The Metropolitan Borough Council of Sefton v Allenbuild Limited

Where a construction contract provides for adjudication followed by arbitration, the court must construe the contractual scheme to identify the matters referred to arbitration. Provisions requiring immediate compliance with an adjudicator’s decision and permitting later final determination may exclude adjudication enforcement from the arbitration clause. A notice of dissatisfaction need not particularise the substantive merits challenge, but it must make clear whether the adjudicator’s jurisdiction or the validity of the decision is challenged. A party which participates in adjudication without a clear jurisdictional reservation may waive that objection. Where no genuine jurisdictional or natural justice challenge is shown, the adjudicator’s decision should be summarily enforced despite the possibility of later arbitration on the substantive dispute.

The claimant sought summary judgment to enforce an adjudicator’s decision requiring the defendant contractor to pay £2,204,217.13 arising from defects in a completed construction project. The defendant sought a stay under section 9 of the Arbitration Act 1996, relying on a notice of dissatisfaction and contending that the contractual arbitration clause covered challenges to the adjudicator’s decision.

The contract incorporated NEC2 provisions, the CIC model adjudication procedure and an arbitration provision. The adjudication had been conducted under the Scheme for Construction Contracts (England and Wales) Regulations 1998. The central issues were whether the notice extended to jurisdictional validity, whether the arbitration clause covered adjudication enforcement, whether any jurisdictional objection had been waived, and whether summary enforcement should proceed.

1. Stay application. The application under section 9 of the Arbitration Act 1996 was refused. Section 9 is mandatory only where the proceedings concern a matter which the agreement requires to be referred to arbitration. The ultimate question is one of contractual construction.
2. The CIC model adjudication procedure displaced the NEC2 adjudication provisions. Alternatively, the statutory Scheme would have displaced them. The contractual adjudication procedure and the Scheme required immediate compliance with the adjudicator’s decision and preserved its provisional binding effect until final determination. Those provisions excluded a challenge to the adjudicator’s decision from the matters covered by the arbitration provision. The court therefore retained jurisdiction to enforce the decision.
3. The notice of dissatisfaction, referring to the entirety of the adjudicator’s conclusions, reasoning and decisions, was sufficient to challenge the substantive merits but did not make clear that jurisdictional validity was also challenged. The distinction between merits and validity was material. In any event, the defendant had participated in the adjudication without a clear reservation and had waived any jurisdictional objection.
4. The approach was consistent with Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] BLR 93 and MBE Electrical Contractors Ltd v Honeywell Control Systems Ltd [2010] EWHC 2244 (TCC). The court expressly agreed with the reasoning in MBE. The ‘pay now, argue later’ policy did not override contractual autonomy; it formed part of the contractually agreed division between provisional adjudication enforcement and later final determination.
5. Summary judgment. Applying the principles in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), as approved in AC Ward & Sons Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098, the defendant had no real prospect of resisting enforcement and there was no compelling reason for a trial. The possibility that an arbitrator might later reach a different final decision did not affect provisional enforceability. Unparticularised hopes that further evidence might emerge were insufficient.
6. The defendant’s stay application was dismissed. Summary judgment was granted for £2,204,217.13, with interest at £51.92 per day from 24 January 2022 until payment. The provisional view was that costs should follow the event.