Adjudication enforcement: when financial risk will not justify a stay

What happened?

Avanton, a development SPV, engaged LUC Construction under a design-and-build contract for three industrial units at Culvert Court, London. Practical completion was certified in April 2025. The parties then disputed the final account.

In May 2026 LUC commenced seven adjudications about the valuation of the works. Avanton commenced its own adjudication concerning a notified sum of £1,877,640.25 and LUC's alleged failure to serve an effective payment notice or pay less notice. The adjudicator decided that LUC should pay Avanton that sum, plus interest and fees.

Three other adjudicators had awarded sums in LUC's favour concerning overvalued contra-charges. In enforcement proceedings Avanton conceded an adjustment for a separate award. LUC initially objected on natural-justice grounds, but abandoned those objections before the hearing. Its remaining application sought a stay of execution.

What did the court decide?

Mr Justice Constable entered summary judgment enforcing the adjudication decision, subject to the agreed adjustment, and refused LUC's application for a stay.

1. Repayment risk must be probable, not merely possible

LUC argued that Avanton might be unable to repay the judgment sum if arbitration subsequently determined that Avanton had been overpaid. The court applied the established principles governing stays in adjudication enforcement. A possible inability to repay was not enough: the party seeking a stay had to demonstrate probable inability to repay on the relevant evidence.

Avanton had limited available cash and substantial borrowing, but the court considered its position in the context of a group-funded development. It was not satisfied that LUC had established the necessary probability of non-repayment.

2. The risks of contracting with an SPV matter

Avanton was established for a particular development. Its finances reflected the normal commercial characteristics of a property SPV, including debt funding and reliance on its wider corporate group. LUC knew the nature of the contracting entity when the contract was made.

Even where a claimant may have difficulty repaying, a stay will not usually be justified if its financial position is similar to the position when the parties contracted. The court was not persuaded that the risk had changed sufficiently here.

3. The payer's hardship must also be evidenced

LUC said immediate payment could force it to cease trading and prevent it from pursuing arbitration. The court recognised that a payer's financial position may exceptionally matter when there is a risk of manifest injustice, but found the evidence insufficient. In particular, LUC had not adequately demonstrated that funding was unavailable from its owners, associates or other realistic sources.

Why does this matter for construction businesses?

Adjudication is intended to produce a temporarily binding decision that can be enforced promptly, even though the final account may later be decided differently. A party seeking to delay enforcement must confront that statutory policy and produce evidence directed to the recognised grounds for a stay.

The decision is especially relevant where a contractor is dealing with an SPV employer, or a payment dispute has developed into multiple adjudications and arbitration.

What should contractors and developers do now?

1. Reconstruct the payment cycle. Check the application, contractual due date, payment notice, pay less notice and service evidence.
2. Keep enforcement and final valuation separate. A different view of the eventual final account does not, without more, defeat an enforceable adjudication award.
3. Check financial evidence before seeking a stay. Accounts, realisable assets, facilities, group support and expected repayment capacity are likely to matter.
4. Investigate funding alternatives. A payer relying on financial hardship should be prepared to explain realistic owner, group or external funding options.
5. Consider security when contracting. Where an SPV will be the employer, assess parent-company guarantees, bonds or other appropriate safeguards at the outset.
6. Protect the route to final determination. Review any arbitration or litigation deadlines separately from the immediate obligation to comply with the adjudication decision.

What the judgment does not decide

The court did not finally determine the correct value of the works or the outcome of LUC's arbitration. It also did not decide that stays of adjudication enforcement can never be granted. The result depended on the evidence and the specific funding and contractual circumstances.