Northumbrian Water Limited v Doosan Enpure Limited & Anor

An adjudicator’s decision under a contractual adjudication regime remains binding and enforceable unless and until revised in the agreed final dispute-resolution process. A party that participates in the adjudication without raising a jurisdictional objection may waive the right to challenge validity later. A dispute about non-payment is ordinarily a “dispute” for section 9 of the Arbitration Act 1996, even where the claim has no arguable defence. However, an agreement that an adjudicator’s decision is immediately enforceable as a contractual obligation may preserve the court’s jurisdiction to enforce it pending arbitration. The court must construe the contract so as to give effect to both the interim binding effect of adjudication and the parties’ agreement to arbitrate the underlying merits.

Northumbrian Water Limited sought summary judgment to enforce an adjudicator’s decision requiring an unincorporated joint venture comprising Doosan Enpure Limited and Tilbury Douglas Construction Limited to pay £22,458,540.04, plus interest and costs.

The contract used NEC3 Engineering and Construction Contract Option C, including contractual adjudication under Option W2 and arbitration as the tribunal for final determination. The defendants had participated in the adjudication and later served a notice of dissatisfaction referring some underlying matters to arbitration, but did not identify any jurisdictional or natural-justice challenge to the adjudicator’s decision.

The central issue was whether enforcement of the adjudicator’s decision was itself a matter required to be referred to arbitration, so that the court was obliged to stay the proceedings under section 9 of the Arbitration Act 1996.

1. Summary judgment granted; stay refused. The adjudication decision was valid and enforceable. The defendants were ordered to pay £22,458,540.04, plus interest and costs.
2. The parties’ contractual procedure made the adjudicator’s decision binding unless and until revised by arbitration, and enforceable as a contractual obligation. The decision addressed the matters referred, was issued within the agreed time, and was not subject to any identified jurisdictional or natural-justice challenge.
3. By participating fully in the adjudication without raising a jurisdictional objection, and by accepting parts of the decision on the merits in the notice of dissatisfaction, the defendants had waived any later jurisdictional challenge. General reservations and non-admissions were too vague to preserve such objections. The principles stated in Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) [2019] EWCA Civ 27 applied equally to contractual adjudication.
4. The court adopted the robust approach to adjudication enforcement explained in Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] BLR 93, Bouygues (UK) Ltd v Dahl-Jensen (UK) Ltd [2000] EWCA Civ 507 and Carillion v Devonport Royal Dockyard [2005] EWCA 1358. Errors of fact, law or procedure do not ordinarily prevent enforcement; the critical questions are whether the adjudicator answered the question referred and acted fairly.
5. Although section 9 of the Arbitration Act 1996 is mandatory and non-payment may constitute a dispute even where there is no arguable defence, as explained in Halki Shipping Corporation v Sopex Oils Ltd [1997] EWCA Civ 3062 and Collins (Contractors) Limited v Baltic Quay Management (1994) Limited [2004] EWCA Civ 1757, the enforcement claim was not a matter required by the contract to be referred to arbitration. The defendants had lost any right to challenge validity, while the contract expressly required immediate enforcement pending arbitration of the underlying merits.
6. The defendants’ application for a stay under section 9 was therefore refused. Their right to refer the underlying disputed matters to arbitration remained, subject to the final and binding effect of matters not referred within the contractual period.