McConnell Dowell Constructors (Aust) PTY Ltd v National Grid Gas PLC

A supplemental agreement which varies the contract price and completion dates, identifies settled and unsettled matters, and remains intertwined with the original construction contract may be subject to the original adjudication provisions. Whether particular claims were settled was therefore a matter for the adjudicator, not the enforcement court.

An adjudicator’s decision must generally be enforced temporarily, even if arguably wrong, subject to later final determination. A stay of execution may be refused where adequate security, such as a bond, protects the paying party. Where the parties have agreed a multi-stage dispute resolution procedure culminating in arbitration, Arbitration Act 1996, section 9 requires the court to stay proceedings falling within that agreement.

The parties entered into a construction contract for a gas pipeline. The contract contained adjudication provisions and provided for arbitration as the tribunal if a party remained dissatisfied after adjudication.

The parties later executed a supplemental agreement adjusting the contract price and completion dates and settling some, but not necessarily all, claims. An adjudicator decided that he had jurisdiction and awarded McConnell sums for additional payment and interest.

McConnell sought summary judgment to enforce the adjudicator’s decision. National Grid resisted enforcement, sought a stay of execution, and brought a counterclaim concerning the supplemental agreement and the interest award. McConnell sought a stay of the counterclaim to arbitration. The central issues were whether the supplemental agreement was subject to the original adjudication machinery, whether enforcement should be stayed, and whether the counterclaim fell within the arbitration agreement.

1. Summary judgment. McConnell was entitled to summary judgment enforcing the adjudicator’s decision. The supplemental agreement operated as a variation of the original contract rather than as a stand-alone settlement agreement. It varied the contract price and completion dates, defined which matters were included in the revised price, and remained contractually intertwined with the original agreement. The commercial construction supported by the officious-bystander test was that the original dispute-resolution machinery continued to apply (paras [43]-[44]).

2. The dispute over which claims had been settled, and the valuation of claims not settled, fell within the adjudicator’s jurisdiction. The adjudicator might have been wrong, including on the interest rate, but his decision was binding until final determination and had to be enforced in the meantime. The court applied the principle stated in Carillion Construction Limited v Devonport Royal Dockyard Ltd [2005] EWCA Civ 1358; [2006] BLR 15 (paras [45]-[49]).

3. Stay of execution. The application for a stay was refused. A bond offered by McConnell adequately protected National Grid against recovery difficulties if it later obtained judgment or an arbitral award. The general principle remained that adjudication awards should be enforced promptly despite possible recovery in later proceedings (paras [50]-[54]).

4. Arbitration. The contract contained an effective arbitration agreement. The contractual reference to the English courts governed enforcement and court applications, while arbitration remained the agreed tribunal for final determination. The counterclaim fell within the agreed dispute-resolution machinery. Section 9 of the Arbitration Act 1996 imposed a mandatory stay where the matter was covered by the arbitration agreement, subject only to the statutory exceptions. The counterclaim was therefore stayed and National Grid’s applications for summary judgment and preliminary issues were dismissed (paras [56]-[61]).