The Housing Grants Construction and Regeneration Act (HGCRA) sets out certain principles that any contractual adjudication provisions must comply with. What happens if any or all of those principles are breached?

This is the question that was considered in the recent Outer House decision of Profile Projects Limited v Elmwood (Glasgow) Limited 2011.

Profile Decision

In this case, the contract specified a nominating body to select the adjudicator to determine any dispute between the parties. A dispute arose and an adjudicator nominated at the request of Profile was appointed. However, the adjudicator was not nominated by the body specified in the contract. The adjudication proceeded and an award was made in favour of Profile.

Elmwood resisted Profile's attempts to enforce the adjudicator's award arguing that the adjudicator had no jurisdiction. This was on the basis that the adjudicator had not been appointed in accordance with the contract.

Profile argued that the contractual adjudication provisions did not comply with the principles set out in HGCRA in a number of respects and that, therefore, these provisions were replaced "lock, stock and barrel" by the Scheme. This meant that Profile had discretion to select the adjudicator nominating body of its choice and that the adjudicator selected by that body had jurisdiction.

The Court agreed that in one particular respect the contractual adjudication provision did not comply with the principles set out in the HGCRA.. It was concluded, however, that where the contractual adjudication provisions do not comply with the HGCRA that does not require such provisions to be replaced "lock, stock and barrel" by the Scheme. They are only replaced to the extent that the adjudication provisions do not comply with the HGCRA.

Comment

As a matter of law it was considered to be reasonably well settled that the adjudication provisions in the Scheme replace contractual adjudication provisions in their entirety where any part of the contractual provisions do not comply with the HGCRA. The conclusion reached by the Outer House, therefore, comes as somewhat of a surprise. No doubt, there will be more argument about this in the future. In the meantime, if this authority is to be followed, it may be no easy task to work out what within the contract continues to apply and what is to be replaced by the Scheme.

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