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Ealing Care Alliance Ltd v London Borough of Ealing Council

Case reference: 
[2018] EWHC 2630 (TCC)
Thursday, October 11, 2018

Key terms: 
Adjudicators' decisions – Benchmarking – Enforcement - Framework agreements - Market testing - Private Finance Initiative - Stay of proceedings

The Claimant, Ealing Care Alliance (“ECA”) commenced Part 8 proceedings against the Defendant, London Borough of Ealing (“LBE”) to enforce the Adjudicator’s Decision as to a Benchmarking Dispute that arose under a PFI contract. These Part 8 proceedings sought a declaration that ECA was entitled to undertake market testing without the need for any written warning in its tender material.

In 2005 LBE signed a PFI agreement with ECA to provide care home services for around 27 years.  The agreement included a Benchmarking procedure every 5 years to allow for rise and falls in the costs of care provisions throughout the course of the contract. Under clause 14.1.9 of the agreement, either party could call for Market Testing if there was a 10% or larger differential in costs between the benchmarked values and the original Agreement.

The first issue that Andrew Singer QC dealt with was the stay of adjudication under clause 14.2.6.  He agreed with ECA that the Part 8 application was not about market testing but was actually about the effect of the Adjudicator’s decision.  He noted that the written warning demanded by the council was not a comment on ECA’s market testing proposal but rather a stipulation as to how the process was to be carried out.  Therefore, the stay to Adjudication was rejected.

On the second issue, and the substance of the declaration, Andrew Singer QC held that there had not been an agreement to mediate.  He went on to note that although LBE had issued proceedings, the underlying dispute was not yet before the court and as such was immaterial in determining whether declaratory relief could be granted.

Overall the main conclusion of this dispute highlights that the attempt to fetter the Market Testing process resulted in non-compliance with the Adjudicator’s decision. The effect of granting the declaration sought to enforce the Adjudicator’s original decision.  It highlights that if a party disagrees with an Adjudicator’s decision, they must follow up with legal proceedings.

Key contact

Tel: +44 (0)20 7421 1986
Tel: +44 (0)20 7421 1986