Hitec Power Protection BV v MCI Worldcom Ltd
Technology and Construction Court
His Honour Judge Richard Seymour QC
15 August 2002
The four contracts in question were for the supply of equipment. The contract provided that where an amount which was due and payable by an affiliate company of the employer was not paid when properly demanded, such amount was to be paid by the employer on behalf of the affiliate company within 10 days of written demand by the contractor to the employer.
The contractor made a demand for payment of the four invoices it had already submitted to the employer’s affiliate companies which it also described as its notice of adjudication. During the course of the adjudication the employer made a jurisdictional challenge on the basis that no dispute had arisen by reason of the required 10 days period not having elapsed before the adjudication was commenced by the contractor. The employer refused to pay the sum awarded to the contractor by the adjudicator and the contractor brought court proceedings to enforce the decision.
Judge Seymour held that the adjudicator did not have the jurisdiction to make an award in favour of the contractor on the basis that he was wrong to have decided that a dispute had arisen under the terms of the clause in question before the stipulated 10 days period after the demand for payment/notice of adjudication served by the contractor had elapsed.
The judge stated that a dispute in the context of adjudication was something more than simply a bald rejection of a claim or a failure to respond to a claim. Instead it was a situation in which a claim had been made, there had been an opportunity for the parties each to consider the position adopted by the other and to formulate arguments of a reasoned kind.
A dispute will not have arisen if a sum is not yet due under the contractual machinery. In addition Judge Seymour was of the view that the making of a claim by itself will not constitute a dispute unless the other party has had the opportunity to consider and respond to it. However, other judges have expressed the view that the mere assertion of an unanswered claim will constitute a dispute. This is an area where there continues to be divergent judicial opinion.