High Court grapples with what constitutes “construction operations”

This blog post examines the recent decision in Engie Fabricom UK Ltd v MW High Tech Projects Ltd, and the difficulties the parties faced concerning a jurisdictional issue relating to whether or not the project works were “construction operations” under the Construction Act 1996.

In Engie Fabricom UK Ltd v MW High Tech Projects Ltd, the central issue was whether works carried out at a gasification power plant were “construction operations” as defined by the Construction Act 1996. This had a crucial bearing on whether the adjudicator, whose decision the Court was being asked to enforce, had jurisdiction to determine the dispute in the first place.

Section 105(2) of the Construction Act lists exclusions from the definition of "construction operations" including work on a site where the "primary activity" is power generation (section 105(2)(c)(i)).

Here, the parties' dispute arose out of a contract for the construction of a fluidised bed gasification power plant. The question was whether the sub-contract works fell within section 105(2) or whether the "primary activity" was, in fact, the thermal treatment of waste.

It was common ground between the parties that if the primary activity of the site is power generation, the project works were not "construction operations" under the Act and there was no legal right or entitlement to adjudicate, so that the decision is without jurisdiction and unenforceable.

The Claimant argued that power generation was merely a secondary activity at the site, and therefore the section 105(2) exclusion did not bite. The Defendant argued that the primary activity at the project works is power generation, and that it is necessary to look at the nature and purpose of the whole site. Numerous examples were provided including the site’s proximity to a National Grid sub-station, and the fact that the Claimant itself describes the project as "the £200m Energy Works EfW Plant… which will power up to 43,000 homes".

On the facts, the judge said the answer was unclear and that he did not have all the evidence (factual and expert) necessary for a proper determination of the issues. Consequently, the Claimant’s application for summary judgment, under CPR 24, to enforce the adjudicator’s decision was declined.

This case illustrates the complications behind jurisdictional challenges concerning section 105 exclusions, resulting in the parties in this case ending up in expensive (ongoing) litigation. It also highlights the importance, at the outset ,of the referring party satisfying itself both (a) that it has a right to refer a dispute to adjudication, and (b) that proper steps are taken to avoid, where possible, subsequent challenges to the adjudicator’s jurisdiction.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.