Hurley Palmer Flatt LLP v Barclays Bank Plc [2014] EWHC 3042 (TCC)

This case concerns whether a party who is not a party to a construction contract can nevertheless commence an adjudication. The relevant contract was between the Applicant and Barclays Plc for mechanical and electrical engineering and design services in relation to a new hall at a Barclays data centre. The contract contained a clause 14.3 which purported to allow any “Affiliate” with a direct interest in the project to enforce the terms of the agreement “always provided that the [Applicant] shall be entitled [to] rely on the equivalent defences in respect of such liability which it had against the Client.” The Respondent as Affiliate relied on this clause and the Contracts (Rights of Third Parties) Act 1999 to refer a claim against the Applicant for an allegedly defective chilled water system to adjudication. The Applicant sought a declaration that the Respondent could not bring an adjudication. The Judge granted the declaration. He construed clause 14.3 to be limited to the ability of an Affiliate to enforce terms of the Contract relating to the Applicant’s liability, and did not extend to procedural rights under the Contract. Further and in any event, the Judge held that the adjudication clause did not fall within section 1(4) of the Contract (Rights of Third Parties) Act 1999 since adjudication is a voluntary method of dispute resolution which does not limit the way in which a third party’s rights can be enforced.