A Scottish court has upheld an adjudication that found an Amey joint venture should have been paid £1.8m over a delayed electrical substation project.
Amey Power Services and UK Grid Solutions built a new electrical substation building and associated infrastructure in Fort Augustus, near Loch Ness in the Highlands, under the name GE Amey JV.
Work started in October 2018 for client Scottish Hydro Electric Transmission, which trades as SSEN Transmission.
SSEN was responsible for delivering and installing two transformers on the job, but its own work on this was delayed.
In March 2023 an adjudicator found that GE Amey was entitled to £1.8m as an increase in defined costs as a result of the delay, but SSEN refused to comply with the decision.
The client argued that the adjudicator failed to address some of its arguments and explain his reasoning properly, including that the contractor failed to achieve practical completion by the contractual completion date.
GE Amey, which took the case to court to get the adjudication upheld, argued its delay and cost overruns were due to a “critical and culpable delay” caused by “[SSEN’s] lack of progress, poor coordination and defects in their works”.
The adjudicator said that SSEN’s project manager should have assessed compensation events relating to the transformers at the time they emerged, but did not.
Lord Richardson, sitting in the Outer House, part of the Scottish Court of Session, pointed out that courts can only overturn an adjudication if the adjudicator was not validly appointed, acted outside their jurisdiction, did not comply with “the rules of natural justice” or provided inadequate reasoning.
He concluded that although there were errors in the written adjudication that made it slightly unclear in parts exactly how much money was owed to GE Amey, “any reasonably informed reader” would understand it was ordering SSEN to pay £1.8m.
Adjudications were introduced into construction in 1998 in order to reduce litigation and keep cash flowing in the supply chain.
A 2022 King’s College London survey on UK construction adjudication said that 40 per cent of adjudication users have at least once suspected that an adjudicator was biased towards one party. Elsewhere in the same survey, however, 78 per cent of users said they believed parties were always or mostly put on an equal footing.
In October, Construction News examined whether, 25 years on from its introduction, the system for adjudications was working, or whether the costs involved and alleged biases were undermining it.