PBS Energo AS v Bester Generacion UK Ltd [2019] EWHC 996 (TCC)
By Jeremy Glover
PBS sought the summary enforcement of an adjudication decision in the sum of £1.8 million. Bester resisted on the basis that the decision had been procured by fraud. Bester had entered into a subcontract with PBS for the engineering, procurement, construction and commissioning of a biomass-fired energy-generating plant. Disputes arose, and proceedings were issued in the TCC arising out of an alleged termination. The full hearing is currently listed for July 2019. In the interim, PBS commenced an adjudication where the adjudicator decided that PBS had validly terminated the subcontract. He also ordered that Bester should repay the performance security of £2.7 million. PBS had to enforce this decision, with the Judge commenting that it was not: “unfair to characterise Bester’s conduct as adopting every and any device to stave off the evil moment of payment.”
PBS started a second adjudication seeking the valuation and payment of certain claims. Issues included the value of the equipment that had been manufactured at the time of termination of the contract. The adjudicator here found that Bester was liable to pay £1.8 million. Bester had claimed that PBS was required to mitigate against its loss by selling on or using the items of plant on some other facility. The adjudicator disagreed, noting that there was evidence that Bester had caused PBS to manufacture the plant items which were now stored at factories in the Czech Republic. Mr Justice Pepperall having reviewed the existing authorities, including Gosvenor London Ltd v Aygun Aluminium UK (see Issue 215) noted that where the alleged fraud has been adjudicated upon, then the adjudicator’s decision should, without more, be enforced. Further, an adjudicator’s decision should usually be enforced where the allegation of fraud should reasonably have been taken before the adjudicator. The Judge continued that there was an: “important distinction between cases in which the fraud was, or should have been, put in issue in the adjudication and cases in which the adjudication decision was itself procured through fraud that was reasonably discovered after the adjudication was over.” Further, whilst the temporary finality of an adjudication decision was important, and the courts must be “robust” not to allow such policy to be undermined simply by the assertion of fraud, that policy consideration must: “yield to the well-established principle that the court will not allow its procedures to be used as a vehicle to facilitate fraud. Where, exceptionally, it is properly arguable on credible evidence that the adjudication decision was itself procured by a fraud that was reasonably discovered after the adjudication, the court is unlikely to grant summary judgment”. Bester said that PBS told the adjudicator that equipment manufactured for the project was stored to