Notices of dissatisfaction under the NEC

United Kingdom

Two recent cases in the TCC have clarified the law in relation to the requirements for a valid notice of dissatisfaction under the NEC form. Such notices are required if a party is to preserve the right to challenge an adjudication decision. This Law-Now provides an overview of the requirements for a valid notice of dissatisfaction in light of the recent caselaw.

Notices of dissatisfaction: what are they?

Under the Construction Act, an adjudication decision is temporarily binding until finally determined by court or arbitration (i.e. the tribunal). However, some contracts require a notification to be issued, within a certain timescale, if a party is to preserve the right to challenge an adjudication decision. Under the NEC suite of contracts this is called a notice of dissatisfaction.

Two recent cases have considered the detail to be included in a notice of dissatisfaction, where and to whom it is to be sent and whether the issue of a notice impacts the enforceability of a decision before the dispute in question is considered by the tribunal.

Where should the notice be sent?

The TCC considered this question in Transport for Greater Manchester v Keir Construction in the context of the standard NEC requirement that communications be sent to the “last address notified by the recipient for receiving communications”.

The parties had been subject to an adjudication, and following the decision, TfGM sent a notice of dissatisfaction through its solicitor to Keir’s solicitors.

Prior to the adjudication, the last notified address was set out in the contract. However, during the adjudication, both parties gave their solicitors' contact details for receiving communications connected to the adjudication.

Keir argued that the notice was invalid because it was sent through solicitors rather than to its registered address or through the project extranet, as set out in the contract.

The court disagreed noting that the details exchanged between the parties’ lawyers became the last address notified under the contract. The notice was therefore served validly.

What level of detail is required?

The Court in TfGM v Keir also considered what level of detail was required, given the contract did not stipulate a form of words which had to be used in a notice of dissatisfaction.

Kier had commenced an adjudication for an extension of time and the repayment of delay damages withheld by TfGM. The adjudicator found in favour of Kier. In order to preserve its right to challenge the decision, the NEC provisions required TfGM to notify Kier “of the matter which [it] disputes and state that [it] intends to refer it to the tribunal” (clause W2.4) and also that the notification be “communicated separately from other communications” (clause 13.7).

TfGM’s solicitors wrote to Kier’s solicitors stating that the adjudicator had “erred in law and in his interpretation and application of the express terms of contract between the parties in a number of fundamental respects.” The letter went on to (i) state that TfGM would comply with the decision on a provisional basis; (ii) request an invoice from Kier for payment purposes; and (ii) request confirmation as to whether Kier’s solicitors would accept service of formal proceedings on Kier’s behalf.

Keir argued that the notice was invalid as it was not precise enough and because it contained references to other matters, it did not comply with the contract requirements.

The court found that given the notice was clear, unambiguous and was sufficient in detail to inform Keir that the adjudicator's decision was not accepted and was being referred to court, it was a valid notice in terms of NEC. In the court’s judgment:

“A valid notice would have to be clear and unambiguous so as to put the other party on notice that the decision was disputed but did not have to condescend to detail to explain or set out the grounds on which it was disputed.”

The fact other matters were referred to within the notice of dissatisfaction did not invalidate it, nor preclude it from setting out that TfGM was dissatisfied with a matter decided by the adjudicator and it intended to refer the matter for final determination.

Does the issue of a notice affect enforcement challenges?

Another recent TCC decision, Prater Limited v John Sisk & Son (Holdings) Limited, considered this apparently novel question. Sisk argued during enforcement proceedings, following a fourth adjudication between the parties, that the adjudicator lacked jurisdiction because the decision relied upon two previous decisions which were unenforceable because Sisk had issued notices of dissatisfaction against those decision.

The court rejected this argument on the basis that the decision is binding on the parties “unless and until revised by the tribunal”. Although a notice of dissatisfaction had been issued, the dissatisfied party must do more than serve a notice, it must “bring and make good that challenge before the [tribunal]”.  On the other hand, the court confirmed that the service of a notice of dissatisfaction was required if a party under the NEC terms wishes to challenge the enforceability of an adjudication decision on jurisdictional or natural justice grounds (in addition to any challenge to the merits of the decision).

Conclusion

It is imperative that parties contracting under the NEC form are aware of and follow the contractual position in relation to notices of dissatisfaction. If the timescales or service requirements are not fulfilled, the notice will be invalid and the adjudication decision in question will become binding on the parties, both as to the merits as well as any jurisdictional or natural justice challenges. It is useful to remember that copies of the notice can be sent to more than one address to ensure that the last notified address is covered.

Whilst the importance of serving a notice of dissatisfaction cannot be overstated, the case law sets a relatively low bar in terms of what is to be notified. There is no requirement for the grounds of the dispute to be set out, as long as there is sufficient detail to inform the recipient that the adjudicator's decision is not accepted and it is the sender’s intention to refer the dispute to the tribunal.

Finally, issuing the notice of dissatisfaction purely keeps the door open to further consideration of the dispute and the adjudication decision remains binding on parties (and subsequent adjudicators) unless and until revised by the tribunal.

References:

Transport for Greater Manchester v Keir Construction Limited (t/a Keir Construction – Northern) [2021] EWHC 804 (TCC)

Prater Limited v John Sisk & Son (Holdings) Limited [2021] EWHC 1113 (TCC)