'Notices of dissatisfaction' in NEC contracts: Importance and pitfalls

If a party to an adjudication relating to an NEC contract (both the NEC3 and 4 suites) is not satisfied with the adjudicator's decision, it must issue a valid 'notice of dissatisfaction' (NOD). The NOD preserves a parties' right to challenge an adjudication decision, albeit it must be issued within a period prescribed by the contract.
 
The NOD must be drafted and notified in compliance with Option W1 or W2 (as appropriate) and the mandatory contractual notice provisions (i.e. clause 13), respectively. Failure may mean the NOD is ineffective and the adjudication decision becomes final and binding.
 

What does the NEC contract suite require in respect of NODs?

 
In their unamended form, Options W1.3(10) and W2.3(11) state that the adjudicator's decision will become final and binding unless the parties comply with the procedures prescribed in the following provisions in NEC4, namely that a NOD must:
 

1. make clear that the dissatisfied party intends to refer the matter to the tribunal (Options W1.4(2) and W2.4(2));

 

2. be issued within four weeks of being informed of the adjudicator's decision;

 

3. be sent either:

 

1. "If the Scope specifies the use of a communication system, […] through the communication system specified in the Scope" (Clause 13.1); or
2. to the "last address notified by the recipient for receiving communications or, if none is notified, at the address of the recipient stated in the Contract Data." (Clause 13.2).

 

4. be communicated separately from other communications (Clause 13.7) (although the fact that a NOD also refers to other related issues such as payment of the sum found due by the adjudicator, will not necessarily mean that it fails to meet the clause 13.7 requirement).

 

Address for delivery of the NOD: Case law

 
In Transport For Greater Manchester v Kier Construction Ltd (t/a Kier Construction - Northern) [2021] EWHC 804 (TCC) (TfGM), Kier argued that the NOD was invalid as it was not sent in accordance with the communications requirement of the contract, as set out at limb iii) above.
 
In TfGM, the adjudicator's decision was issued on 25 November 2019. The NOD was sent on 29 November 2019 by TfGM's solicitors to Kier's solicitors. In response to TfGM's Part 8 proceedings, Kier issued Part 11 proceedings (challenging the Court's jurisdiction), arguing that sending the NOD between solicitors was contrary to Clause 13.2, that the NOD should have been served on Kier's address as stated in the Contract Data and, as such, the NOD was invalid.
 
Mrs Justice O'Farrell DBE dismissed Kier's Part 11 application, stating that "both the Notice of Adjudication and the Referral identified Walker Morris as the legal representative of Kier and gave Walker Morris' contact details for the purposes of the adjudication. The address of Walker Morris thereby became the last address notified by Kier for receiving communications in connection with the adjudication pursuant to clause 13.2". The NOD was therefore considered to have been "sent to the last address notified by Kier for receiving communications in connection with the adjudication in accordance with the mandatory requirement of Clause 13.2 of the Contract".
 
In TfGM, the Court considered the earlier decision of Anglian Water Services Ltd v Laing O'Rourke Utilities Ltd [2020] EWHC 1529 (TCC) (Anglian) in which the Court dealt with a very similar point.
 
In Anglian, Laing's solicitors confirmed that it would accept service of any documentation relevant to the adjudication. Upon receiving the adjudicator's decision, Anglian's solicitors faxed a NOD to Laing's solicitors within the specified time limit. Laing argued that the NOD was invalid as it should have been served on their address as stated in the Contract Data.
 
Edwards-Stuart J rejected Laing's argument, stating that the rationale behind the mode of delivery specified in Clause 13.2 is that this "is the only means of achieving of securing effective delivery of a communication under the contract". Clause 13.2 did not require communications exclusively to be sent to the address of the recipient as stated in the Contract Data but rather that was merely the default position if the parties failed to identify any other address for receiving communications.
 

The content of the NOD

 
It is sufficient for a party to state its intention to refer the adjudicator's decision to the tribunal in the NOD. There is no prescribed form of words or level of detail required in the NOD which will likely be held valid as long as it is "clear and unambiguous so as to put the other party on notice that the decision was disputed but did not have to condescend to detail to explain or set out the grounds on which it was disputed" (per TfGM).
 
In TfGM v Kier, the court agreed that the words "intention to seek formal resolution to reverse the outcome of the Decision" were "sufficient to inform Kier that [TfGM] intended to refer the disputed adjudication decision to the Court".
 
The dissatisfied party is also not required to separate the communication in the NOD if the other matters referred to in the NOD are connected and incidental to the adjudication. The obligation to issue separate communications under the NEC suites is one that can be overlooked by parties, sometimes with serious consequences.  However, in TfGM, the Court held that by confirming to Kier that TfGM intended to pay the sums awarded to Kier in compliance with the adjudication pending such litigation, TfGM had not invalidated the NOD for failing to separate the communication under Clause 13.7. The court reasoned that the matter "arose out of the adjudication decision and was simply confirmation that, despite the notice of dissatisfaction, the adjudication decision would be honoured." This was not considered a distinctive, separate issue to the NOD in contrast to say, if a NOD also sought to notify a compensation event.

Co-authored by construction trainee YinYee Ng.