High Court grapples with what constitutes 'construction operations'

In Engie Fabricom UK Ltd v MW High Tech Projects Ltd [2019] EWHC 1876 (TCC),
the central issue was whether works carried out at a gasification power plant were ‘construction operations’ as defined by the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996).  This had a crucial bearing on whether the
adjudicator, whose decision the court was being asked to enforce, had jurisdiction to determine the dispute in the first place.
Section 105(2) of the HGCRA 1996 lists exclusions from the definition of ‘construction operations’. It includes work on a site where the ‘primary activity’ is power generation (section 105(2)(c)(i)). 

Here, the parties’ dispute arose out of a contract for the construction of a fluidised bed gasification power plant. The question was whether the sub-contract works fell within section 105(2) or whether the ‘primary activity’ was the thermal treatment
of waste.  

It was common ground between the parties that if the primary activity of the site was power generation, the project works were not ‘construction operations’ under the HGCRA 1996 and there was no legal right or entitlement to adjudicate, meaning that
the decision was without jurisdiction and unenforceable. The claimant argued that power generation was a secondary activity at the site, and therefore the s 105(2) exclusion did not bite. The defendant argued that the primary activity at the site
was power generation, and that it was necessary to look at the nature and purpose of the whole site. Numerous examples were provided including the site’s proximity to a National Grid sub-station, and the fact that the claimant itself described
the project as ‘the £200m Energy Works EfW Plant… which will power up to 43,000 homes’.

On the facts, the judge said the answer was unclear and more evidence (factual and expert) was required to determine the issue. Consequently, summary judgment under CPR 24 to enforce the adjudicator’s decision was declined.  

This case illustrates the complications behind jurisdictional challenges concerning section 105 exclusions, resulting in the parties in this case ending up in expensive (ongoing) litigation. It also highlights the importance, at the outset, of the
referring party satisfying itself both (a) that it has a right to refer a dispute to adjudication, and (b) that proper steps are taken to avoid, where possible, subsequent challenges to the adjudicator’s jurisdiction.