Court rules settlement agreement was variation to original JCT contract and not standalone contract

The construction industry is seeing an increased number of settlement agreements that require remediation works to be conducted.

This is often due to the implications of Grenfell and the subsequent reforms in the law – which also makes it more likely that adjudication will apply to disputes arising under those agreements.

The outcome of the recent case London Eco Homes Ltd v Raise Now Ealing Ltd [2025] underlines this trend.

The case concerned a dispute between London Eco Homes Ltd (LEHL), a building contractor, and Raise Now Ealing Ltd (RNEL), the employer under a standard JCT Intermediate Building Contract (JCT contract).

During the project, which was based in West Ealing, London, various disputes arose between the parties. While the JCT contract contained an express right to refer disputes to adjudication, the parties resolved their disputes in a written settlement agreement (SA).

The SA required RNEL to pay a settlement sum to LEHL. RNEL did not comply, resulting in LEHL referring the dispute to adjudication.

RNEL disputed the jurisdiction of the adjudicator claiming that there was no right to refer a dispute to adjudication under the SA.

The adjudicator rejected RNEL’s argument and ordered RNEL to pay £95,000 plus interest to LEHL and the adjudicator’s fees.

RNEL did not pay, prompting LEHL to issue Part 7 court enforcement proceedings, seeking £125,748.11.

Parties’ arguments

The principal issue was whether the SA was a stand-alone construction contract or alternatively a variation of the JCT contract.

LEHL argued the SA was a variation of the JCT contract and, therefore, the adjudication provisions in the JCT contract applied, meaning the adjudicator had authority and therefore the £95,000 should be paid by RNEL.

RNEL argued the SA was a free-standing agreement intended to supersede and replace the JCT contract, as was evident from its entire agreement clause, meaning the adjudication provisions in the JCT contract did not apply.

RNEL argued that this and the fact there was no reference to adjudication in the SA meant that the adjudicator had no jurisdiction.

Decision of the court

The court dismissed RNEL’s arguments and enforced the adjudicator’s decision.

The SA was not a standalone construction contract to which the statutory adjudication provisions applied, because it did not provide for the carrying out of works that would constitute construction operations.

However, the SA constituted a variation of the JCT contract because it was closely tied to it.

The court referred to the recital clauses in the SA, which recite the background, and noted the reference there to the termination clause in the JCT contract and to the fact that the SA varied the payment provisions of the JCT contract.

The court therefore held that the SA was a variation of the original JCT contract, which meant that the adjudicator’s decision was valid, and RNEL had to pay the sums that fell due.

Key takeaways

Parties entering into settlement agreements should be clear about whether any parts of the original contract are intended to survive, in particular any dispute provisions.
Parties should consider whether adjudication is to be available for disputes arising under a settlement agreement. The statutory right to adjudicate cannot necessarily be relied on and, if available at all, may only apply to a part of the agreement.
If settlement agreements provide for construction works to be performed, the statutory right to adjudication is likely to be implied in those respects.

If you have any questions about Alternative Dispute Resolution, please get in touch with a member of our Dispute Resolution team

This article was co-authored by Trainee Ruaridh Brown.

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