Payment Terms Under NEC3

In the Scottish case of SGL Carbon Fibres Ltd v RBG Ltd, [2012] CSOH 19, Lord Glennie dismissed an appeal by the employer against an arbitrator's decision. The court, in agreement with the arbitrator, found that an employer bore the burden of proof when seeking to recover alleged overpayments to a contractor under a NEC3 Engineering and Construction Contract.

The Facts

• SGL Carbon Fibres Limited engaged RGB Ltd under an amended NEC3 Engineering and Construction Contract (June 2005, with Options C and W2) to carry out engineering works at SGL's premises.

• During the course of the project, the parties departed from the NEC3 contractual payment mechanism and instead used a process by which the employer's quantity surveyor, rather than the project manager as provided for in clause 50.1, would approve the amount that the contractor intended to claim before the latter submitted its monthly application for interim payment.