The Technology and Construction Court (TCC) decision in Darchem Engineering Limited v Bouygues Travaux Publics and another provides important guidance on adjudication jurisdiction in the context of joint venture arrangements. The case serves as a reminder that, even in closely integrated project structures, adjudication remains a consensual process grounded in contract.
The judgment makes clear that participation in a joint venture, or involvement in delivery of the works, does not of itself render a party subject to adjudication. For those operating through JVs, SPVs or hybrid contracting arrangements, there is continued importance in being precise when identifying who is, and who is not, a party to adjudication proceedings.
Facts
The initial dispute leading to adjudication arose out of works undertaken at the Hinkley Point C nuclear power station in Somerset.
The main contractor on the project was BYLOR, an unincorporated joint venture comprising Bouygues Travaux Publics and Laing O’Rourke Delivery Limited. BYLOR was responsible for delivering the principal civil engineering works package.
BYLOR engaged another unincorporated joint venture, EDEL, as a subcontractor. EDEL was formed by Darchem Engineering Limited (‘Darchem’) and Framatome Limited. The subcontract related to specialist works (relating to stainless‑steel pools, pits and tanks) together with associated works for the nuclear facility.
Following the emergence of disputes under the subcontract, Darchem commenced three adjudications in its own name. In each case, the adjudicator rejected jurisdictional objections and found in Darchem’s favour. The question of jurisdiction ultimately came before the TCC when Darchem applied for summary judgment to enforce the third adjudicator’s decision, which required payment of £23.9 million.
Key Issues
The key issues for the TCC to consider were therefore:
- Whether Darchem itself was a party for the purposes of the adjudication; and
- Could Darchem commence adjudication proceedings in the name of the subcontractor.
The TCC’s Decision
Mr Justice Constable concluded that Darchem was not a party to the subcontract in its own right. Although Darchem was a member of the EDEL joint venture, the subcontract identified the contracting party as the joint venture itself rather than its individual participants.
On a proper construction of the subcontract, Darchem did not assume separate contractual rights or obligations under the agreement and therefore did not fall within the definition of a “Party” for the purposes of the adjudication provisions. As a result, Darchem could not rely on the statutory or contractual adjudication regime in its own name.
It followed from this that Darchem also lacked standing to refer the dispute to adjudication on behalf of the EDEL joint venture. The Court rejected the argument that Darchem was entitled to act as a representative of the joint venture when commencing adjudication proceedings.
In the absence of clear contractual authority, either within the subcontract itself or by operation of clause 12.6, Darchem had no standing to invoke the adjudication process for the joint venture. The referral was therefore invalid, as it had not been made by, or with proper authority from, the contracting party.
Takeaways
This case highlights the importance of express drafting; where it is intended that individual companies within a joint venture should be entitled to initiate proceedings independently, such entitlement must be expressly conferred by the contract. A provision that the joint venture members act jointly and severally, or are jointly and severally liable, will not of itself achieve this.
The judgment also pointed out the fact that, should Darchem’s position have been allowed, it would have given rise to the potential for an unmanageable and potentially absurd number of separate adjudications, with each joint venture participant able to pursue proceedings independently in respect of the same dispute.
In spite of the above, Darchem has been granted permission to appeal to the Court of Appeal, and it is anticipated that the appeal will be heard later this year.
This decision highlights the importance of clear contractual drafting and careful consideration of party status in construction disputes involving joint venture structures. Druces’ Dispute Resolution team regularly advises clients on adjudication strategy, jurisdictional challenges and the enforcement of adjudicators’ decisions across a broad range of construction and infrastructure projects.
James Sharp, Solicitor – Dispute Resolution at Druces LLP
For further information, contact James at j.sharp@druces.com or +44 (0)20 7216 5594, or contact Richard Bailey at r.bailey@druces.com or +44 (0)20 7216 5516.
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