Successful defence of airport extension construction project

Brodies was instructed to defend Shetland Islands Council in a claim brought by Highlands & Islands Airports Limited relating to the design of an extension to Sumburgh Airport. Highlands claimed that it was experiencing ongoing damage to the runway as a result of defective design. The council denied the existence of design defects.

The matter came to adjudication and a decision was reached in Highlands' favour. However, it was discovered that the adjudicator had taken legal advice from senior counsel without informing the parties or giving them an opportunity to comment on the advice.

The council judicially reviewed the adjudicator's decision to have it declared unenforceable, having been made in breach of the principles of natural justice. Highlands argued that a letter written by the council stating an intention to take the dispute to arbitration (thereby appealing the adjudication) was in effect acceptance that the decision was valid.

The court decided that the decision was not enforceable and that the letter stating an intention to arbitrate was no more than a preserving of the council's rights. This decision has been widely reported in the trade press because of the unusual actions of the adjudicator in seeking legal advice without informing the parties, and the challenge that the council had accepted the adjudicator's decision as being valid when it wrote stating an intention to challenge it by arbitration (which it was contractually obliged to do).