Neutral citation: Anglian Water Services Ltd v Laing O’Rourke Utilities Ltd [2010] EWHC 1529 (TCC)

NEC contract topics:  Clause 13.2 (address for communications)  93.1 (review by tribunal)

Form of contract: NEC2 1995

Main areas of law: Arbitration procedure under the Arbitration Act 1996, statutory adjudication under the Housing Grants, Construction and Regeneration Act 1996 (HGCRA)

 

Anglian Water Services Ltd (AWS) engaged Laing O’Rourke Utilities Ltd (LOR) under the 2nd Edition (1995) of the NEC Engineering and Construction Contract to design and construct tanks at the Saltfleet Sewage Treatment Works. Disputes emerged and were referred to adjudication, resulting in a decision by Dr Robert Gaitskell QC dated 24 February 2010.

The adjudication provisions in the contract did not comply with the HGCRA, specifically section 108, because they failed to allow a party to refer a dispute to adjudication “at any time.” As a result, the adjudication provisions were replaced by the Scheme for Construction Contracts.

Clause 93.1 of the contract required that if a party was dissatisfied with the adjudicator’s decision, they had to notify the other party of their intention to refer the dispute to arbitration within four weeks. AWS sent such a notice to LOR's solicitors, Pinsent Masons (PM), but LOR later challenged its validity on the basis that it had not been served at the correct address under clause 13.2 of the contract.

 

The court addressed four central legal questions:

• Whether clause 93.1 was incompatible with Part II of the HGCRA and therefore invalid.
• Whether AWS had effectively served the notice of dissatisfaction within the contractual four-week period.
• Whether the notice sent to LOR's solicitors constituted effective service under clause 13.2 of the NEC contract.
• If not, whether AWS should be granted an extension of time under section 12 of the Arbitration Act 1996.

AWS argued that clause 93.1 was invalid due to its mandatory requirement for adjudication prior to arbitration, which they contended fettered statutory rights. LOR countered that AWS’s notice was not validly served in accordance with clause 13.2, and even if it had reached the right individuals, it was not compliant with the contractual method of service.

 

Mr Justice Edwards-Stuart ruled that clause 93.1 was not inconsistent with the HGCRA. While it imposed a condition precedent to arbitration, it did not conflict with the statutory right to refer disputes to adjudication at any time. The judge concluded that clause 93.1 was an arbitration clause, not part of the adjudication provisions, and remained valid.

On the issue of service, the judge found that clause 13.2 set a clear requirement that contractual communications take effect only when received at the last address notified. Despite AWS’s notice being received by the relevant individuals at LOR through their solicitors, it was not sent to the prescribed address at St Neots and therefore did not meet the service requirements of the contract.

Nevertheless, the judge held that AWS’s communication was a document “relevant to the adjudication,” and PM had previously agreed to accept service of such documents. Therefore, the notice was held to have been validly served within the contractual period. Alternatively, if that conclusion were incorrect, the judge was satisfied that the conduct of LOR’s solicitors, by acknowledging receipt without qualification, led AWS’s legal team to reasonably believe that service had been validly effected. As such, an extension of time under section 12 of the Arbitration Act 1996 would have been granted.

 

This case offers several valuable insights for professionals engaged in NEC-based projects. It confirms the enforceability of clause 93.1 and its coexistence with the Scheme for Construction Contracts under the HGCRA. This highlights that contractual processes requiring adjudication before arbitration are permissible, provided they do not restrict the statutory right to adjudicate at any time.

The decision also emphasises the importance of complying with communication protocols under clause 13.2. Despite actual receipt by intended recipients, non-compliance with prescribed service methods can make a communication ineffective. However, when parties have established a pattern or agreement for accepting service through legal representatives, courts may regard such service as valid if it aligns with prior conduct and mutual understanding.

While the NEC forms are designed for collaborative processes, their formal requirements, particularly regarding notices, must be treated with the same level of rigour as any bespoke or traditional contract.

For project managers, consultants, and legal advisers, this judgment serves as a reminder to ensure that the rules governing the serving of notices are properly followed and that addresses are formally updated under the contract. Legal teams should also exercise care in how acknowledgements of service are worded to prevent unintentionally misleading the opposing party.