Neutral citation: WSP CEL Ltd v Dalkia Utilities Services Plc [2012] EWHC 2428 (TCC)

NEC contract topics: Time bar provisions in clause W1.3

Form of contract: NEC3 Professional Services Contract

Main areas of law: Contractual adjudication, jurisdiction of adjudicators, enforcement of adjudicators' decisions via summary judgment, legal interpretation of agreements varying adjudication procedures.

 

WSP CEL Limited (“WSP”) entered into a Consultancy Services Contract with Dalkia Utilities Services Plc (“Dalkia”) on 12 May 2009. The contract required WSP to deliver engineering, project management, and construction management services for a biomass energy plant at Diageo Distilling Limited’s distillery in Fife, Scotland. The agreement adopted the NEC3 Professional Services Contract (June 2005) and incorporated its standard adjudication provisions under Option W1. The Housing Grants, Construction and Regeneration Act 1996 did not apply.

Dalkia terminated the Consultancy Services Contract on 6 May 2011, effective from 11 May 2011. Following this, WSP served its final account dated 19 August 2011 seeking payment on termination, encompassing both compensation events and other forms of loss and expense. Dalkia did not provide a substantive response, and WSP commenced adjudication. The adjudicator determined in December 2011 that a dispute had arisen due to Dalkia’s failure to respond. This led to a Consent Agreement dated 13 January 2012, allowing for without prejudice negotiations and setting terms under which either party could refer outstanding disputes to adjudication.

On 22 February 2012, WSP served a Notice of Adjudication pursuant to the Consent Agreement. Dalkia contested jurisdiction, relying on time bars in clauses W1.3(1) and (2) of the NEC Conditions, arguing that the adjudicator had no authority over claims that were out of time or already resolved.

 

The key legal question was whether the adjudicator had jurisdiction to determine the final account dispute, including claims Dalkia argued were time-barred under the NEC Conditions. This raised a broader issue of whether a consent agreement between parties can validly extend or override the time limits prescribed by clause W1.3.

Dalkia contended that clause W1.3(2) precluded adjudication of any disputes not referred within the contract’s specified timeframes. It also argued that the adjudicator lacked authority to determine his own jurisdiction. WSP’s case was that clause 6 of the Consent Agreement expressly conferred such jurisdiction and extended the time for referral, permitting adjudication of all disputed matters in the final account.

 

Mr Justice Ramsey held that the adjudicator did have jurisdiction. He concluded that the Consent Agreement expressly gave the adjudicator authority to determine its effect and interpretation, including jurisdictional matters. The judge found that both parties had agreed to this arrangement and were bound by it unless and until a court revised the decision.

The court further ruled that, even without the Consent Agreement, Dalkia’s own correspondence amounted to a concession of the adjudicator’s jurisdiction, forming an ad-hoc agreement. Mr Justice Ramsey found that the Consent Agreement extended the time for referring all aspects of the dispute, overriding any time bar set by the NEC3 Adjudication Table. He concluded that the NEC3 clauses, particularly W1.3, could be varied by subsequent agreement, as occurred here. Therefore, Dalkia’s jurisdictional objections failed. The adjudicator’s award of £1,054,800.60 to WSP was upheld, and WSP was granted summary judgment for that amount. The court also noted that, if any claims lacked jurisdiction, the adjudicator’s decision was severable and enforceable in part.

 

This case confirms that the strict timelines in NEC3 clause W1.3 may be varied by express post-contractual agreement.  The judgment emphasises the importance of understanding that clause W1.3 functions as a condition precedent. However, it also makes clear that parties retain autonomy to override such provisions by mutual agreement. This can have significant implications in managing final account disputes, especially where procedural deadlines have passed.

Those serving as project managers, consultants, and clients should exercise caution when entering into side agreements that concern dispute resolution mechanisms. Precision in drafting and clarity about the scope and purpose of such agreements are critical to avoiding procedural disputes.

The court’s decision reiterated that adjudicators can be empowered to determine jurisdictional issues if such authority is granted by agreement, even if not explicitly stated in the contract.