Wales And West Utilities Ltd v PPS Pipeline Systems GmbH

JUDGMENT

Mr Justice Akenhead:

These two sets of proceedings relate to a dispute or possibly two disputes arising between the parties out of a contract dated 4 May 2012 ("the Contract") for the supply and construction by PPS Pipeline Systems GmbH (“PPS”) of a new gas pipeline from Llanwrin in Powys to Dolgellau in Gwynedd; some 24 kilometres of steel pipe was to be laid in Snowdonia. The Employer was Wales & West Utilities Ltd (“Wales”). The Contract value was some £8,629,060.18. The primary issues between the parties relate to the jurisdiction of the adjudicator in two adjudications known as Adjudication Nos. 2 and 3 and in particular the scope of the dispute referred to him in Adjudication 2. The second set of proceedings, by which a court order was sought for the appointment of an arbitrator, has been resolved, subject to questions of costs.

Background

The contract was based on the NEC3 Engineering and Construction Contract (June 2005 Edition with later amendments) and provision was made for adjudication by way of Option W2. Apart from referring to disputes being "referred to and decided by the Adjudicator", there is little that assists otherwise. W2.3 (in the standard NEC3 present tense) states:

“(1) Before a Party refers a dispute to the Adjudicator, he gives a notice of adjudication to the other Party with a brief description of the dispute and the decision which he wishes the to Adjudicator to make…

(2) Within seven days of a Party giving a notice of adjudication he

refers the dispute to the Adjudicator…

(4) The Adjudicator may

review and revise any action or inaction of the Project Manager or Supervisor related to the dispute…”

To understand the nature of the issues between the parties in this case, it is necessary to refer to a number of the Contract’s provisions:

(a) The NEC Conditions by Clause 16 provide for the Project Manager and the Contractor to give each other early warning of events which might increase costs, cause delays or impair performance of the completed works and then to cooperate as to how to overcome or address such events.

(b) Clause 60.1 identifies "compensation events" which may give rise to the Contractor becoming entitled to extensions of time and to payments for related costs. They include:

“60.1(1) The Project Manager gives an instruction changing the Work Information…

60.1(14) An event which is an Employer’s risk as defined under clause 80.1 of this contract.”

One of the standard compensation events was exc