Atkins Ltd v Secretary of State for Transport

Citation: BLR 193; (2013) 146 Con LR 169; [2013] CILL 3337; [2013] All ER (D) 53 (Feb)

Nature of case:
Atkins was appointed by the Secretary of State to maintain a group of trunk roads in East Anglia.  The contract provided for certain defined compensation events, one of which was to occur if a defect was discovered that, among other requirements, was such that (in language identical to clause 60.1(12) of the NEC3 contract) “an experienced contractor would have judged at the contract date to have such a small chance of being present that it would have been unreasonable for him to have allowed for it.”

In the event, a high number of potholes appeared in the roads that Atkins were contracted to maintain, and they argued in arbitration that the above requirement would be satisfied if: the pothole in question was one of a number of potholes; and there was such a small chance of that number of potholes being present that it would have been unreasonable to allow for that number of potholes.  The arbitrator rejected Atkins’ claim, who in the instant case sought to challenge the arbitrator’s award on the grounds that he had not dealt with the above argument, and in the alternative sought permission to appeal the decision under section 69 of the Arbitration Act 1996.

Akenhead J dismissed the claim, stating that the test in clause 60.1(12) had to be applied to each defect individually, and whether the test was satisfied or not would depend upon the foreseeability of the cause of the defect.  Further, while Akenhead J found that the arbitrator’s decision was not open to serious doubt, and thus refused permission to appeal, he did state that, as the clause in question was taken from the standard form NEC3 contract, its interpretation would have been a matter of “general public importance” for the purposes of an appeal under section 69.

Link to Judgment 

Counsel

Justin Mort QC

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