Mace v Baltic: three lessons on risk allocation and adjudication

The recent TCC decision of Mace Construct Ltd v Baltic Investment Holdings Ltd will not exactly make national headlines, but it contains several practical reminders for anyone involved in construction projects and contract drafting.

If you do not want to read the entire summary, you can take away this: bespoke wording matters, courts will hold parties to the deal they negotiated, and adjudicators have wider powers than many assume.

Mace was engaged under an amended JCT Design & Build 2016 contract for a major refurbishment project. The contract included extensive bespoke amendments, including a “schedule of derogations” dealing with design responsibility. Disputes later arose over extensions of time and planning risk, eventually reaching the High Court.

Three issues stood out.

1. The schedule of derogations was enforceable

Under a standard D&B contract, the contractor usually assumes full design responsibility from the outset. Here, however, the parties had negotiated a schedule stating that for certain items Mace would not take design responsibility until Baltic had finalised its requirements.

Baltic argued that the main contract terms overrode the schedule. The court disagreed.

The judge held that the schedule had been properly incorporated and did not contradict the contract; it simply qualified how design responsibility operated for specific items. The court’s approach was commercially sensible: where parties have clearly negotiated a bespoke allocation of risk, the court will try to make the documents work together rather than discard one of them.

Takeaway: if you negotiate carve-outs or qualifications to standard form obligations, record them clearly and consistently. The courts will generally seek to give effect to them.

2. The court would not rewrite the parties’ ‘planning risk bargain’

Mace sought a declaration clarifying which party carried the risk of planning delays. The court refused.

Why? Because the parties had already negotiated detailed bespoke provisions dealing with that exact issue. The judge was not prepared to paraphrase or improve the drafting after the event.

Takeaway: bespoke risk-allocation clauses will usually be enforced as written, even if, with hindsight, one party dislikes the commercial outcome.

3. Adjudicators can reopen extensions of time

This was the most significant point.

Mace argued that once the employer’s agent had granted an extension of time, that decision could not later be reduced or revisited by an adjudicator

The court rejected that argument.

Under paragraph 20 of the Scheme for Construction Contracts, an adjudicator has the power to “open up, review and revise” decisions and certificates unless the contract expressly states they are final and conclusive. This contract contained no such protection.

Importantly, the judge said the adjudicator must carry out the same prospective exercise that should originally have been undertaken, effectively stepping back into the shoes of the contract administrator at the relevant time, rather than judging matters with hindsight.

Takeaway: do not assume an extension of time is untouchable simply because it has been granted. Unless the contract expressly protects the decision, an adjudicator may be able to revisit it entirely.

This case does not radically change the law, but it is a useful reminder of three recurring themes in construction disputes:

•             negotiated documents matter;

•             courts are reluctant to rescue parties from their own drafting; and

•             adjudicators’ powers are extremely broad.

By the time a dispute reaches adjudication, the commercial battle has often already been shaped by the wording agreed months, sometimes years, earlier.

Getting the contract wording right at the outset is almost always cheaper than arguing about what it meant later. If you need expert legal advice, you can contact Sophie Thornley here.