Neutral citation: Greater Glasgow Health Board v Multiplex Construction Europe Ltd  [2021] CSOH 115.

NEC contract topics: interpretation of dispute resolution Option W2, adjudication as a mandatory precondition to litigation.

Form of contract: NEC3 Engineering and Construction Contract (Option C), NEC3 Professional Services Contract (Option A).

Main areas of law: Prescription and limitation in the context of defective construction claims.

Greater Glasgow Health Board (GGHB) commenced proceedings against four defendants arising from alleged faults in the design and construction of the Queen Elizabeth University Hospital in Glasgow. The first defendant, Multiplex Construction Europe Ltd, was the main contractor under an NEC3 Engineering and Construction Contract (Option C). The fourth defendant, Capita Property and Infrastructure Ltd, acted as project supervisor under an NEC3 Professional Services Contract (Option A). Both contracts included NEC clause W2 on dispute resolution. The second defendants acted as guarantors to the first defendant, and the third defendants were the lead consultants under a separate contract.

Clause W2.1(1) provided that a dispute “is referred to and decided by the Adjudicator.”

Clause W2.4(1) barred any reference to the tribunal unless the dispute had first been decided by adjudication.  Notably, bespoke amendments had been made in the contractor's version to clarify that disputes included “any difference under or in connection with the contract.”

GGHB alleged numerous defects across 11 categories, including water systems, ventilation systems, heating, doors, glazing, and others. These were asserted to have caused significant financial loss, for which GGHB claimed £72.8 million jointly and severally from the defendants. No aspect of the dispute had been referred to adjudication prior to the summons being served shortly before expiry of the five-year prescriptive period.

 

The court was required to resolve several issues:

• Whether the dispute fell outside the scope of the adjudication clause due to complexity and multiplicity of parties
• Whether the action was incompetent by virtue of non-compliance with the agreed dispute resolution procedure
• Whether the proceedings should be dismissed or sisted to allow adjudication to proceed
• Whether the summons constituted a relevant claim for prescription purposes

GGHB argued that the scale and complexity of the claims, involving multiple parties and joint and several liability, made adjudication inappropriate. It partly based this on Lord Malcolm’s observations in Whyte and Mackay Ltd v Blyth & Blyth Consulting Engineers (2013). The defenders contended that the contract clearly stipulated all disputes must be resolved through adjudication before court proceedings, and that the pursuer had failed to meet this condition.

 

Lord Tyre rejected the pursuer’s primary argument that the claims were too complex for adjudication. He referred to Michael J Lonsdale v Bresco (2020), where the Supreme Court recognised adjudication as a main method of dispute resolution capable of handling complex final account and professional negligence claims. The court found nothing in the subject matter of the pursuer’s claims that would exclude them from adjudication. The assertion that 22 separate adjudications might be required did not override the binding nature of clause W2. The argument that the action was competent despite non-compliance with the adjudication requirement was also rejected. Lord Tyre held that the court’s jurisdiction to decide the dispute was, “in the meantime,” ousted until the adjudication process had concluded.

The judge found that failure to adjudicate did not make the action invalid but prevented the court from hearing the matter. Similar reasoning from arbitration cases like Hamlyn & Co v Talisker Distillery (1894) and Brodie v Ker (1952) SC supported this view. Clause W2.4 did not function as a condition precedent that extinguished the underlying obligation or claim.

On disposal, the court sisted the proceedings to await the outcome of adjudication, following the approach adopted in The Fraserburgh Harbour Commissioners v McLaughlin & Harvey (2021). Lord Tyre declined to grant a declarator regarding prescription, finding the issue to be premature and inappropriate for decision at this stage.

 

The decision affirms the strong enforceability of the NEC3 adjudication process, even when disputes are complex, involve multiple parties, and occur after completion. The judgment supports the view that adjudication under NEC clause W2 is not limited to interim disputes nor is it overridden by issues of scale or multiple contractual relationships.

The finding that contractual requirements to adjudicate do not make a court action premature, but simply prevent consideration until adjudication ends, offers clarity for pursuers near limitation deadlines. The decision implicitly endorses the strategic use of litigation to safeguard claims under the Prescription and Limitation (Scotland) Act 1973, while following pre-litigation dispute resolution procedures.