Yuanda (UK) Co Ltd v WW Gear Construction Ltd [2010] EWHC 720 (TCC)
The effect of amendments to contractual adjudication clauses within JCT Trade Contracts
Facts
The claimant was a contractor instructed to install a glazed curtain wall in a hotel constructed by the defendant. The contract entered into between the parties was a JCT Trade Contract amended to the extent that the entire provisions relating to adjudication were deleted and replaced with a clause which, amongst other things, stated that, should the claimant bring any issue to adjudication, it would be responsible for all of its and the defendant’s costs irrespective of the outcome of the adjudication. It was further held that interest for late payment by the claimant should be set at 0.5 per cent above the base rate. The claimant sought a declaration that the amended provisions were void and directions as to how they should be replaced.
Issue
The issues in this context were whether the amended clauses were in compliance with the requirements section 108 of the Housing Grants, Construction and Regeneration Act 1996 and the Scheme for Construction. If they were not what should replace them in the contract and thirdly, whether the rate of interest was a substantial remedy within the meaning of the Late Payment of Commercial Debts (Interest) Act 1998.
Held
It was held that whilst the 1996 Act did not contain any provisions in relation to costs and that a contract allowing an adjudicator to award costs would notionally be valid, in these circumstances the clause relating to costs had the effect of preventing the claimant from effectively bringing a claim. The clause should be replaced by the adjudication provisions contained in the Scheme for Construction. Thirdly, the contractual interest rate, having regard to the fact that the matter had not been negotiated between the parties, could not be considered a substantial remedy under the 1998 Act.
Updated 20 March 2026
This case note accurately summarises the decision in Yuanda (UK) Co Ltd v WW Gear Construction Ltd [2010] EWHC 720 (TCC). The core legal principles discussed remain relevant, but readers should be aware of the following developments affecting the statutory context.
The Housing Grants, Construction and Regeneration Act 1996 was significantly amended by Part 8 of the Local Democracy, Economic Development and Construction Act 2009, which came into force on 1 October 2011. These amendments affected, among other things, the adjudication provisions under section 108 and introduced new provisions on payment notices. The Scheme for Construction Contracts (England and Wales) Regulations 1998 was also amended by the Scheme for Construction Contracts (England and Wales) (Amendment) (England) Regulations 2011. Readers should therefore consult the amended versions of both the Act and the Scheme when considering current adjudication requirements rather than relying solely on the pre-2011 position described in the article.
The Late Payment of Commercial Debts (Interest) Act 1998 has also been amended, most notably by the Late Payment of Commercial Debts Regulations 2013 (implementing EU Directive 2011/7/EU), which increased the statutory interest rate to 8% over the Bank of England base rate and introduced additional remedies including a fixed sum for debt recovery costs. The analysis of what constitutes a “substantial remedy” under the 1998 Act should be read in light of these changes. The underlying reasoning in Yuanda on this point has not been overruled, but the legislative landscape has changed materially since 2010.
