1) Stay of legal proceedings pending adjudication – Greater Glasgow health Board v Multiplex Construction Europe Ltd and others [2021] CSOH 115 (5 November 2021) Lord Tyre The defenders built the Queen Elizabeth University Hospital in Glasgow, under an NEC3 Engineering and Construction Contract (ECC), Option C. The pursuers alleged there were defects in the building and to avoid limitation issues, commenced proceedings in court claiming £72.8 million. NEC3 contains at W2 a tiered dispute resolution clause and provides that a dispute cannot be referred to “the tribunal” without first having been referred to adjudication. The defenders said that the bringing of an adjudication was a condition precedent to any court proceedings and thus the court action was incompetent. The pursuers claimed the dispute fell outside the scope of clause W2 in that it was a complex matter with a multitude of “disputes” which could lead to as many as 22 adjudications. They also disputed the claim that adjudication was a condition precedent to the bringing of court proceedings and averred that the court retained jurisdiction despite clause W2. Lord Tyre giving judgment, confirmed the principle that a tiered dispute resolution clause was to be upheld[6]. In reaching his conclusion, the judge considered that the dispute fell within the scope of clause W2. There was no general proposition that some disputes were too large, too complicated or raised too late to be suitable for adjudication. In any event, clause W2.4 envisaged that the parties could fall back on the tribunal (in this case the court) if necessary to
obtain a final resolution of the matter. Furthermore, as Lord Briggs said in Bresco [7] adjudication is now a mainstream dispute resolution process in its own right and often achieves a final resolution because the adjudicator's decision is not challenged. The judge accepted that clause W2 acted as a contractual bar to referring a dispute to the tribunal without first adjudicating but rejected the submission that the action was incompetent. The case was indistinguishable from a situation where parties had agreed to arbitrate their disputes, where the court's jurisdiction was not totally ousted though it was unable to deal with the merits of the dispute. Therefore it was inaccurate to describe the referral of a dispute to adjudication under clause W2 as a condition precedent to raising a court action. However, in the absence of a waiver from the defenders, it was something the court could not entertain until the adjudication process had concluded. The correct course was to sist (stay) the court action pending the outcome of the adjudication process.
Comment
This case rested on Scottish law and procedure, but given that Option W2 is widely used throughout the UK, it will be of wider value. The conclusion that clause W2 is not a condition precedent to arbitration or court proceedings is interesting, although it seems unlikely to make any difference in practice.
[6] Applying Lord Carloway's reasoning in The Fraserburgh Harbour Commissioners v McLaughlin & Harvey Ltd [2021] CSIH 58. [7] Bresco Electrical Services Ltd (In Liquidation) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC
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