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Huge Government Contract Dispute Back to Square One

A contract dispute between a technology company and a government department – with hundreds of millions of pounds at stake – has been put back to square one after the High Court pinpointed ‘serious irregularities’ in an arbitration process.

In a contract which was worth ‘a high nine-figure sum, if not more’, the department had engaged the company to design, develop and deliver a state-of-the art new technology system. However, the department purported to terminate the agreement before it had run its course and arbitrators were appointed.

They decided that the department had unlawfully terminated the contract; that it had repudiated the same and that the company had accepted that repudiation. The department was ordered to pay more than £185 million in compensation.

In overturning the arbitrators’ award, however, the Court ruled that they had in some respects failed to deal with the issues that were put before them as well as important parts of the department’s case. The department had suffered substantial injustice as a result of those irregularities. Overturning the award, the Court directed that a fresh arbitration panel be assembled to consider the dispute afresh.