Wales and West Utilities Ltd v PPS Pipeline Systems GmbH (TCC 23.1.2014)

The decision in the third adjudication awarding a specified sum which followed on from the decision in the second adjudication that it was entitled to a compensation event in principle should be enforced
 

 

 
WALES AND WEST UTILITIES LTD v PPS PIPELINE SYSTEMS GHBH
 
Technology and Construction Court
Akenhead J
23rd January 2014
 
 
 
The contract incorporated NEC3 amended to delete the compensation event for encountering unanticipated physical conditions. The contractor encountered more rock than it had anticipated and wished to claim the additional cost of installing more pipework protection (Rockguard).
 
The contractor in its first letter to the employer notified its claims due to the employer’s wrong and misleading works information and in its second letter gave an “early warning notice” in which it requested payment. The employer’s project manager responded to these two letters by denying any contractual entitlement to additional payment.
 
The employer began a (second) adjudication in which it requested a decision that the contractor had no entitlement in respect of the dispute identified in the correspondence. The contractor in its response sought decisions that it was entitled to a compensation event in respect of the increase in Rockguard. The employer unsuccessfully contended that the dispute referred did not encompass the Rockguard issues. The adjudicator decided that whilst the contractor had no entitlement to a compensation event in respect of the rock, it did have one in respect of Rockguard.
 
The contractor submitted a claim for the additional cost of Rockguard and began a third adjudication in which it sought decisions that it was entitled to a project manager's instruction and for its claim to be assessed. The employer contended that the adjudicator had exceeded his jurisdiction in the second adjudication by considering the Rockguard issues. The adjudicator rejected this further jurisdictional challenge and awarded the contractor a specified sum.
 
The employer issued proceedings seeking declarations that the decision in the second adjudication in relation to Rockguard was unenforceable and that the decision in the third adjudication was therefore also unenforceable.
 
Akenhead J rejected the employer’s contentions and declared the decisions in both adjudications to be enforceable. The employer in its notice of adjudication for the first adjudication could not be said to have sought to refer something less than the whole dispute which had crystallised by virtue of its letter and its notice did not cut down the scope or ambit of that dispute because (i) The employer was simply confirming that the dispute being referred was that which came out of the exchange of letters (ii) The fact that the notice stated that the scope of the dispute being referred did not extend to consequential issues did not limit what was being referred due to the crystallised dispute relating to the principle or basis of entitlement and (iii) What was (clearly intended to be) left and left to be resolved in the adjudication was whether as a matter of principle the contractor had any entitlement to a compensation event.
 
The dispute as crystallised and as referred to adjudication included the whole package of arguments put forward by the contractor in its first letter which included the contractor’s claim or asserted entitlement in its two letters as to whether the increases in Rockguard should have been instructed and constituted compensation events. The employer accepted that if the adjudicator did have jurisdiction to make his decision in the second adjudication, it could not challenge his decision in the third adjudication.
Download