Insolvency adds an extra layer of complexity to disputes between construction companies and contractors. In this episode, we discuss how these may (or may not) be resolved through adjudication.

When insolvency strikes, the path to resolving conflicts between construction companies and contractors can be much harder to navigate. Adjudication is often seen as a relatively swift and inexpensive route towards resolution – but it does carry some limitations, uncertainty, and risks.

In this episode, Ashurst colleagues Tom Duncan, Dyfan Owen and Stefan Jammes provide a brief overview of adjudication by an insolvent party, and adjudication against an insolvent party. Dyfan explains the challenges posed by insolvency set-off provisions, which have raised doubts about the efficacy of adjudication for insolvent companies. And he discusses the landmark UK Supreme Court case, Bresco v Lonsdale (2020), which affirmed the right of insolvent companies to adjudicate disputes.

Stefan and Dyfan explore the grey areas that surround the enforcement of an adjudicator’s decision in favour of insolvent parties, highlighting the stringent requirements for adequate security and the limited circumstances under which enforcement may occur. They also discuss the feasibility of adjudicating against insolvent parties and reflect on the court’s considerations when lifting the Insolvency Act’s moratorium on legal proceedings. Stefan emphasises that a balance must be struck between creditors’ interests and the insolvency process’s integrity.

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The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Listeners should take legal advice before applying it to specific issues or transactions.

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