Imtech Inviron Ltd v Loppingdale Plant Ltd (TCC - 3.12.2014)
The adjudication clause of the framework agreement was not incorporated into the sub-contract despite it providing that the sub-contractor was to assume the contractor's obligations, liabilities and risks in that contract
3 December, 2014
IMTECH INVIRON LTD v LOPPINGDALE PLANT LTD
Technology and Construction Court
3rd December 2014
pursuant to which the employer was entitled to issue contracts known as task orders and appointed the sub-contractor to carry out some or all of the work included in task orders by way of issuing purchase orders to it. A dispute arose between the contractor and the sub-contractor respect of an interim payment application, which the sub-contractor referred the dispute to adjudication. The adjudicator awarded the sub-contractor a specified sum which the contractor refused to pay.
The sub-contract provided that the sub-contractor was to perform and assume, as part of its obligations under the sub-contract, the contractor's obligations, liabilities and risks in the framework agreement relating to the carrying out of the works as if they were expressly referred to in the sub-contract as obligations, liabilities and risks of the sub-contractor. The framework agreement’s adjudication provisions set out machinery for the nomination and appointment of an adjudicator. However, the sub-contractor did not comply with this machinery in the securing the adjudicator’s appointment. The contractor contended in the adjudication and in the enforcement proceedings that the adjudicator lacked jurisdiction on the ground that the sub-contractor did not comply with the adjudication clause’s machinery. The sub-contractor contended that the adjudication clause had not been incorporated into the sub-contract and that it had validly secured the adjudicator’s appointment pursuant to the Scheme for Construction Contracts which had been incorporated into the sub-contract in the absence of an adjudication clause.
Edwards-Stuart J accepted the sub-contractor’s contention and enforced the adjudicator’s award. The true construction of the sub-contract was that it only incorporated those terms from the framework agreement and/or the task order with which the sub-contractor had to comply in order that not only its obligations but also those of the contractor were met. There was, for example, no self-evident reason why the sub-contractor should have to carry the same level of liability insurance as the contractor, which accounted for the clause in the framework agreement providing that that was to be the case. Similarly it was far from evident that the parties intended the adjudication provisions of the framework agreement to be incorporated into the sub-contract or any of the purchase orders issued by the contractor.