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Enforcing Adjudicator’s decisions in construction disputes

Temple have developed an insurance product that plays a vital part in assisting insolvent building sub-contractors in enforcing adjudicator’s decisions.

Now that “anti-adjudication” injunctions have been consigned to history due the Supreme Court’s landmark decision in Bresco Electrical Services Ltd (In Liquidation) (Appellant/Cross-Respondent) v Michael J Lonsdale (Electrical) Ltd (Respondent/Cross-Appellant) [2020] UKSC 25 , the question still remains, how to enforce the adjudicator’s decision given the insolvent status of the referring party?

 This problem was addressed in the case of Meadowside Building Developments v 12-18 Hill Street Management [2019] EWHC 2651 (TCC). The Court stipulated that among two other measures, an after-the-event insurance policy is required in these types of case, providing adequate security for the responding party’s costs in (1) defending any summary judgment application and (2) prosecuting any final determination proceedings challenging the adjudicator’s decision.

Temple’s specialist insurance product has been designed specifically to provide cover for these two risks.

The policy was the subject of a great deal of scrutiny by the judge and the opponent’s Counsel in a case we underwrote in which our insured was ultimately successful [ Balfour Beatty Civil Engineering Ltd v Astec Projects Limited (In Liquidation) [2020] 796 (TCC)]. It has been found fit for purpose.

Your questions answered

What risks are covered?

Opponent’s costs and insured’s disbursements in respect of (1) summary judgment application and (2) final determination proceedings.

What is the level of indemnity?

This will depend, but typically in respect of risk 1 – summary judgment application- £50,000 and in respect of risk 2- Final determination proceedings – £150,000.

Can the level of indemnity be increased?

Yes- subject to no material adverse deterioration in the merits of the potential claim or defence.

When can an application for insurance be made?

Once the adjudicator has issued his decision in favour of the insured. The adjudicator’s decision must cover the entirety of the insured’s dealings with the responding party and the decision must be regarded as not being defective or erroneous in any material respect.

When is the premium payable and how is it calculated?

The premium is calculated as a percentage of the level of indemnity of each risk insured. The premium is fully deferred until settlement or judgment and only payable if the insured is successful in its claim and or defence. If neither of the risks are engaged and the responding party pays the adjudicator’s award without the need for issuing a summary judgment application, then a premium becomes payable based on a percentage of the aggregate level of indemnity for both risks.

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Contact our experts

If you would like more information on our litigation insurance and disbursement funding products for construction disputes, please email nicholas.ellor@temple-legal.co.uk or call me on 01483 514815. We look forward to hearing from you.

Nicholas Ellor

Nicholas Ellor

Senior Underwriter

Nicholas Ellor

Nicholas is a Senior Underwriter within the commercial underwriting team.

Prior to joining Temple, Nicholas had over twenty years’ experience working as a solicitor in London on both contentious and non-contentious company commercial and corporate matters. Having been a practitioner, he is fully aware of the pressure and time constraints a commercial litigator has to operate under and brings that expertise insights to the table and provides a fast, highly professional service.

His experience and knowledge enhance our teams’ abilities to quickly and expertly assess claims and to provide intelligent and timely support throughout the legal process.