08 May 2019

Case Law Review: Hitachi Zosen Inova AG v John Sisk & Son Limited [2019] EWHC 495 (TCC)

by Mark Woodward-Smith, Group Managing Director -

In the case of Hitachi Zosen v John Sisk1 and Son Ltd , the High Court’s ruling provides some clarity on when an issue can be looked at again within the adjudication process. It is important to note that the ruling does not establish a new principle but shows consideration for whether two disputes are the same or substantially the same by looking at what was decided in a prior adjudication, and what has been referred in a later adjudication. Furthermore, where new substantiation is provided, this could mean that a later dispute is not the same as a previous dispute.

This principle was also considered in Quietfield Ltd v Vascroft Construction Ltd2 and Harding v Paice3. In the latter case, Jackson LJ said: “One must look at what the first adjudicator actually decided. Ultimately it is what the first adjudicator
decided, which determines how much or how little remains available for consideration by the second adjudicator.”

The claimant, Hitachi Zosen Inova AG (“Hitachi”), was employed to specify, design, engineer, construct, commission and test a multi-fuel power plant on the site of the existing coal-fired power station at Ferrybridge in Yorkshire. Hitachi engaged John Sisk & Son Limited (“Sisk”) to provide design and construction services for the project by a contract dated 29 March 2012 (“the Contract”), for a contract price of more than £44 million. The contract allowed for adjudications in accordance with the TeCSA
Adjudication Rules.

A dispute arose regarding one of the items of additional work known as ‘Event 1176’ which was described as “Acceleration Works to the Boiler Hall construction as agreed” and was valued by Sisk at £1,092,497.45. It was submitted for payment under Application No. 6 as 100 percent complete. The respective Payment Notice issued by Hitachi for Application No.6 rejected the claim for any payment for Event 1176 and asserted as an overall position that Sisk had been overpaid. Given this dispute, Sisk referred some of the items included in Application No. 6 to adjudication. The items included Event 1176 and within the Notice of Adjudication, Sisk requested a “declaration as to the correct valuation of each of the items in dispute that have been referred to the adjudicator”. This was the second adjudication between the parties and the adjudicator concluded that Sisk was instructed to accelerate its works as claimed and concluded “that this is a variation that requires valuation”. However, the adjudicator decided that “I do not have sufficient details to value the works and hence for the purposes of Payment Notice 6 my value is £nil.”

Sisk again sought recompense for Event 1176 and relied upon existing evidence as well as new documentation it submitted to substantiate their claim. The application for payments was in the revised sum of £999,595.59. Hitachi rejected the claim asserting it has no contractual merit. Sisk referred the matter to adjudication, which was the eight adjudication between the parties. The adjudicator found that Sisk was entitled to a payment of £825,703.17 plus VAT and interest.

At the outset of the adjudication, Hitachi raised a jurisdictional challenge since further to paragraph 9(2) of the Scheme, it is a general statement of principle that an adjudicator does not have jurisdiction to decide a dispute that is the same or substantially the same as a dispute that has previously been decided in an earlier adjudication.

The High Court ruled that in this case, this was not the same dispute as the second adjudication and that the adjudicator did have jurisdiction to decide the dispute, as whilst the earlier adjudicator had decided that Event 1176 was a variation that required valuation, the Adjudicator had declined to put a value on Event 1176 due to the lack of substantiation provided at the time.

In summary, the second adjudication had decided the liability but not the value of thevariation. The dispute in the eighth adjudication was therefore not the same as the dispute in the second adjudication and consequently, the decision made by the adjudicator in the eighth adjudication was enforceable.

To download a PDF version of Mark’s article please click the link here: Hitachi-v-Sisk-TW

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