Notices of dissatisfaction under the NEC: an important qualification

United Kingdom

A recent TCC decision has provided further guidance as to what is required for a valid notice of dissatisfaction under the NEC form. The decision confirms that a notice of dissatisfaction is required for challenges to enforcement as well as to the merits of an adjudication decision. However, challenges to enforcement must be separately specified and will not be covered by a general expression of dissatisfaction with the decision.

Notices of dissatisfaction: a recap

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.

In Transport for Greater Manchester v Keir Construction, the TCC considered the level detail required for a valid notice of dissatisfaction under the NEC form. The NEC does not address this expressly and the Court concluded that 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”.

In Prater Limited v John Sisk & Son (Holdings) Limited, the TCC found that a notice of dissatisfaction under the NEC form was required both for challenges to the validity or enforceability of an adjudicator’s decision as well as challenges to the substantive merits of a decision.

For a more detailed review of these two recent TCC cases, see our previous Law-Now here.

Metropolitan Borough Council of Sefton v Allenbuild Limited

In this most recent case the TCC has reconsidered the detail requirements of an NEC notice of dissatisfaction where a challenge to the validity or enforceability of an adjudicator’s decision is concerned.

The dispute concerned alleged defects relating to works carried out under an NEC Contract. The Council obtained an adjudicator's decision awarding it £2.2 million plus interest and commenced court proceedings to enforce that decision.

Allenbuild resisted enforcement and relied on a notice of dissatisfaction issued in relation to the “entirety of the Adjudicator's Decision including all of the Adjudicator's conclusions, reasoning, and decisions”. It claimed this prevented the “decision from being final and binding and leaves open any challenges on any basis whatsoever (whether as to enforceability or final determination)”.

The Court did not accept that argument and noted that “whilst a notice of dissatisfaction need not descend into the details of the substantive challenge, the issue of the validity of an adjudication decision is of a fundamental different character from its merits”.

The Court found that in order for the notice of dissatisfaction to be valid it ought to make it clear whether a challenge is being made to the validity of an adjudicator’s decision on jurisdictional grounds, instead of, or in addition to, a challenge to its substantive merits.  The wording above was not sufficient as it did not make clear that a challenge was being made to the validity of the adjudicator’s decision, on jurisdictional grounds, in addition to the challenge against the merits of the decision.

Conclusions and implications

This case highlights an important qualification to the rule that a generally worded notice of dissatisfaction will be valid under the NEC form. In order to preserve any challenge to enforcement of an adjudication decision, parties will now need to make specific reference in a notice of dissatisfaction to enforcement challenges as well as challenge to the substantive merits of the decision. It is unclear from the Court’s judgment whether the nature of the enforcement challenge needs to be to be spelt out in the notice. In keeping with previous decisions, a large amount of detail is unlikely to be required, but it would be prudent for those drafting such notices to identify in general terms whether the enforcement challenge concerns jurisdictional issues on the one hand or natural justice issues on the other.

References:

TheMetropolitan Borough Council of Sefton v Allenbuild Limited [2022] EWHC 1443 (TCC)

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

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