Judge cuts award against Rentokil Initial after company issues "arrestment order" to freeze payment.
Doubts have been thrown on the effectiveness of the Construction Act in Scotland after a firm was able to halve an adjudication award despite losing the case.

Lawyers are concerned that other companies in Scotland will now copy the tactics used in this case to avoid complying with the act.

The complex case began when Rentokil Ailsa Environmental failed to comply with an adjudicator's decision to pay Eastend Civil Engineering £166 000.

When the specialist issued a petition for enforcement, Rentokil released a cheque to Eastend's lawyers for the amount owed, but later served an arrestment, a Scottish legal procedure that freezes payment due on a writ.

Rentokil also issued a writ for damages over work carried out on 13 contracts by Eastend, including two that had formed part of the adjudicator's ruling.

Eastend successfully applied to have the arrestment lifted, but Rentokil appealed the decision. In deciding the appeal on 31 March, Sheriff Principal Cox said it had not been the intention of parliament to allow arrestment to be used to avoid complying with an adjudicator's award.

However, because Rentokil's arrestment also covered contracts that were not part of the adjudication, part of the arrestment was allowed to stand. This means that Eastend will receive only half of the adjudicator's award.

Constructors' Liaison Group legal adviser Rudi Klein said: "It's good news the Scottish courts have found in favour of the act and said arrestment cannot apply on an adjudication. But it's a grave worry that arrestment can still be used to frustrate a decision in other ways." He added: "Clearly, Scottish contractors should start buying strengthened attaché cases and insist on payment in cash the minute the adjudicator makes his award." Louise Cook, solicitor with Edinburgh-based MacRoberts, which acted for Eastend, welcomed the ruling but said it represented a "split decision".

Tony Stephens, general manager corporate affairs at parent group Rentokil Initial, said Rentokil accepted the judgment and had no plans to appeal. He said: "We support the Construction Act, but this is not a typical case and we feel we were justified in our actions." Cook said a draft bill that restricted the use of arrestment had been prepared by the government.