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Tilbury Douglas JV loses arbitration bid

15 Nov 22 Tilbury Douglas Construction and its joint venture partner Doosan Enpure have lost their legal battle against Northumbrian Water over their Horsley water treatment works (phase two) contract.

In the Technology & Construction Court, judge Finola O’Farrell has ruled that the joint venture of Tilbury Douglas Construction and Doosan Enpure must pay Northumbrian Water nearly £22.5m.

When Northumberland Water terminated the JV’s contract in May 2021 – more than five years into the contract – the client claimed that it was owed £50,999,343.30 (including VAT) for contractor default. The contracting JV disputed that any sums were payable and claimed it was entitled to £32,854,840.23 as an adjustment to the prices under the contract in respect of claims and compensation events.

They went to adjudication, the outcome of which Michael Turgoose directed the contractors to pay Northumbrian Water £22,458,540.04 (including VAT) plus interest and 90% of the adjudicator's fees and expenses.

The JV said it did not have to pay what the adjudicator demanded, claiming that the dispute should now move from adjudication to arbitration. It applied for stay of the proceedings pursuant to section 9 of the Arbitration Act 1996.

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The decision for Finola O’Farrell, judge in charge of the Technology & Construction Court since March 2021, was whether any dispute about non-payment of the adjudicator's decision, including enforcement, must be referred to arbitration.

He judgment cited previous cases and concluded that JV had “not identified any grounds of challenge to the decision for want of jurisdiction or procedural unfairness, any right to challenge the validity of the decision has been lost and the decision is binding unless and until revised in arbitration.”

She concluded: “For those reasons, the court refuses the JV's application for a stay. The adjudication decision is valid and enforceable; there is no justification for a stay of proceedings for arbitration.”

A Tilbury Douglas spokesperson commented: “This court ruling refers to a legacy joint venture project, therefore, Tilbury Douglas only has an obligation for a share of the settlement sum, which has already been accounted for in its trading position. We will make no further comment on commercial matters.”

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