Carillion Construction Ltd v Devonport Royal Dockyard Ltd
Citation: [2005] EWCA Civ 1358
Background Facts​
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Carillion Construction Ltd ("Carillion") was the subcontractor and Devonport Royal Dockyard Ltd ("DML") the main contractor, engaged to refit nuclear submarines.
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DML had a main contract with the Ministry of Defence (MoD) to upgrade Devonport dockyard facilities.
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Carillion was engaged as a subcontractor to upgrade "9 Dock" including major civil engineering works.
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Their relationship was governed by a subcontract and a detailed Alliance Agreement, which included a "target cost" payment mechanism with gain/pain share provisions.
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Amendments to the target cost were made during the works; final costs and bonuses were disputed.
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Carillion claimed over £10 million in further payments and a £1.5 million bonus.
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An adjudicator ruled in Carillion’s favour, awarding over £10 million.
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DML resisted enforcement, arguing lack of jurisdiction, breach of natural justice, and inadequate reasoning.
​Judgment
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Court of Appeal decision:
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The adjudicator’s decision was upheld as valid and enforceable.
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DML's arguments that the adjudicator had exceeded jurisdiction or breached natural justice were rejected.
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​
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Key points:
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Adjudicators’ decisions must generally be enforced even if there are factual or legal errors, as they are intended to be temporarily binding.
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The adjudicator was acting within jurisdiction: assessing the target cost was integral to determining the sums payable under the Alliance Agreement.
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No serious breach of natural justice occurred, despite DML’s complaints about process and reasoning.
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Brief reasons given by an adjudicator suffice as long as they cover the issues and allow parties to understand the decision.
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​
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Outcome:
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Carillion obtained summary judgment enforcing the adjudicator's award of approximately £10.6 million.
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General Principles Developed
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Enforceability of adjudication decisions:
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Reinforced the "pay now, argue later" policy of the Housing Grants, Construction and Regeneration Act 1996.
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Errors of fact, law, or procedure do not prevent enforcement unless they constitute jurisdictional errors or serious breaches of natural justice.
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​
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Natural justice threshold:
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Breaches must be serious (e.g., a party denied opportunity to present its case) to resist enforcement.
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Procedural imperfections or errors in reasoning do not amount to serious breaches.
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​
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Jurisdictional approach:
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The scope of an adjudicator’s jurisdiction is defined by the dispute referred in the notice of adjudication.
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When resolving a referred dispute, the adjudicator can address issues necessarily linked to that dispute.
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Role of reasons:
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Adjudicators are not required to give detailed reasons; short, intelligible explanations suffice.
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Judicial attitude:
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Courts discourage technical challenges to adjudicator decisions, favouring quick enforcement to preserve cash flow in construction projects.
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