In a recent arbitration, BSA's team succeeded in defeating
the operation of a pay when paid clause, triggered by a MEP
subcontractor against BSA's client, a security package
subcontractor, by arguing the MEP subcontractor's lack of
pursuit of the security package subcontractor's claim and in
breach of good faith.
The security package subcontractor ("SP-Sub") was
subject to a strict back-to back arrangement, in terms of payment
of its dues, under the SP subcontract it had entered into with the
MEP subcontractor ("MEP – Sub").
Under the pay-when paid clause, no payments would be made to the
SP-Sub until the MEP-Sub had first received these from the main
contractor, under its own subcontract, which was in turn
back-to-back with the main contract.
