Adjudication: should you pay up to a financially troubled party?

The Technology and Construction Court has recently looked again at the difficult issue of enforcement of adjudicator's decisions where the successful party is having financial problems.

In this case, the contractor was not in liquidation or administration, but there were ongoing winding up proceedings against it.  The facts relevant to the adjudication were also already the subject of a claim in the courts between the parties. 

The judge analysed the current law and confirmed that:

  • it was inappropriate for the court to fail to enforce the adjudicator's decision, because the court would be pre-empting the success of the winding up petition.
  • a stay of execution of the enforcement would be granted until after the resolution of all the disputes between the parties as:
    • the judge was in no doubt that the contractor would not be able to repay the sums, particularly as it had ceased trading
    • the judge found that the contractor's financial problems were not caused by the employer's failure to pay the adjudication award.

The employer therefore did not have to pay the sums to the contractor before the expected date of the hearing for the winding up petition.

Alexander & Law Ltd v Coveside (21BPR) Ltd [2013] EWHC 3949 (TCC)

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