In PBS Energo AS v Bester Generacion UK Limited,¹ where Watson Farley & Williams very recently acted for the successful respondent, the English Court of Appeal handed down an important judgment on the approach to enforcement of adjudication awards. The decision, in which Lord Justice Coulson endorsed the approach of the Technology and Construction Court (“TCC”) to applications to enforce awards where there is an arguable case of fraud which could not have been raised during the underlying adjudication, will be of interest to all parties to construction contracts.
The adjudication process
Compulsory adjudication is a speedy dispute resolution process, introduced by the Housing Grants, Construction and Regeneration Act 1996 to preserve cash flow in the construction industry in the face of the disputes that frequently arise between parties to construction contracts. The procedure results in a decision which is temporarily binding on the parties, until the underlying issues can be finally determined by a court or arbitral tribunal.
In order to support the objectives of the adjudication procedure, the TCC has developed a similarly speedy process for the enforcement of awards. Where a respondent fails to pay an award made against them, and before final determination of the underlying issues, the claimant can commence proceedings for enforcement, and seek summary judgment at the same time. This dramatically reduces the time taken to obtain a judgment and recover monies. Adopting a “pay now, argue later” approach, the court will usually not interfere with the adjudicator’s decision, unless it is plain that the adjudicator lacked jurisdiction or on the grounds of procedural unfairness.
PBS Energo A.S (“PBS”) had been engaged by Bester Generacion UK Limited (“Bester”) to act as sub-contractor in respect of the engineering, procurement, construction and commissioning of a biomass-fired energy-generating plant in Wrexham. A dispute arose between the parties and PBS purported to terminate the sub-contract.