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Anglian Water decided its dispute with Laing O鈥橰ourke Utilities ought to go to arbitration because it was unhappy with the outcome of round one, the adjudication. So be it. But Anglian Water nearly found that the adjudicator鈥檚 interim decision was wholly final and binding. It鈥檚 all to do with the dispute procedure in the NEC Engineering and Construction Contract.

Laing O鈥橰ourke is the design-and-construct contractor for a number of tanks at Anglian鈥檚 Saltfleet sewage treatment works on the Lincolnshire coast. Their dispute must have been a tad tricky because the adjudicator was a very senior queen鈥檚 counsel. Nevertheless, Anglian is insisting onre-running the adjudication in front of an arbitrator and it鈥檚 perfectly right to do so. Right because arbitration, like litigation, is the big dig instead of adjudication鈥檚 light probe.

Anglian first argued that the NEC鈥檚 adjudication rules do not comply with the statutory rules in the Construction Act and therefore the adjudication result was null and void

Let鈥檚 look at what happened. The adjudicator鈥檚 decision arrived on 24 February. The disappointed party then had four weeks to issue a 鈥渘otice of dissatisfaction鈥� to the other party and also to refer the dispute to the final tribunal, in this case arbitration. If it fails to act in those four weeks, the adjudicator鈥檚 decision becomes cast in stone. Laing O鈥橰ourke, which was perfectly content with the result of the adjudication, argued that the four-week deadline had passed.

Anglian鈥檚 first argument was that the NEC鈥檚 adjudication rules do not comply with the statutory rules in the Construction Act, and therefore the adjudication was null and void. The argument is that the NEC makes adjudication mandatory: no party can arbitrate or litigate unless or until that dispute has first been to adjudication. But the Construction Act does not say adjudication is a must - it鈥檚 only a right; it鈥檚 a choice. Everyone in parliament in 1996 was satisfied that new adjudication did not bar anyone going to the 鈥渟tandard鈥� places, such as the court or arbitration. Adjudication is not supposed to be a fetter on the court, but the NEC turns that on its head.

The High Court would not accept this argument. Nothing fettered the adjudication itself, it said, so it was all good.

Anglian鈥檚 second argument was that since the NEC rules (in NEC2) were non-compliant with the Construction Act, all the rules fell away, so there was no condition precedent to arbitration and therefore the four-week time limit disappeared. This argument failed as well. The judge said all that was required was that the adjudication be conducted according to the rules. The fact that it blocked the bypass to arbitration or litigation was nothing to the point.

In the end anglian got home on the snakes and ladders board. The rescue ladder was a clause in the arbitration act 1996

Then came one of those arguments as to whether the notice of dissatisfaction and the notice of arbitration had been properly served. Laing O鈥橰ourke said no. Anglian said yes. A fax with all the information and formal notice went to Laing O鈥橰ourke鈥檚 solicitor on 22 March, inside the four weeks. But the NEC鈥檚 rules lay down the law for the what and where of sending such notices. Seemingly, the formal place for communication with Laing O鈥橰ourke was at St Neots in Cambridgeshire.

The fact that notices were received by all the correct people at Laing O鈥橰ourke did not trump the NEC rule. The judge observed that on several cases the time and place for the receipt of a notice started time running for important matters. It makes sense to lawyers to have a point of certainty. The point is lost on builders or road makers.

In the end, Anglian got home on the snakes and ladders board. The rescue ladder was a clause in the Arbitration Act 1996 that says that if an arbitration provision fixes a timeframe to do something, the court has the power to extend time on the grounds that 鈥渋t is unjust to hold either party to the strict terms of the proviso in question鈥�. Well, said the judge, Anglian thought it had achieved effective service when it sent the documents to Laing O鈥橰ourke鈥檚 solicitor and to the chiefs at Laing O鈥橰ourke head office, so heigh-ho, the time for service was extended. And now the arbitration can begin.

Oh, and one other thing - could NEC take a fresh look at that four-week rule? Bit of a tank trap.

Tony Bingham is a barrister and arbitrator at 3 Paper 好色先生TVs Temple