Neutral citation: Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd [2015] EWHC 2915 (TCC)

NEC contract topics: Interpretation of NEC3 ECC dispute resolution provisions, Option W2, Contract Data

Form of contract: NEC3 Engineering and Construction Contract

Main areas of law: Adjudication enforcement under the Housing Grants, Construction and Regeneration Act 1996, jurisdictional challenges related to adjudicator appointment and procedural rules.

 

Imperial Chemical Industries entered into a contract with Merit Merrell Technology  in December 2012 for the installation of steelwork and tank works at a new paint processing facility in Ashington, Northumberland. The contract used the NEC3 Engineering and Construction Contract form, incorporating core clauses, dispute resolution Option W2, and several secondary options. In February 2013, the parties executed a memorandum of agreement that amended certain contract terms, including Option W2.

Disputes arose concerning the valuation of additional works and the quality of welding undertaken by the Merit. An initial adjudication in early 2015 resulted in an award in favour of Merit. During this adjudication, the contract was terminated, leading to a third adjudication in which the adjudicator found in favour of Merit on the termination issue.

This judgment related to a second adjudication. In this instance, ICI sought delivery of project documents, which it contended were necessary for the safe operation and regulatory compliance of the plant. The adjudicator held that ICI was entitled to the documents listed in Schedule 1 of the Notice of Adjudication, but declined to order delivery due to insufficient time allowed in the referral. ICI then applied to the court to enforce the adjudicator’s decision and delivery up of the documents.

 

Merit raised multiple jurisdictional challenges. It argued that the adjudicator had been nominated by the wrong adjudicator nominating body, that the procedural rules followed during adjudication were not those stipulated by the contract, and that ICI had shifted positions on the applicable procedure.

The adjudication provisions were particularly contentious. While the Contract Data named the Chartered Institute of Arbitrators (CIArb) as the adjudicator nominating body and stated that Option W2 governed dispute resolution, Appendix 2 of the contract, which was intended to replace Option W2, referenced the Royal Institution of Chartered Surveyors (RICS) and the Technology and Construction Solicitors’ Association (TeCSA) rules. Both were in square brackets.

Merit argued that either Appendix 2 governed, making the nomination by CIArb invalid, or that the adjudication followed inconsistent or incorrect procedural rules. It also contended that enforcement of the adjudicator's declaration could not extend to ordering delivery, which the adjudicator had declined to do.

 

Mr Justice Edwards-Stuart upheld the adjudicator’s jurisdiction. He found that the memorandum of agreement reinstated Option W2 by expressly amending it, which would have been impossible had Option W2 been entirely deleted. This preserved CIArb as the valid nominating body and confirmed that the adjudication should be conducted under the NEC3 procedures.

Alternatively, the judge concluded that even if Appendix 2 applied, the square brackets around the references to RICS and the TeCSA rules rendered those placeholders, not binding choices. The clear and unbracketed designation of CIArb in the Contract Data therefore prevailed.

The judge also found that the Defendant had waived any right to object to the use of Option W2. Both parties had proceeded on the basis that Option W2 applied, and neither asserted during the adjudication that the TeCSA rules should govern. Thus, the adjudicator acted within jurisdiction and did not violate natural justice.

Regarding delivery of documents, the court declined to order specific performance. The adjudicator had expressly chosen not to make such an order, citing the unreasonably short timeframe of five days given in the referral. The court held that issuing an order that went beyond the adjudicator’s decision would amount to substitution rather than enforcement. Although the ICI argued that more time had since passed, the court maintained that the appropriate relief had not been sought. An application for interim preservation of documents might have been suitable but had not been made. The court did, however, enforce the adjudicator’s declaration of entitlement as binding and valid and granted summary judgment for the adjudicator’s fees, including interest.

 

This case offers critical guidance on interpreting and amending NEC3 dispute resolution procedures. It clarifies that unless clearly deleted, Option W2 remains effective when later amended, and references in square brackets may be viewed as placeholders rather than operative terms. Where disputes arise concerning procedural rules or nominating bodies, the explicit and final wording in Contract Data and amended clauses carry significant weight.

Practitioners should ensure that amendments to NEC contracts are clearly drafted and consistent across all documents. Competing clauses, particularly regarding dispute resolution, can give rise to avoidable challenges. This case also highlights the importance of clearly asserting jurisdictional objections during adjudication. A party that fails to object or that proceeds on the basis of one procedural approach risks waiving rights to challenge jurisdiction later.

The judgment further confirms that adjudicator declarations of entitlement cannot automatically be converted into mandatory orders by the court unless the adjudicator himself issued such an order or unless additional relief is specifically sought. Claimants seeking delivery of documents must request enforceable orders from adjudicators or apply to the court for tailored relief, such as interim injunctions.

This decision affirms the principle that adjudicators’ decisions, even when declaratory, remain enforceable within their limits, reinforcing the swift and practical resolution mechanisms provided by NEC contracts and the 1996 Act.