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It is notoriously difficult to resist payment following a call on an on-demand guarantee or bond. Generally, nothing less than a seriously arguable case of fraud by the beneficiary will suffice. The stringency of this test is backed by strong policy arguments militating in favour of protecting the integrity of the banking system. However, even where a seriously arguable case of fraud is made out, the balance of convenience may weigh against injunctive relief, as demonstrated recently in Tetronics (International) Ltd v HSBC Bank plc. Continue reading

REUTERS | Dado Ruvic

For many years, parts of the construction sector have pushed for improvement of the market’s treatment of retention monies. Post-Carillion and its devastating impact on suppliers, however, matters may have reached a tipping point.

On 9 January 2018 – a few days before the construction giant’s collapse – the backbencher Peter Aldous introduced the Construction (Retention Deposit Schemes) Bill under Parliament’s Ten Minute Rule.

Given the importance of government support in mustering a majority in the House of Commons, relatively few Private Members’ Bills (PMB) become law. To this end, proponents of the “Aldous Bill”, not least the Waveney MP himself, have been busily promoting its merits within the industry and rallying support among politicians ahead of it being debated by MPs at the second reading. Continue reading

REUTERS | Alexandre Meneghini

The Construction Act 1996 turned 20 this month, which means that for the last 20 years the UK’s construction industry has been subject to its statutory adjudication and payment rules. I was just a couple of years out of university 20 years ago, so I’ve never really known a world without these things (something that Lucy Garrett QC noted in her video for Practical Law). I remember doing presentations to clients in the months leading up to May 1998 on the implications of the Act and, in particular, the payment and withholding notices regimes. It seems a long time ago now!

Looking back, a lot has happened since May 1998 and I thought that I would highlight just a few aspects of adjudication. Given the volume of case law and the limited space I have here, this is by no means a comprehensive review. Continue reading

REUTERS | Russell Cheyne

Last year, I blogged on the first instance decision of the Scottish courts in SSE Generation Ltd v Hochtief Solutions AG and another. That decision has been overturned by the Inner House, Court of Session (the Scottish equivalent of the Court of Appeal) in an important judgment that sheds light on how the English courts might interpret the provisions of the NEC engineering and construction contract (ECC) that govern the extent of a design and build (D&B) contractor’s design liability.

My colleague, John Hughes-D’Aeth, recently blogged on the joint insurance aspects of the case, but in this blog I focus on contractual interpretation. Continue reading

REUTERS | Insiya Syed

Sometimes being sent a court judgment can prove to be a welcome distraction from decision writing and that is certainly the case with HHJ Melissa Clarke’s judgment in Martinez (t/a Prick) and another v Prick Me Baby One More Time Ltd (t/a Prick) and another.

If you haven’t seen this one (and why would you, it is a decision from the Intellectual Property Enterprise Court), it is worth a read and I guarantee it will make you chuckle. It certainly made me chuckle (and the boys when I told them about it when I got home, although the names alone may have been enough to do that!). Continue reading

REUTERS | Jean-Paul Pelissier

Section 33 of the Arbitration Act 1996 imposes a duty on arbitrators to “act fairly and impartially as between the parties” and section 24(1)(a) provides that the court has the power to remove an arbitrator if circumstances exist that “give rise to justifiable doubts as to his impartiality”.

This week I’m looking at the Court of Appeal’s decision in Halliburton Company v Chubb Bermuda Insurance Ltd and others, where the court had to decide whether an arbitrator should be removed under section 24 in circumstances where he had accepted multiple appointments in overlapping cases without telling the parties.

Continue reading

REUTERS | Mukesh Gupta

My colleague, Natalie Wardle, commented on the Supreme Court’s decision in Gard Marine and Energy Ltd v China National Chartering Company Ltd in her May 2017 blog. As she noted, the judgments (and the 3:2 majority verdict) left a number of questions unanswered. Two of these were:

  • What is the strength of the implied term that one co-insured party may not sue another, and when it may be rebutted.
  • The juridical basis for the implied term and its consequential impact on sub-contractors.

These issues have arisen in two recent cases, which I propose to examine briefly in this blog. They throw a little more light on the situation, but by no means provide all the answers. Continue reading

REUTERS | David Mdzinarishvili

Much has been written about Fraser J’s judgment in Gosvenor London Ltd v Aygun Aluminium UK Ltd, with both Tim Sampson and Abdul Jinadu discussing various issues on this blog.

What I thought was interesting about the judgment was how it illustrates the tension between adjudication and the principle embodied within it of keeping cash flowing, and how a successful challenge on enforcement may stop it. Ironically, this is often at a time when a party most needs cash to keep flowing.  Continue reading

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Anyone with a substantial adjudication practice will have experience of a lay client asking these questions (or some version thereof):

“Why can’t we call them crooks? They [the other party] are clearly fraudulent. Why can’t we say so?”

As a legal practitioner you have to patiently explain that fraud can only be pleaded on specific instructions and must be supported by prima facie evidence. However, despite the reluctance of lawyers to plead fraud, it is a fact that fraud has always been an issue in adjudication and in these days of the “smash and grab” adjudication, Coulson J’s (as he then was) decision in Grove Developments Ltd v S&T (UK) Ltd notwithstanding, alleging fraud is an increasingly attractive argument of last resort to avoid making payment following an unfavourable adjudication decision.

In Gosvenor London Ltd v Aygun Aluminium UK Ltd, Fraser J had reason to consider the relationship between fraud and adjudication. In a case with some extraordinary facts, he restated established principles and also made some new law by expanding the ways in which allegations of fraud can be deployed in an attempt to avoid paying sums awarded by  an adjudicator to a party suspected of questionable behaviour. Continue reading