Aidan Reay successfully resists jurisdiction challenge in the TCC

Appearing on behalf of the Claimant in the Technology & Construction Court, Aidan Reay, instructed by Paul Booth of Ramsdens, has successfully resisted an application seeking to strike out or stay the claim on the basis that the court did not have jurisdiction to hear the claim because the Claimant was obliged to first refer the matter to adjudication under the terms of NEC3 following the decision of the Outer House of the Court of Session in The Fraserburgh Harbour Commissioners v McLaughlin & Harvey Limited [2021] CSOH 8.

His Honour Judge Stephen Davis (sitting as a judge of the High Court) accepted the Claimant’s argument that, whilst the purchase orders did refer to NEC3 Engineering & Construction Contract June 2005 (with June 2006 amendments), this reference was inadequate to incorporate the NEC3 dispute resolution terms into the contract between the parties because:

1. NEC3 terms require parties to the contract to supply a range of information to complete the contract and so the NEC3 terms cannot be incorporated by reference unless and until the information necessary to complete the contract is agreed and the applicable options have been chosen. In this case, there was effectively a bare reference to NEC3 terms and this was insufficient to furnish the parties with a complete suite of terms.
2. Even if the NEC3 terms could have been incorporated by a bare reference, the clause imposing mandatory adjudication before litigation could be commenced (clause W2) was an option and it would need to be selected by the parties before it would apply. The reference to NEC3 within the purchase order did mention certain options but not clause W2 and so the clause was not incorporated.

The decision provides useful confirmation that terms will not be incorporated by reference where the terms to be incorporated are missing important information required to give them full effect and that, where contractual options need to be selected by the parties, the court will not make the decision for the parties in the absence of them having agreed the options.

Having determined that the NEC3 terms did not apply, the court did not have to deal with the question of whether the decision to strike out the claim in Fraserburgh Harbour Commissioners should be followed in England and Wales or whether the appropriate response to a claim commenced without prior recourse to adjudication should merely be stayed for the adjudication to take place.