Arbitrator to rule in Kier row

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A multi-million-pound legal wrangle between top five contractor Kier and London developer City and General is now in the hands of an arbitrator.

The arbitration aims to bring a close to a long-running dispute – which has included a string of eight adjudications – relating to work carried out on the site of the former Patent Office Library in London in 2002.

It is understood Kier Regional may be trying to claw back more than £10 million from City and General (Holborn).

The pair entered into a £11.65 million contract in November 2001 for refurbishment and rebuilding works at the site. But by the end of the construction programme, following a granted time extension of 60 weeks, Kier claimed the final cost had increased to £30 million.

While Kier will be looking to recoup at least part of this difference in the arbitration, the contractor is also hoping for a £1.25 million payment from C&G relating to wins in previous adjudications – money it has tried to recoup for several years.

In August, Kier made a last ditch effort to claim the money – which has been owed since 2004 – by seeking a third party debt order against two of C&G's sister firms, Cambridge Gate Properties and Temple Guiting Manor. Both were understood to be indebted to the London developer.

However, Mr Justice Coulson was forced to discard the claim this month after problems were discovered with the accuracy of the accounts given by the three firms.

In his judgment – prior to the beginning of the arbitration process – Mr Justice Coulson said the accounts of C&G, Cambridge Gate and Temple Guiting Manor had many "errors and [were of a] misleading nature".

Kier relied on the accounts to show that the two firms owed large sums of money to C&G. There was another blow for the contractor when, during the action, a cross-application was made by C&G to put the adjudication enforcement on hold until the arbitration had concluded.

The judge granted its wish, which means Kier is still waiting on the £1.25 million and may have to attempt to claw it back during the arbitration battle.

In handing down the decision, Mr Justice Coulson said he had "been concerned, and have expressed that concern on more than one occasion, that these hard-fought enforcement proceedings are distracting both parties from the major task of preparing for an eight week arbitration".

The arbitration, which began on Monday, is expected to last for eight weeks.