Beware time-bar provisions

Adjudication is sometimes described as a rough and ready from of speedy dispute resolution and is mandatory for certain construction contracts in the UK. Where it is mandatory it can be commenced at any time.

Where the contract does not come within the mandatory statutory requirements, eg for a residential home-owner or on a power generation site, the parties can agree to contractual adjudication. That adjudication process can also be subject to specific time constraints.

Time-barred?

A time-bar provision is a form of condition precedent. Essentially it states that:

  • a party to the contract must carry out a specific task or provide a notice
  • by a specific date or within a clear time period
  • it is entitled to a remedy or to invoke a process.

The clause may also say that if that date is missed then the party is no longer entitled to the remedy or process.

For example, the NEC Short Form Contract states

A party may refer a dispute to the adjudicator if the party notified the other party of the dispute within four weeks of becoming aware of it Clause 93.3

Although the judicial meaning of both dispute and awareness is much debated under English law, the court had to consider whether one party was out of time to start an adjudication.

The background

The problem arose on a very large refurbishment and building project between the home-owners  and a specialist contractor.

The specialist contractor sent an invoice for its fees on 17 January and chased payment on 6 February. Lawyers acting for the home-owners sent a letter on 19 February to the specialist contractor stating that there was no contract between them [see what lessons you can learn from the failure of their contract process]. The first letter was followed up with further arguments and evidence on 16 March.

This was enough to create a dispute and – for the purposes of the quoted clause – time started to run when the lawyers sent their second letter, at the latest.

As the notice of adjudication was not sent until 25 April, it was out of time. Although the judge had no great enthusiasm for this contractual time-bar on adjudication, the contract was clear and the time-bar was upheld.

What should you do?

Pay careful attention to any time periods specified in your contract – failure to comply can adversely limit your rights, remedies or other options for resolving issues.

Case: Sitol Limited v Finegold & Anor [2018] EWHC 3969; See also this article by CMS on the case.

 

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