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Westminster hotel project

Facts

Client: Contractor

Region: UK

Industry: Construction

Fenwick Elliott acted on behalf of Chinese trade contractor in respect of the construction of a substantial luxury hotel in Westminster. In particular, we advised on a dispute arising out of a subcontract for the provision of glazed curtain walling. This lead to adjudication and enforcement proceedings in the TCC.

Issues

Our client’s subcontract, albeit based on the standard JCT trade contract form, was subject to a substantial number of amendments drafted by the contractor. These had been introduced late in the day and were heavily weighted in its favour.

For example, the contractual interest rate was 0.5% above base rate when, at the time of contract, the base rate was 5.5%. Further, the JCT trade contract form provisions for adjudication were deleted entirely and in their place was a Tolent-type clause which stated that if our client referred a dispute to adjudication then the referring party would bear both parties’ legal and expert costs.

Solutions

Given the wording of the contract, our proposed solution was to seek declaratory relief in a CPR Part 8 action in the TCC.

The application was successful with the court holding that the Tolent-type clause was a fetter on the right to adjudicate and that the contractual rate of interest not a substantial remedy as required by the Late Payment of Debts legislation. The Judge could not see any reason why interest at 5% (as provided for in the JCT standard form) would not be a substantial remedy.

Benefits

By acting in this way, our client could proceed, certain in the knowledge of what the key clauses of its trace contract actually meant.