News & Insights

Adjudication is meant to be a swift and economical way to resolve contractual disputes in the construction industry, however this isn’t always the case.

Take AMD Environmental Ltd v Cumberland Construction Company Ltd [2016] EWHC 285 (TCC) for example.

Cumberland Construction had engaged AMD Environmental to carry out mechanical and electrical work at the Hilton Hotel in Park Lane, London.  Cumberland disputed AMD’s final bill and the dispute was referred to an adjudicator.  He ruled in favour of AMD and awarded it £77,993, plus VAT and interest.  AMD then launched proceedings to enforce the award.

Cumberland challenged the adjudicator’s decision on a number of grounds:

• That the statutory adjudication regime did not apply because the subcontract was not in writing.
• That the dispute had not crystallised by the date of AMD’s notice of adjudication.
• That elements of the procedure breached rules of natural justice because AMD had provided new information to the adjudicator during the adjudication which had not previously been provided to Cumberland.

The court rejected all of Cumberland’s arguments and ordered that the adjudicator’s decision be enforced.

The court will typically award interest at between 4% and 5% but in this case Cumberland was ordered to pay interest on the adjudicator’s award at the higher rate of 6% because the adjudication decision should have been honoured some time ago and the arguments in support of Cumberland’s position were “hopeless”.  The court also ordered Cumberland to pay AMD’s costs on the more generous indemnity basis.

This judgment illustrates the court’s concern that too many adjudicators’ decisions are being challenged without merit and has laid down a marker that parties who pursue such cases will be heavily financially penalised.

If you would like any further information regarding dispute matters please contact Rob Kelly on 01202 755217.

This article provides information and comments on legal issues and developments of interest.  The contents of this article do not constitute legal advice, is not a comprehensive treatment of the subject matter covered, and should not be relied on as such.  Legal advice should be sought about your specific circumstances before taking any action with respect to the matters discussed.