The question of whether a power plant was really a power plant was at the centre of a recent construction adjudication dispute. The court was asked to decide whether the ‘primary activity’ of a development was the generation of power or the incineration of waste. This distinction would make all the difference about whether the adjudicator had jurisdiction over the dispute or not.
Most construction disputes can be settled by adjudication; however there are a few exceptions set out in section 105 of the Construction Act 1996. Among others, this excludes projects where the ‘primary activity’ of the development is power generation. It was this exclusion that was at the centre of the dispute in Engie Fabricom UK Ltd v MW High Tech Projects UK Ltd.
MW High Tech was the main contractor on a major project to build a waste to energy plant in Hull. It appointed Engie Fabricom as a sub-contractor to construct the fluidised bed gasification power plant.
A dispute between the parties was referred to adjudication, where Engie Fabricom was awarded just over £27,000 plus VAT and costs. When MW High Tech failed to pay, Engie Fabricom started a court action requesting summary judgement and enforcement of the adjudicator’s decision.
In response, MW High Tech claimed that the adjudicator did not have jurisdiction. It argued that the project’s primary activity was power generation, so could not be subject to adjudication under section 105 of the Construction Act.
Engie Fabricom countered that the primary activity of the plant was in fact the incineration of waste, with the generation of power being a secondary benefit.
The judge decided that MW High Tech had a realistic prospect of establishing that the primary activity at site was power generation and ruled that the dispute should go to trial rather than being settled by summary judgement. The outcome of the trial is awaited.
“Going to such lengths over a relatively small £27,000 dispute seems a lot of effort and expense for little reward,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “However it is likely that the parties were seeking to establish positions with other goals in mind. It is hard not to think that this effort might have been better employed earlier when they considered the provisions of their contract.”
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