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Once aspirational in the Legal and construction industries, Environmental, Social, and Governance (ESG) considerations are now central to investor expectations, regulatory compliance, and societal demands. The recently published report on ESG in Construction Law5 is the first of its kind and highlights the importance of ESG to practitioners of the legal and construction industries, identifying critical gaps impeding the adoption of ESG practices.

More than 200 respondents from the UK’s Society of Construction Law participated in the ESG in Construction Law survey, which led to the publication of the report in December 2024. The survey represented the views of construction lawyers, construction practitioners, and dispute resolution professionals throughout the UK. It found that over 50% of respondents rated ESG issues as moderately to extremely important, although fewer than a third actively engaged in ESG-related work. Despite the growing demand for legal expertise in ESG, there are several persistent challenges facing the Legal and construction industries in relation to it. These include inconsistent ESG standards and large training gaps. Meeting these challenges is critical to a more sustainable and socially responsible approach to building and engineering practices.

The research revealed a divide between the adoption of ESG and the priorities of construction professionals versus those focused on construction law. Unsurprisingly, governance emerged as the main priority for legal practitioners. This is likely due to their role in ensuring regulatory and legal compliance, risk mitigation, and the navigation of complex contractual network chains. Non-legal construction professionals prioritised environmental concerns and considerations. This was evidenced by the survey, which asked questions concerning the importance of waste and water management in different building and engineering practices.

The main outlier revealed by the survey and report was the social element of ESG, which was neglected by most practitioners on both ends. Since environmental, social and governance considerations are all intwined, this raises serious concerns about the Legal and construction industries’ lack of a holistic ESG perception. Taking social considerations into account, stakeholder engagement is critical in large-scale construction projects, particularly in local communities. Community engagement is also essential in mitigating local resistance and creating social value. Addressing the uneven understanding and implementation of ESG issues within the legal and construction industries is crucial to prevent ESG initiatives from undermining their own effectiveness. In doing so, not only do the two industries achieve more holistic ESG performance but also reduce the risk of disputes arising from their initiatives’ undermining of their own effectiveness.

The research found that the lack of standardisation of ESG specifications and metrics was another pressing problem. Several ESG metrics are currently being adopted and promoted in the legal and construction industries, yet the lack of consistent frameworks has led to misaligned goals, creating numerous ESG-related disputes. This issue has practical and legal ramifications, such as in greenwashing claims, disputed ESG targets, and subsidiaries hiding ESG breaches under their parent companies. This is particularly relevant when new contracts might now be expected to or require sustainability obligations. Yet, vague definitions and unenforceable benchmarks will undermine these contract’s provisions. With the rise of ‘greenwashing’ claims and pressures, organisations must be careful not to inflate their sustainability credentials.

Fragmented ESG standards undermine the transparency and accountability of generated data, potentially eroding trust among stakeholders. Construction legal professionals have a pivotal role in promoting ESG adoption and standardisation in the legal and construction industries by aligning, standardising, and further developing ESG provisions in key standard building contracts such as the NEC, JCT, and FIDIC. The same initiatives could also be integrated into specialist areas such as the IChemE and IMechE standard forms of contract. Construction law professionals play a key role in providing the clarity needed to harmonise ESG requirements with the legal environment, and enforce ESG obligations, ensuring that ESG commitments in the construction industry translate into measurable outcomes.

ESG-related legislation and regulations applicable to the construction industry are already in effect, with new ones under consideration, such as HM Treasury’s consultation on the Future Regulatory Regime for Environmental, Social, and Governance (ESG) Ratings6 . Contracts serve as an effective mechanism for embedding ESG obligations into projects, offering the enforceability required to ensure ESG accountability. However, these contracts must be carefully drafted. For instance, construction legal professionals already incorporate relevant legislation, such as the Modern Slavery Act 20157 and the Bribery Act 20108, into their contracts, often without fully recognising how these acts intersect with broader ESG considerations. Additionally, contracts will soon need to align with international standards, such as the EU Corporate Sustainability Due Diligence Directive9 , which imposes specific requirements for construction supply chains.

More than half of the survey’s respondents indicated that training should be a key focus for construction trade bodies in advancing ESG initiatives. While resources like webinars provide accessible training options, there is a pressing need for more rigorous and structured training programs. This is where collaboration between legal professionals, industry bodies, and academic institutions becomes essential. Instead of the current pulverised activities, joint ESG accreditation should be jointly developed, covering ESG training and certifications that combine theoretical knowledge with practical application. Training, for example, focusing on the technical side of ESG criteria, can be complemented with ESG-specific contractual mechanisms and dispute resolution methods enabling legal and construction professionals to navigate complex sustainability obligations. Training should also be targeted at all seniority levels of professionals and accessible to all sides of organisations, therefore addressing the training shortages and intergenerational knowledge gaps. Universities such as UCL and professional organisations such as the SCL can play a fundamental role in pushing for such change.

Significant disparities in ESG training and knowledge management exist across the legal and construction industries. It was found that younger professionals and those working in smaller firms were particularly disadvantaged. Although a smaller sample, none of the respondents aged between 18–24 reported receiving formal ESG training, while only 25% of those aged 25–34 had participated in such programmes. In contrast, nearly half of the respondents aged between 45–54 had undergone ESG-related training. Senior respondents, who often held leadership roles, therefore reported higher levels of ESG training and engagement. This generational gap is particularly concerning as the knowledge and expertise retained by senior legal and construction professionals may end up not passing down to younger and early-career professionals, leaving the industries with an underprepared generation of practitioners and creating the risk of having to ‘reinvent the wheel’ for such generation. Not only does this waste the progress that has been made over the past three decades, but it will also cost a lot of time and money to salvage the knowledge lost.

The organisational size of the respondents also impacted their level of training. Respondents from larger firms with over 500 employees reported significantly higher access to ESG training (43%) than those in smaller firms with fewer than 20 employees (18%). This discrepancy is particularly troubling given that professionals in smaller firms, although a substantial part of the workforce, tend to have fewer training resources. Without adequate training, professionals at smaller firms are at greater risk of not adopting sufficient and compliant ESG measures. For example, take the adoption of ESG-considerate agreements. If such organisations draft their contracts improperly with insufficient provisions, the non-compliance of ESG clauses and contracts will lead to disputes. Therefore, there needs to be a long-term vision to how ESG training is managed, and knowledge is retained. In contrast, most respondents who participated in any ESG training had done it within the last 12 months. Investing in more training programs is a strategic necessity for professionals across the legal and construction industries. Equipping early-career professionals with the tools to address ESG challenges will ensure that the legal profession remains at the forefront of ESG integration.

The findings from the ESG in Construction Law report and survey highlight the importance of environmental, social, and governance considerations in the legal and construction industries, drawing on insights from those industries’ respective practitioners. A holistic, yet balanced, approach will be critical to put all three ESG priorities on par with one another. Addressing the issues identified in the survey, such as standardisation, training, and prioritisation gaps, will enable legal and construction professionals to play a transformative role on a national and international scale.

There had been a number of adjudications between the parties:

The first adjudication was a “smash and grab” adjudication, in which Lidl was ordered to pay the sum in application for payment 19 (“AFP19”) together with interest. In the second adjudication, Lidl sought the cost of appointing a third party to rectify alleged defects in the works. The third adjudication, again referred by Lidl, concerned 3CL’s entitlement to an extension of time. Lidl did not seek any remedy in relation to the payment or deduction of liquidated damages.

At the time the second and third adjudications were commenced, the sum awarded in the first adjudication had not been paid. 3CL argued that the decisions in the second and third adjudications were made without jurisdiction because the adjudications had been commenced before the notified sum, as awarded in the first adjudication, had been paid.

Lidl submitted that10:

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  The only prohibition in S&T(UK) v Grove (“Grove”)11 on commencing an adjudication is where the dispute referred is a “true value” adjudication in respect of the same payment cycle as the notified sum adjudication (the “same payment cycle true value adjudication prohibition”).

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  Neither the second or third adjudications were true value adjudications. The second adjudication was a breach of contract claim for the cost of employing a third party to rectify defective works. It did not seek a valuation of 3CL’s works. The third adjudication was an extension of time claim where no monetary relief was sought.

3CL submitted that12:

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  The principle in Grove prevented Lidl commencing any adjudication until it had paid the first adjudication decision (the “any adjudication prohibition”).

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  Even if the Grove principle was limited to true value adjudications, this extended to any adjudication where the relief sought was designed to permit the party liable to pay the notified sum to undermine its payment obligation or revalue the account between the parties (the “any true value adjudication prohibition”).

The Judge found that there was no basis for the any adjudication prohibition: “There is no rationale for a construction of the Act which has the effect of prohibiting any adjudication while that notified sum remains unpaid, even where the subject matter of the adjudication has no relation to the notified sum”13 . The financial prejudice of having to defend an adjudication before receiving payment of a notified sum was lessened by the speedy enforcement process for adjudication decisions.

The Judge found that claims are covered by the Grove principle “… insofar as they are matters which could have been the subject of a payless notice served in respect of the particular notified sum in question”14 .

He gave the examples of defects claims and delay claims: if, at the time of the relevant payment cycle, the paying party has a claim for defects already in existence or for delay already incurred, but fails to serve a valid payless notice, it cannot commence a true value adjudication in respect of such claims until it has paid the relevant notified sum15. This also applies to subsequent payment cycles: “… if the payer chose to refer an adjudication based on a subsequent payment cycle … that would be caught by the Grove principle unless the payer could show that there was nothing in the reference which sought to raise matters which could have been raised in the previous payment cycle, trivial matters excluded”16 .

However, there is no prohibition on adjudicating claims that arise after the payless notice date.

Applying that to the facts:

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  The Judge found that there was overlap between the defects raised in the second adjudication and Lidl’s ineffective payless notice for AFP19 (“PAY-7”). The overlap would not be enforced, but the remainder of the second adjudication decision would be severed and enforced.

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  In PAY-7, Lidl claimed to be entitled to withhold liquidated damages from 18 June 2022 to 29 September 2022. In the third adjudication, Lidl submitted that 3CL was entitled to no extension of time between the contractual completion date of 25 May 2022 and the date of practical completion on 26 October 2022. Even though the adjudicator had not been asked to decide whether Lidl was entitled to be paid or deduct liquidated damages, in so far as the third adjudication sought a declaration that 3CL was not entitled to any extension of time over the same period as that covered by PAY-7, Lidl was effectively seeking a true valuation of that issue. It “… would inevitably lead to a claim for liquidated damages in respect of the same period to the extent that it succeeded and, hence, to that extent was prohibited under the Grove principle until Lidl paid the notified sum due under AFP19 and decision no 1”17.

The adjudicator in the third adjudication had no jurisdiction to determine whether 3CL was entitled to an extension of time between 18 June 2022 and 29 September, but did have jurisdiction in relation to the earlier and later periods.

Regardless of what you think of the merits of the Grove principle, it is clearly here to stay for the foreseeable future. It is therefore welcome to have some clarification from the courts on the scope of the principle.

However, in my view, there are some difficulties with how the Grove principle has been interpreted in Lidl. For example:

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  Extending the scope of the Grove principle to matters that could have been raised in a payless notice is likely to lead to satellite arguments about what could have been raised but was not.

• •

  More fundamentally, it impedes the ability to obtain a true valuation of the works in an adjudication in relation to a subsequent payment cycle. The purpose of the Act was to promote cashflow in the construction industry, and that purpose was at the forefront of the court’s reasoning in Grove. But I think that purpose could have been met in Lidl in a way that was less restrictive of the right to adjudicate. The court could have decided that, to the extent that there is or should have been overlap with an earlier ineffective payless notice in a true value adjudication in relation to a subsequent payment cycle, that is not a defence to enforcement of a notified sum adjudication. That would be less restrictive of the parties’ right to adjudicate than depriving an adjudicator of jurisdiction in relation to the overlap until the notified sum is paid.

Leaving that aside, there are two practical points that arise from the judgment:

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  Give notice! The easiest way for a party to avoid the difficulties demonstrated in Lidl is to comply with its contractual and statutory notice requirements (which I know is easier said than done).

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  In any true value adjudication, it would be sensible to clearly identify the constituent parts of the claim by date. If the responding party raises an argument that some of the items should have been included in an earlier payless notice, this will enable the parties and the adjudicator to sever the items that arise before the payless notice date if necessary.

In part of a lengthy decision about an IT modernisation project, both parties suggested that to recover either compensation for delays or delay damages, the other party had to comply with certain conditions precedent. Having reviewed a number of authorities, Mr Justice Constable, while stressing that the overriding principle was that every contract must be construed according to its own particular terms, set out a list of the relevant matters that need to be considered when considering whether or not a clause is a condition precedent:

“(2) there is nothing as a matter of principle which prevents parties freely agreeing that the exercise of a particular right to payment or relief is dependent on compliance with a stated procedure, but parties will not be taken to have done so without having expressed that intention clearly;

(3) the language of obligation in relation to procedure to be complied with (e.g. ‘shall’) is necessary, but not sufficient;

(4) the absence of the phrase ‘condition precedent’ or an explicit warning as to the consequence of non-compliance is not determinative against construing the regime as one of condition precedent;

(5) however, the absence of any language which expresses a clear intention that the right in question is conditional upon compliance with a particular requirement is likely to be, at the very least, a powerful indicator that the parties did not intend the clause to operate as a condition precedent;

(6) the requisite ‘conditionality’ may be achieved in a number of different ways using different words and phrases when construed in their ordinary and natural meaning;

(7) the clearer the articulation, purpose and feasibility of the requirement to be complied with (in terms of substance and/or timing), the more consistent it will be with the conclusion that, depending on the rest of the language used, the requirement forms part of a condition precedent regime”.2 

Here, Clause 5.6 provided in “plain language” that DBS “shall not be liable to compensate [TCS] for Delays to which Clauses 7 or 8 apply unless [TCS] has fulfilled its obligations set out in, and in accordance with, Clauses 5.1, 5.2 and 5.3”. This wording had the effect of making compliance with Clauses 5.1 to 5.3 a condition precedent to any entitlement to compensation under Clauses 7 or 8.

However, this condition precedent regime applied only to DBS’s liability to compensate TCS for “Delays”, a defined term. This meant that a failure to comply with the condition precedent would not impact upon TCS’s entitlement to relief as described in other clauses, here the “authority” clause. As a result, non-compliance would not prevent TCS from defending itself from DBS’s claims, whether for Delay Payments or for damages for breach of contract provided it established that the failure to achieve a completion date was the result of such an “authority” clause.

This left the question of whether TCS’s own claims for damages, as opposed to contractual compensation, would be caught by Clause 5.6. DBS argued that the objective intention of the parties cannot have been that (having expressly agreed that the payment of delay compensation in certain circumstances was subject to a condition precedent) TCS could circumvent that regime by claiming damages for breaches of other terms of the Agreement.

The judge agreed. TCS’s potential entitlement to claim both loss and expense pursuant to Clause 7.4 and general damages at common law for Delays (as defined) were subject to compliance with the regime at Clauses 5.1 to 5.3. The ordinary meaning of the language used in Clause 5.6 (“liable to compensate [TCS] for Delays”) was wide enough to cover both claims brought under, and for, breach of contract. Finally, the judge noted that:

When it came to delay damages, where a milestone was not achieved due to issues with testing, by Sub-clause 6.1, DBS was required (“shall”) to “promptly issue a Non-conformance Report”. Clause 6.1 concluded, “The AUTHORITY will then have the options set out in Clause 6.2”. No non-conformance reports were issued. The judge considered that, when looking at ordinary language of the clause, the word “then” in the last sentence of Clause 6.1 made clear, at the very least, that the entitlements in Clause 6.2 happened after the matters dealt with in the preceding words of Clause 6.1 had been engaged. The entitlements in Clause 6.2 were clearly linked to Clause 6.1, through the conditional phrasing of “If … then …” The judge noted that:

Further, the use of the word “promptly”, rather than a specified number of days, did not preclude the condition-precedent nature of compliance. Whether a report had been given “promptly” was a question of fact and is sufficiently certain in meaning to be given effect to.

That, however, was not the end of the story. Clause 5.2 required TCS to submit a draft Exception Report to TCS: “not later that five (5) Working Days … after the initial notification”. TCS said that it had assumed that DBS would not rely on Clauses 5.1 to 5.3 as a condition precedent. The judge agreed with that for a number of reasons, including:

• •

  DBS did not, in discussions and negotiations: “articulate any reliance upon the provisions at the time”. The: “condition precedent was simply not a live point”.

• •

  There was an assumption by TCS that, whilst it was still necessary to produce an Exception Report, no technical point on 5 Working Days was being taken against it and that any entitlement would be determined in light of the substantive merits.

• •

  DBS did not take any point that TCS were not entitled to bring a claim because no Exception Report had been served within 5 Working Days. One witness gave evidence that the first time they could remember seeing the 5 Working Days point being taken by DBS was in the pleadings.

This was not a case of acquiescence by nothing more than silence. DBS had not reserved their position. It was clear, on DBS’s own evidence, that it also considered that the 5 Working Day requirement had “fallen by the wayside”. It would have been obvious to DBS that TCS was engaging in the project in a way, to DBS’s benefit, that it may not have done faced with a denial of entitlement to compensation based on the 5 Working Day point.

As a result, DBS was now estopped from arguing that TCS had no entitlement to compensation for delay on account of its failure to comply with Clause 5.3.

Judgment was handed down on 6 November 2023 by O’Farrell J in Siemens Mobility Limited v High Speed Two (HS2) Limited & Bombardier Transportation UK Limited, Hitachi Rail Limited18. This case was heard at a 5 week trial in late 2022, with further dates in January and March 2023. Siemens brought 17 claims in total and the court heard from 18 witnesses. The claims were brought primarily on the basis of the Utilities Contract Regulations 201619 (“UCR”) but public law principles were also invoked and the claims included 8 judicial reviews. All claims were dismissed.

Each claim contained multiple allegations that the court methodically considered and rejected. In relation to one of the later claims concerning an allegedly intended modification, the judge observed at paragraph 689 that Siemens was “tilting at windmills”. It might be said that this literary metaphor characterises much of Siemens’ approach to the litigation.

As in 2021 in Bechtel Limited v High Speed 2 (HS2) Limited20, HS2’s procurement processes were vindicated by the court following a lengthy and wide-ranging trial.

This is a brief overview of the notable aspects of the case.

There was a challenge to the assessment by HS2 of more than 20 questions in its technical evaluation (Stages 2 to 4). A recurrent theme of the challenge was that HS2 made manifesterrors by failing to reflect an alleged lack of evidence that the successful tenderer (“the JV” – comprising Bombardier Transportation UK Limited and Hitachi Rail Limited)’s proposals demonstrated compliance with the various specifications. The court found that that line of attack frequently involved misconstruing the questions, which asked tenderers to demonstrate either assurance that such compliance was feasible or the validity of their modelling or otherwise describe their approach to contract mobilisation and delivery. As the court pointed out at paragraph 381, it was not intended that HS2 should approve the proposals at tender stage as the design and delivery plans were incomplete.

HS2’s role was to assess the tender responses against the specific questions asked and the award criteria without discrimination or manifest error. The court’s role, in turn, is supervisory and the significant margin of appreciation enjoyed by the assessors was recognised. O’Farrell J cited with approval Fraser J’s comment from Bechtel that

In the 250 paragraphs of the judgment on scoring allegations, the court found that Siemens had identified not a single manifest error.

HS2 exercised a discretion in the Invitation to Tender (“the ITT”) to allow a tenderer which failed to meet one of the technical evaluation thresholds (a shortfall tender) to progress in the competition to the assessment of price at ‘Stage 5’. The ITT set out relevant factors in the exercise of the discretion (paragraph 401). The court noted that while the discretion was expressed to be absolute it must not be exercised on an unlimited, capricious or arbitrary basis and must be exercised rationally and in accordance with the policy on which it was based.

The JV was a shortfall tenderer due to failing one sub-plan in one delivery plan, but did well on all other parts of the tender, unlike the other shortfall tenderers, and the discretion was exercised allowing it to progress in the competition. Siemens made a number of allegations that HS2 failed to recognise or take into account issues relating to deliverability risk and wrongly dismissed others. The court found that the complaints were either wrong, unjustified or failed to appreciate the process being followed by HS2.

The court also rejected the criticism of the roles played by the various HS2 review panels which ensured scrutiny and oversight of key procurement decisions. The court found that the decision taken by HS2 was careful, rational, based on relevant evidence and not contrary to the UCR.

There was an unusual challenge to the timing and operation of provisions in the ITT which required tenderers to seek HS2’s consent for a change of control and obliged tenderers to choose which tender would remain in the competition if that change resulted in two tenderers being part of the same corporate group (section 15.7.2). These provisions had been the subject of clarification questions in the same procurement in 2018 when a merger between Alstom and Siemens was mooted.

That merger did not go ahead but a merger between Alstom and Bombardier did reach completion in late January 2021. The outcome of the technical evaluation, which was also finalised and notified to tenderers in January 2021, was that Alstom was disqualified and the JV’s tender progressed to Stage 5, but neither tenderer knew the outcome of the other’s tender as HS2 wished, for reasons of competitive tension in the procurement to keep the identity of the Stage 5 tenderers confidential until contract award.

HS2 therefore then agreed with the parties to the merger that it would tell each the Stages 2–4 outcome of the other’s tender, so that they could make an informed choice under section 15.7.2. For obvious reasons, both Alstom (by now owner of Bombardier) and the JV chose the JV’s bid.

Siemens’ case was that HS2 had permitted Alstom and the JV to delay making the section 15.7.2 notification until after completion to ensure that they would not back the wrong bid. It also challenged the process of communicating the outcomes to the tenderers, alleging among other things that HS2 failed to comply with the undertakings provided by the merging parties to the European Commission by not appointing an independent expert to select which bid would remain.

The court pointed out at paragraph 499 that section 15.7.2 was not in fact engaged at all because Alstom’s tender was disqualified at the date of completion and thus prior to HS2’s consent being given for the change of circumstances. There was also nothing left for the independent expert to determine as there was by then only one tender in play and, in any event, HS2 had no obligation to appoint an independent expert as this was not provided for in the tender rules, HS2 was not subject to the merger undertakings and it was up to the tenderers to decide which of the tenders they wished to withdraw. The allegation that HS2 delayed the process was rejected as the obligation to notify HS2 of the change of circumstances under the terms of the ITT did not arise until there was a definite proposal to make a change and notification was duly made by the JV on 29 January 2021, the date of closure of the merger. Notification of the joint proposal under section 15.7.2 was made 5 weeks later, which was within the anticipated timescale. Moreover, there was no evidence that any delay gave Alstom or the JV an unfair advantage as Alstom knew by 24 September 2020 (the date of European Commission approval when Siemens said the section 15.7.2 obligation was triggered) that it was likely to be disqualified. The court also pointed to the responses to Siemens’ own clarification questions from 2018 to show that HS2 did what it said it would do in the tender rules.

There was one failing on HS2’s part, which was that it communicated with the merging tenderers by telephone rather than via. the portal. This was the only breach that the court found in the 183-page judgment and was a technical breach of the tender rules with no causative effect.

Siemens also made multiple allegations regarding the Stage 5 process, which was the comparison of the ‘Assessed Prices’ of Siemens and the JV to determine which was the most economically advantageous tenderer. The Assessed Price aggregated the contract price tendered for capital, maintenance and other costs and certain monetised benefits (or deductions) representing notional value to HS2 as a result of design features (such as number of seats and noise levels). The commercial assessors carried out checks on the consistency of the various documents and models used to compile the Assessed prices. This led to certain clarifications on the JV’s tender which were challenged by Siemens.

Applying the principles set out in Hersi v Lord Chancellor21, Regulation 76 (4) of the UCR and the tender rules, the court held that the various clarifications sought arose due to inconsistencies or obvious errors that made no difference to the evaluation outcome and that it was permissible to correct these. Somewhat bizarrely, Siemens challenged HS2’s use of the alias ‘Dr No’ for Siemens to which HS2’s response was that the JV’s alias ‘Le Chiffre’ was an equally if not more evil Bond villain. The court agreed that there was no merit in this or other Stage 5 allegations.

On the abnormally low allegation, the court adopted at paragraph 559 the formulation of the law set out by Fraser J in Bechtel and held that it was a matter for HS2 whether to carry out an abnormally low review and how to do it. The court found that the significant difference in the Assessed Prices of the two tenderers was expressly considered by HS2, including Siemens’ greater allowance for risk, contingencies and margin. HS2 did not find the JV’s bid to be abnormally low and, in the absence of that finding, there was no obligation on HS2 to require the JV to explain its prices. Siemens failed to establish that there was irrationality or manifest error in the finding that the JV’s bid was not abnormally low.

Siemens argued that Case C-448/01 EVN AG and Wienstrohm GmbH v Austria22 gives rise to a general duty to verify tenders after evaluation but before negotiation or award under the equal treatment principle. The court rejected this interpretation of EVN, finding that unlike in EVN, HS2’s tender documents, including at pre-qualification (PQP) stage, contained assessment criteria and requirements which permitted the responses to be effectively verified as part of assessment. While the tender documents enabled HS2 to review or verify information submitted by tenderers up to contract award there was no obligation to do so.

Nevertheless, HS2 did conduct certain pre contract checks on the JV’s financial standing and technical issues relating to the JV partners which had arisen subsequent to the assessment of capability at PQP stage. The court accepted the submission that having decided to do so, HS2’s checks must be carried out and its discretion (as to whether or not to exclude tenderers) exercised rationally and without manifest error (paragraph 619). Siemens made multiple allegations regarding the pre contract checks carried out, all of which were rejected by the court.

On the financial checks, the court decided that Siemens’ criticisms were misplaced and their disagreement with HS2’s conclusions on the JV’s financial resilience was not sufficient to establish manifest error.

On the technical side, the court found that Siemens’ “challenge amounts to no more than an assertion that [the individual reviewing the checks] should have found that the issues raised were so serious as to oblige HS2 to disqualify the JV. That fails to grapple with the exercise he was undertaking …” (paragraph 641).

HS2 was not reassessing the tender responses and any such fresh assessment would breach principles of equal treatment and transparency as it was not provided for in the tender rules. It was undertaking a review to assess whether new issues, such as delay and cracking on other trains gave rise to grounds for reconsidering the earlier evaluations. They did not because they related to different designs, materials and suppliers. HS2 considered these matters and the court found no errors in HS2’s analysis and report.

Siemens argued that the award decision was made by HS2 on the basis that it would later change the train design substantially, in particular to add more doors, without factoring in the impact of such a change on the assessment process. It claimed that this was inevitable on the basis that the JV’s design did not meet the Department for Transport (“the DfT”)’s dwell time (i.e. the time spent between doors opening and closing) and journey time requirements and should have been disqualified for a failure to meet certain mandatory requirements (TTS94 and TTS-161).

The court found there to be no evidence that the JV failed to meet these mandatory requirements. Concerns were raised by the West Coast Partner (the franchisee) over whether the static dwell time model (“SDTM”) used by HS2 to assess the dwell time performance of the proposed design was an accurate reflection of the likely mix of travellers, but this was the model used in the tender rules and the court accepted the evidence that there were no irregularities in the SDTM or the data used (paragraph 677).

The court noted the considerable latitude afforded to a utility using the negotiated procedure to make changes, as recognised in Bechtel and found there to be no unfairness in principle to Siemens in HS2 considering such changes and no decision made to make the changes. The court also rejected the argument relating to DfT requirements as these did not form part of the tender rules and HS2’s evidence that the DfT requirements could be met in a variety of ways was accepted. The decision to enter into the contract with the JV was not outside the range of reasonable decisions open to HS2 (paragraph 680).

Finally, Siemens argued that the claim relating to the alleged substantial modifications, though brought after the contract had been entered into with the JV, triggered an automatic suspension. This prompted the court to find that “Siemens is tilting at windmills” (paragraph 689).

There was no contractual change or notional contract to which a suspension could attach. The court also rejected the request for an order preventing HS2 from entering into the alleged modification, not least because no design changes had been instructed and any future change would be different from those which had been rejected, so any declaratory order would be obsolete (paragraph 691).

In claims brought in the months before trial in 2022, Siemens alleged that two HS2 employees involved in the procurement had conflict of interest by virtue of the fact that they had defined benefit pensions from their previous long employment at Bombardier. It was not alleged that the prior employment itself was a conflict. That would have been time-barred as Siemens knew of their involvement and prior employment as early as October 2021. It was the pensions issue that only came to light in correspondence in August 2022.

HS2 argued that the pensions conflict was time barred, partly on the basis of Siemens’ own evidence from their head of pensions at trial that it was “almost inevitable” that the individuals would have defined benefit pensions given the time of their prior employment in the early 2000 s. The court rejected the limitation point on the basis that the individuals could equally have cashed in their pensions, Siemens did not know for a fact that they still had them until August 2022 and it was not incumbent on Siemens to have asked the questions about pensions in October 2021 that it later asked in July 2022.

However, the court rejected the pensions conflict claims (paragraph 755) because it considered that the pensions did not give rise to a conflict, applying the test in Regulation 42 and the common law doctrine of apparent bias (Porter v Magill23). The court noted that, in deciding whether the fair minded and informed observer would consider that the interest might be perceived to compromise the impartiality of the individuals, it should have regard to admissible evidence about what actually happened in the course of decision making and all relevant factual circumstances.

The ultimate question was whether the proceedings were and were seen to be fair (Virdi v Law Society24). The material circumstances included that the pension was held in a separate Fund, administered by trustees to meet longterm pension liabilities, acting in the best interests of the Fund’s beneficiaries, rather than Bombardier’s. The sequence of events necessary before there would be any impact on the value of the pensions (including Bombardier’s insolvency, no rescue of the Fund by another employer, a deficit in assets in the Fund which could not be recovered) and the fact that the Pension Protection Fund would then provide compensation of 90% (and a cap on increases for inflation) was such that the interest of the two employees was so remote as to be immaterial.

The court added that the various steps taken by HS2 to manage potential conflicts and avoid distortions of competition, including training, having 3 assessors for each question, anonymisation of tenders and three levels of review of decision making by HS2 panels, ensured that there was no unfairness or appearance of unfairness. Finally, and in any event, the individuals involved were not decision makers and Siemens had failed to establish that any of the impugned decisions would have been any different had they not participated.

A further, very late claim was issued on 29 December 2022 and served on 5 January 2023, after the close of evidence, arising out of evidence given in cross-examination on 30 November 2022. This claim was the subject of an application to strike out and reverse summary judgment by HS2, which was heard on 14 March 2023 (closing submission in the main trial having been made on 23 January 2023). The alleged conflict of interest was that one of the individuals with the pension interest had also maintained contact with former colleagues at Bombardier and HS2 had failed to prevent this.

The court considered the case law on abuse of process (Henderson v Henderson25) and the guidance in cases on very late amendments (CIP Properties v Galliford Try26 and Quah Su-Ling v Goldman Sachs27). The court criticised Siemens for failing to provide an adequate explanation for the delay in issuing the claim between 30 November 2022 and 29 December 2022 (paragraphs 802–803).

The court cited Lewison LJ in FAGE UK Ltd v Chobani UK Ltd28; “The trial is not a dress rehearsal. It is the first and last night of the show”. The court went on to find, against this background, that the late claim had no real prospect of success. The court found that the fair minded and informed observer would not perceive that his impartiality and independence was compromised and concluded that “it would be oppressive and unjust to HS2 for it to be vexed with another trial … on the chance that, on a further trail of inquiry something might turn up” (paragraphs 811–813).

Finally, permission was refused for the 8 parallel judicial review claims brought which relied on the same allegations as the Part 7 claims, with reference to public law duties, on the basis that (a) Siemens was not entitled to invoke public law duties in support of its UCR claims (see paragraph 129), (b) the challenges raised concern a commercial competition and did not contain any public law element and (c) there was a suitable alternative remedy in the UCR as demonstrated by the (multiple) Part 7 claims.

The case is notable for at least the following important points.

First, the judgment reinforces that a claimant cannot win if it is unable to show that there were manifest errors in the assessment conducted or decisions taken or other material breaches of duty. Those might be a failure to follow the published tender rules, deficiencies in a tender response not considered by assessors or an irrational exercise of discretion. But there is no remedy for subjective disagreement by unsuccessful bidders.

Second, the court firmly rejected the proposition that parallel judicial reviews could or should be issued, relying on the same allegations and claiming identical relief. It is now clear that claimants should not invoke public law principles such as legitimate expectation in procurement disputes, given the scope of the principles of equal treatment and transparency (paragraph 131).

Third, the formulation of the law on abnormally low tenders as set out by Fraser J in SRCL v NHS Commissioning29 and Bechtel has again been endorsed. If an authority does not consider a bid to be abnormally low, it does not need to require a tenderer to explain its prices and to succeed a claimant would need to show at least manifest error or irrationality in the authority’s consideration of the issue.

Fourth, the court made clear its position on the meaning of EVN and that there is no general duty of verification of tenders or qualification status prior to contract award.

Fifth, the judgment makes clear that, if matters arise in the course of cross-examination that the claimant wishes to deploy in fresh allegations, it should act before the curtain closes on evidence.

In addition, it is submitted that the case raises important questions about multiplicity of claims and allegations. First, the court was obviously concerned about the large number of claims, stating at paragraph 797 that “In most cases, the issue of 17 different claims by a claimant against the same defendant, in respect of the same dispute, arising out of the same procurement, would be considered to be an abuse of process”. While the court acknowledged that the bringing of new claims to avoid limitation issues was a well-established practise in procurement cases, it is submitted that this established practise is only justified if the claims raise new causes of action and, even then, the claimant should seek the defendant’s approval for amendments before issuing a new claim.

Second, while wide-ranging allegations are often pleaded at an early stage (sometimes due to limitation concerns), it is submitted that it is sensible to weed out weaker allegations well before trial to avoid unnecessarily long and costly litigation.

Finally, this case provides a good example of a utility with a sophisticated set of tender rules and processes, including the use of tiers of review panels to ensure proper oversight of decisions and good governance. HS2’s procurement processes for high value procurements have again been examined thoroughly and given a clean bill of health.

Adjudication is a popular and widely used means of resolving disputes in the UK. The right of parties to construction contracts to refer disputes arising “under the contract” to adjudication, as mandated by section 108 of the Housing Grants, Construction and Regeneration Act 1996 (HGCRA)30, is well established.

But what is meant by the term “under” a contract? Is this limited to claims for breach of the contract in question? Or does it also encompass wider claims arising in connection with a contract, such as statutory claims under the Defective Premises Act 1972 (DPA)3?

These questions have recently been determined by the Technology and Construction Court (TCC) in BDW Trading Ltd v Ardmore Construction Ltd31.

This is the first time that the TCC has had to determine the ability of a party to bring a claim under the DPA in adjudication. In light of the extension of the limitation period under the DPA from six to 30 years (as well as the widening of its scope) brought about by the Building Safety Act 2022 (BSA), the decision will have wider ramifications for how parties pursue historic fire and building safety claims.

BDW (as assignee of the original building contract) brought adjudication proceedings in 2024 against Ardmore in respect of a residential development in Hampshire.

The original building contract had been entered into in 2002 and practical completion was achieved in 2003/2004.

Nearly 20 years later, in 2022, BDW issued a letter of claim to Ardmore in respect of alleged fire safety defects at the development, and subsequently commenced adjudication.

The adjudicator found in BDW’s favour and required Ardmore to pay over £14 million in damages.

Ardmore resisted enforcement and BDW consequently sought enforcement in the TCC, seeking summary judgment against Ardmore. Ardmore sought to resist enforcement on four grounds. We examine one of those grounds – the alleged lack of jurisdiction of the adjudicator over DPA claims – below.

Limitation – how could BDW bring a claim nearly 20 years after completion of the works?

BDW’s claim had two alternate legal bases:

For breach of the building contract, based on the alleged use of an inappropriate cladding system (rather than the product set out in the design intent) and on the alleged failure to install horizontal fire barriers; and

For breach of Section 1 (1) of the DPA, which imposes a duty on those “taking on work for or in connection with the provision of a dwelling” to see that the work is done in a workmanlike or professional manner, with proper materials, and “so that the dwelling will be fit for habitation when completed”.

For breach of contract claims, the limitation period is either six years (for simple contracts) or 12 years (for deeds) from the date on which the cause of action accrued. Once the limitation period has expired, a defendant will have a complete defence to the claim. Ardmore would therefore ordinarily have had a complete limitation defence to BDW’s breach of contract claim, brought some 20 years after completion of the works.

However, BDW argued it was “in time” for limitation purposes due to deliberate concealment by Ardmore of the alleged breaches, including the failure to install fire barriers, meaning that an exception under the Limitation Act 1980 applied.

Before enactment of the BSA, the limitation period in which a potential claimant could bring a claim under section 1 of the DPA was six years from completion of a dwelling.

However, section 135 of the BSA – which came into force on 28 June 2022 – inserted a new section into the Limitation Act 198032 which “had the effect, among other things, of increasing retrospectively the limitation period for a claim under section 1 (1) of the DPA 1972 from six years to 30 years”.

Until section 135 came into force, Ardmore therefore also had a complete limitation defence against claims by BDW under the DPA – but from June 2022, BDW’s claims were no longer time-barred due to the extended limitation period provided by the BSA. We provide more detail on DPA claims in our earlier insight.

Did the adjudicator have jurisdiction over the DPA claim?

The contract expressly stated that disputes arising “under the contract” could be referred to adjudication, mirroring the wording of section 108 HGCRA.

The parties disagreed on the meaning of the words “under the contract”:

Ardmore contended that they should be interpreted narrowly and were not capable of encompassing a claim under the DPA – meaning that the adjudicator had no jurisdiction to determine that claim. It relied upon the fact that different wording was used for the arbitration clause in the contract (which referred to disputes “arising under this Contract or in connection therewith”.

BDW argued that the words “under the contract” should not be interpreted narrowly. It submitted that the weight of case law supports the view that the reasoning in the Fiona Trust case (which considered similar wording in the context of an arbitration clause) should apply equally to adjudication.

In Fiona Trust, the (then) House of Lords had considered the meaning of the phrases “arising under” and “arising out of” in an arbitration clause and held that there was no difference in substance between the two phrases. The starting point is a “strong presumption” that commercial parties intend all disputes to be determined in a single forum – and if they wished to exclude a particular type of claim from the scope of an arbitration agreement, they would need to do so expressly.

Mrs Justice Joanna Smith DBE agreed with BDW that the adjudicator had jurisdiction over its claims including the DPA claim. On an analysis of the authorities, she held that:

Fiona Trust “confirms a ”strongly signposted” departure from previous linguistic distinctions between disputes arising on the one hand “under” and, on the other hand, “arising out of” or “in connection with” the underlying contract between the parties”.

The “relevant “underpinnings” for adjudication are in many ways similar to those identified by Lord Hoffmann [in the Fiona Trust] for arbitration”. This therefore “strongly supports” the application of the Fiona Trust principle to adjudication provisions.

She further found that there was “no significance in the differing wording in the arbitration and adjudication provisions of this Building Contract”. This did not “indicate a clear intention that the jurisdiction of the adjudicator would be narrower than that of the arbitrator (as opposed to, say, indicating merely that the draftsman was following the wording of section 108 HGCRA 1996 for the purposes of the adjudication provision)”.

Although only a summary judgment application, this decision is significant. The parties’ contract in this case was based on an older JCT form, but the wording of the adjudication clause is substantially the same as in the JCT 2016 and 2024 – and as noted above, is based on section 108 of the HGCRA.

The decision confirms that the reference to disputes “under the contract” in such clauses will include statutory claims such as those under the DPA.

It provides clarity to parties wishing to revive, or potentially facing, previously time-barred claims under the DPA, confirming that these claims can be referred to adjudication. Claimants will welcome the confirmation that adjudication may be used to pursue fire safety defect claims, without concerns about wasted time and cost due to potential jurisdictional challenges.

The Supreme Court has recently heard the appeal in URS v BDW33. The Supreme Court decision, expected in Spring 2025, will bring the Defective Premises Act – legislation that until the BSA, was rarely used – further into the spotlight.