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ARTICLE · 06 AUGUST 2020

Legal Developments In Construction Law: July 2020

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A respondent to an adjudication claim by a party in liquidation, and with its own cross-claim

United KingdomReal Estate and Construction
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1. Adjudication v insolvency rules; and the winner is...?

A respondent to an adjudication claim by a party in liquidation, and with its own cross-claim, said that, because of the automatic operation of insolvency set-off under the Insolvency Rules, all claims and cross-claims under the contract then ceased to exist, and were replaced by a single claim to the balance (by whichever party turned out to have the larger claim). The Court of Appeal disagreed, but continued an injunction stopping the adjudication because, it said, since there could be no enforcement, it would be futile. Was it right?

The Supreme Court confirmed that the existence of a cross-claim operating by way of insolvency set-off does not mean that the underlying disputes about the company's claim under the construction contract and, if disputed, the cross-claim, disappear and are consequently incapable of adjudication.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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