of the adjudication decision on the merits that it accepted the underlying validity of the decision.” This inference, O’Farrell J stated, is supported by the fact the Notice did not identify any ground on which the validity of the decision would be challenged. Further, the general non-admissions and reservations contained within the Notice were deemed too vague to be effective. 

On the adjudication enforcement claim, O’Farrell J found that the JV failed to identify grounds of challenge to the effectiveness of the Decision in the enforcement proceedings themselves. This is no doubt the result of the JV wishing to avoid being caught by section 9(3) of the Arbitration Act, which provides that the JV would lose the right to make an application for stay after taking any step in the proceedings to answer the substantive claim. However, O’Farrell J refers to Patel v Patel [2000] and Capital Trust Investments Ltd v Radio Design TJ AB and others [2002] which state that an act which would otherwise be regarded as a step in the proceedings will not be treated as such if the applicant has specifically stated that he intends to seek a stay. It was therefore open to the JV to explain the basis on which any challenge to the validity of the adjudication would be made.

In respect of the stay, the JV sought a stay of the proceedings on the basis that the parties agreed that their disputes should be decided in arbitration. O’Farrell J refused a stay of proceedings on two grounds. Firstly, the Notice of Dissatisfaction failed to include any challenge to jurisdiction or on grounds of any breach of the rules of natural justice. The decision is therefore final and binding. It follows that the JV lost its right to challenge the validity of the adjudication decision, in court or arbitration, although it retains its right to refer the underlying disputed issues to arbitration in accordance with its notification. The effectiveness of the adjudication decision is not a matter which under the Contract is to be referred to arbitration and section 9(1) of the Arbitration Act is not engaged. Secondly, the parties expressly agreed that the Decision is binding on the parties “unless and until revised by the tribunal”.

Practical Implications

This case is one of a growing many that highlights the court’s determination to uphold adjudication decisions. As summed up by O’Farrell J in the judgment, “the courts take a robust approach to adjudication enforcement, enforcing the decisions of adjudicators by summary judgment regardless of errors of procedure, fact or law, unless the adjudicator has acted in excess of jurisdiction or in serious breach of the rules of natural justice.” Attention should also be paid to O’Farrell’s comments regarding the general non-admissions and reservations contained within the Notice of Dissatisfaction which were deemed “too vague to be effective”.