Interserve Industrial Services Ltd v Cleveland Bridge UK Ltd

The award of a specified sum to the sub-sub-contractor by the adjudicator in the second adjudication should be enforced notwithstanding that the adjudicator in the third adjudication awarded to the sub-contractor a greater sum to be paid by the sub-sub-contractor
 
INTERSERVE INDUSTRIAL SERVICES LTD v CLEVELAND BRIDGE UK LTD

Technology and Construction Court
Jackson J
6 February 2006
 
 
The adjudicator in the second adjudication decided that a specified period of delay had occurred during the period in question and that each party was liable for a proportion of that delay. The adjudicator also awarded a specified sum to the sub-sub-contractor. The sub-contractor refused to pay the sum awarded and made a further claim against the sub-sub-contractor. This further claim was for another extension of time together with associated loss and expense. This further claim was the subject of the third adjudication in which the adjudicator in the second adjudication was (again) appointed. The adjudicator in the third adjudication decided that each party was liable for a proportion of the period of delay in question. He also awarded the sub-contractor a specified sum which was greater than the sum he awarded to the sub-sub-contractor in the second adjudication. The sub-contractor contended that the award in the second adjudication should not be enforced by the court on the ground that it had been awarded a greater sum in the third adjudication.
 
Jackson J rejected this contention and ordered summary judgment in favour of the sub-sub-contractor to enforce the award. This rejection was based on caselaw and the relevant provisions of the Construction Act. In particular the judge derived from the caselaw the general principle that where there were successive adjudications, the losing party at the end of each adjudication had to comply with the decision (in the absence of special circumstances) and could not withhold payment on the ground of its anticipated recovery in a future adjudication on different issues. When the adjudicator delivered his decision in the second adjudication (1) the sub-contractor became obliged to pay the sum awarded before the date by which the adjudicator ordered that sum to be paid and (2) the sub-contractor was not entitled to withhold payment on the ground of its anticipated recovery in the third adjudication. This was made clear by (1) section 108(3) of the Construction Act, which provided that a construction contract was to provide that an adjudicator's decision was binding until the final determination of the dispute by court or arbitration proceedings or by agreement and (2) the requirements for an effective notice of withholding under section 111 of the Construction Act.
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