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Knife-Edge Timing Solves £2.4 Million Construction Contract Dispute

In a striking piece of knife-edge timing, a property developer has convinced the High Court that it was reassigned rights under a construction contract just before a multi-million-pound dispute was placed before an adjudicator. The decision means that the developer is entitled to enforce the adjudicator's £2,477,152 award in its favour.

The developer had employed a contractor to carry out refurbishment works on retail and office space at a cost of almost £19 million. The project was plagued by delays and the developer eventually purported to terminate the contract. The award was made after the developer commenced the adjudication proceedings.

In resisting enforcement of the award, the contractor argued that the developer had assigned its benefits under the contract to a third party and was thus not entitled to commence the adjudication under its own name. On that basis, it was submitted that the award was invalid because the adjudicator lacked jurisdiction.

The Court ruled that such an assignment had indeed taken place. However, it went on to find that, very shortly before the adjudication was commenced – and possibly on the very same day – all rights under the contract had been reassigned to the developer. In the circumstances, the contractor had no real prospect of successfully defending the developer's claim.

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    One of the disadvantages of complex arrangements, such as the assignment and reassignment of rights, is that they create more to argue about. However, in this case the developer got the procedures right and was able to enforce the adjudicator's decision.

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