Introduction

The case of Greater Glasgow Health Board v Multiplex Construction Europe Ltd and Others ([2021] ScotCS CSOH_115) adjudicated by the Scottish Court of Session has established significant precedent concerning the interplay between contractual adjudication clauses and court jurisdiction. The pursuer, Greater Glasgow Health Board, initiated an action seeking £72,800,000 in damages due to alleged construction defects in the Queen Elizabeth University Hospital project in Glasgow. The defendants included Multiplex Construction Europe Ltd (the main contractor), BPY Holdings LP and BPY Holdings GP Limited (guarantors), Currie & Brown UK Limited (the lead consultant), and Capita Property and Infrastructure Limited (the project supervisor).

The core issues revolved around whether the contractual dispute resolution clauses, specifically adjudication provisions, rendered the court action incompetent or whether the action should be sisted (paused) pending adjudication.

Summary of the Judgment

Lord Tyre, delivering the opinion of the Outer House, concluded that the present action was not incompetent but should be sisted to allow the adjudication process to unfold as per the contractual agreements. The court rejected the defendants' pleas that the action was barred by mandatory adjudication clauses, emphasizing that while the dispute fell within the scope of these clauses, it was appropriate to allow the court proceedings to temporarily proceed alongside adjudication without dismissing the action outright.

Analysis

Precedents Cited

The judgment referenced several key cases to underpin its reasoning:

• Whyte and Mackay Ltd v Blyth & Blyth Consulting Engineers Ltd (2013 SLT 555): Highlighted limitations of adjudication in complex disputes.
• Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd [2020] Bus LR 1140: Emphasized adjudication as a mainstream dispute resolution process.
• Fraserburgh Harbour Commissioners v McLaughlin & Harvey 2021 SLT 1009: Characterized adjudication clauses as contractual bars on court proceedings.
• Bank of Scotland v W&G Fergusson (1898) 1F 96 and Balfour v Baird 1959 SC 64: Discussed concepts of incompetency and fundamental nullity in court actions.

These cases collectively informed the court's approach to interpreting the adjudication clauses and determining the appropriate procedural steps.

Legal Reasoning

Lord Tyre meticulously dissected the adjudication clauses (clause W2) within the contracts, noting that they mandated any dispute to be referred to an adjudicator before court intervention. Despite the complexity and multiplicity of disputes outlined by the pursuer, the court found that the clauses did not implicitly exclude complex or joint and several liability disputes. The use of the singular term "dispute" in the clauses was interpreted broadly enough to encompass the multifaceted nature of the present action.

The court also addressed the argument that multiple adjudications would be impractical, referencing Whyte and Mackay but distinguishing it based on the current context where no adjudication had yet been initiated. Lord Tyre held that potential complexities did not inherently render adjudication unsuitable, aligning with precedents that support the enforceability and applicability of adjudication clauses.

Furthermore, the court clarified that invoking adjudication clauses does not equate to the clauses being conditions precedent. This distinction underscored that the court retains jurisdiction to decide the merits of the case, albeit after adjudication considerations.

Impact

This judgment reinforces the sanctity of contractual dispute resolution mechanisms, particularly adjudication clauses, in Scottish construction law. It underscores that while court actions are not rendered incompetent solely due to adjudication agreements, the procedural pathway must respect the contractual obligations to refer disputes to adjudicators first. Consequently, future cases will likely adhere to this bifurcated approach, ensuring that parties engage in adjudication before resorting to litigation, thus maintaining the efficiency and intended use of adjudication as a dispute resolution tool.

Complex Concepts Simplified

Conclusion

The ruling in Greater Glasgow Health Board v Multiplex Construction Europe Ltd serves as a pivotal reference point in the realm of construction law and contractual dispute resolution within Scotland. By affirming that court actions are not inherently incompetent when adjudication clauses are present, but should instead be temporarily suspended in favor of adjudication, the judgment strikes a balance between honoring contractual agreements and ensuring that complex disputes receive appropriate attention through adjudication. This approach not only upholds the efficiency and intended use of adjudication but also preserves the court's jurisdiction to resolve disputes that may remain unresolved through adjudication.

Legal practitioners and parties engaged in construction contracts should take heed of this decision, ensuring that procedural adherence to adjudication clauses is meticulously observed to avoid procedural setbacks while also recognizing that the courts retain eventual authority to adjudicate unresolved matters.