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NEC3 ECS: Inaction on a notified CE by the Contractor to the Subcontractor
A Subcontractor notified and submitted a CE (also attached the quotation) to the Contractor. There were meetings (risk reduction) in between to try and resolve the CE which was fruitless. It couldn't be determined whether the CE was valid. The issue was never concluded and both parties went silent for over a year. 12 months later, retention was leased on the subcontract. the retention release was the last interaction between the two parties. More than a year later (after the retention release), the subcontractor reinstated the unresolved CE seeking payment on the basis that no conclusion was reached and final account had not been signed off. The reason that the final account was never signed off is that the subcontractor refused to sign because according to him, he is entitled to the unresolved CE he notified. The Subcontractor also argues that the Contractor's nonresponse to his CE notification is deeming the CE accepted.
According to 62.6 & 64.4 of the ECS, the Subcontractor did not fulfill the suspensive condition for him (the subcontractor) to notify the Contractor of his (the Contractor's) non-response, therefore cannot automatically deem the non-response as acceptance.
The contract has expired (Contract end date), and that according to W1.3, the Subcontractor should have notified a dispute Between two and four weeks after the Subcontractor’s notification of the dispute to the Contractor, the notification itself being made not more than four weeks after the Subcontractor becomes aware that the action was not taken.
Therefore the issue was deemed as closed.
Please advice if this is the correct approach.
Aug 15, 2019
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My experience of these events is that a lot more information comes out of the woodwork as you delve deeper.
So from what you say:
- you are correct in that without the notification under 62.6 - and possibly going back a stage the last para of 61.4 - the contract has not been followed so you can reject on this basis. But if the Subcontractor was to follow the contract, then they would have a good argument for saying a dispute has crystallised under the contract. From that moment, the 4 week time bar would apply
- as you are using W1, I assume the contract is not in the UK and therefore it is not compulsory that you go to adjudication prior totalling it onto the tribunal: arbitration or litigation. Consequently - and without knowing the law of which country (or even which country !) - they could probably still go straight to the tribunal without having to go through the potentially time-barred adjudication procedures.
As a side comment, one fo the flaws in NEC3, which has been corrected in NEC4, is that there is no final account sign-off.
Aug 16, 2019
Aug 16, 2019
Thanks for the insight, it is for a project in South Africa.
Aug 19, 2019
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