The Technology and Construction Court (TCC) has given judgment in a case involving the attempted enforcement of an adjudicator's decision which was in favour of a company in a company voluntary arrangement (CVA).

Adjudication, backed by a summary enforcement regime in the TCC, is a relatively swift and inexpensive way to resolve disputes involving construction contracts. The courts have allowed enforcement of adjudicator's decisions against insolvent companies in limited situations, and companies in CVA's have been held out to be more likely to succeed than those in insolvent liquidation.  

However, in the case of FTH Ltd v Varis Developments Ltd, where FTH were in a CVA, the TCC still applied the test of whether or not there was a real risk that if Varis was forced to pay FTH the sum awarded by the adjudicator, it may lose security for its cross-claim (said to be c.£1.7m).

The judge held that on its particular facts, the CVA was not one which would allow FTH to 'trade its way out of trouble' and in fact, the likely recovery under the CVA was likely to be significantly worse than had been forecast. 

There were real questions remaining about FTH's actual trading position, which had also not taken Varis's cross-claim into account. The judge declined to give summary judgment on the adjudicator's decision.  

The case law points to insolvent parties needing to provide actual security or providing very positive facts, to succeed in enforcing the adjudicator's decisions. If decisions cannot be enforced, there is little point in an insolvent company going through with the adjudication process in the first place.