Carillion Construction Ltd v Devonport Royal Dockyard Ltd (Part III)

The adjudicator had the power to award interest where the adjudication was conducted under the Scheme for Construction Contracts notwithstanding that neither the sub-contract nor paragraph 20(c) of the Scheme contained an express provision for the award of interest
 
CARILLION CONSTRUCTION LTD v DEVONPORT ROYAL DOCKYARD LTD (Part III)

Court of Appeal
Chadwick LJ MR and Moore-Blick LJ
16 November 2005
 
 
An issue for determination where the adjudication was conducted under the rules of the Scheme for Construction Contracts was whether the adjudicator had the power to award interest notwithstanding that neither the sub-contract nor paragraph 20(c) of the Scheme contained an express provision for the award of interest.
 
Paragraph 20 provided that the adjudicator was to decide the "matters in dispute". In doing so he could take into account any other matters which the parties agreed should be within the adjudication's scope or which were matters under the contract which he considered were "necessarily connected with the dispute". In particular, the adjudicator could: (a) open up, revise and review any decision taken or any certificate given by any person unless the decision or certificate was stated by the contract to be final and conclusive (b) decide that any party was liable to make payment under the contract and when that payment was due and the final date for payment and (c) decide the circumstances in which, the rates at which and the periods for which simple or compound rates of interest were to be paid having regard to any contractual term relating to the payment of interest.
 
Chadwick LJ stated that there was no "freestanding" power to award interest as the judge at first instance held insofar as the adjudicator could only decide questions as to interest if they were: (a) "matters in dispute" that had been properly referred to him (b) agreed by the parties as being within the scope of the adjudication or (c) considered by the adjudicator as being "necessarily connected with the dispute".
 
However, Chadwick LJ went on to hold that the questions of interest decided by the adjudicator were agreed by the parties as being within the scope of the adjudication on the basis that the contractor had acquiesced in the referral of such questions insofar as: (a) The sub-contractor advanced a claim for interest in its notice of adjudication (b) the contractor's response was that no sum was due to the sub-contractor with the result that the question of interest did not arise and (c) if the contractor had intended to take the point that interest should not be within the scope of the adjudication, it was inconceivable (given the extensive representations made by the contractor in the adjudication) that it would not have said so.
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