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THE EDINBURGH SCHOOLS PARTNERSHIP LTD v GALLIFORD TRY CONSTRUCTION (UK) LTD

Construction Law Reporter

THE EDINBURGH SCHOOLS PARTNERSHIP LTD v GALLIFORD TRY CONSTRUCTION (UK) LTD

Adjudication – Title to sue – Effect of assignation – Jurisdiction of the adjudicator – Natural justice

The pursuer sought to enforce the decision of an adjudicator. The defender sought to resist enforcement on three grounds. The first was that the pursuer had no title to refer the disputed matter to adjudication because it had assigned its rights under the Design and Build Contract with the defender to a third party as Security Trustee. The pursuer resisted this submission on the ground that the assignation was by way of security and not an absolute assignment. Lord Bannatyne rejected the submissions advanced on behalf of the defender and held that there was a "fundamental difference" between an absolute assignation and an assignation in security. In the present case there was no dispute that the assignation was by way of security and was not absolute. This being the case, the pursuer was not wholly divested of its rights. On the contrary the pursuer was held to have "a significant and continuing" interest in the Design and Build Contract. Given this continuing interest it was held that the pursuer retained title to use for its own interest and therefore was entitled to refer the dispute between the parties to adjudication. In so concluding Lord Bannatyne did not cast any doubt upon the validity of the present assignation of the Design and Build Contract, nor did he challenge the proposition that in a competition between creditors the assignation was valid and effectual as an absolute assignation. The assignation was effective but it did not have the effect of depriving the pursuer of its entitlement to refer the dispute to adjudication.

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