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RBG Limited v SGL Carbon Fibers Limited [2012] CSOH 19 [payment provisions]

1 April 2015

The Facts

  • RBG was engaged by SGL to perform certain works, more particularly the construction of an additional production line, the construction of civil and structural elements, and the installation of equipment, piping and ducts at SGL’s premises at Muir of Ord Industrial Estate in Easter Ross.
  • The parties entered into an NEC3 Option C contract.
  • During the course of the contract, the parties departed from the payment mechanism under the contract to the extent that the employer’s quantity surveyor would approve the amounts the contractor intended to claim before a application for interim payment was made.
  • Two disputes were referred to adjudication and the resulting decisions challenged in court. The parties then agreed to arbitrate their disputes.
  • The arbitrator found that:
    • The contractor bore the onus of proof when claiming additional payments above what it had already received. Likewise, the employer bore the onus when attempting to recover amounts allegedly overpaid to the contractor.
    • Any agreement reached or assessment made as to the amounts to be paid on each assessment date was “on an interim basis only” and was not a final assessment of the Price for Work Done to Date (PWDD). Under clause 50.5 interim payment certificates can be corrected at a later date however, the onus at that stage, rests with the party pursuing the correction.
  • SGL appealed the award of the arbitrator on the basis there had been an error of law in finding that the employer bore the onus when attempting to recover any overpayment.
  • In the appeal SGL argued that the arbitrator made two separate errors:
    • Firstly the contract required the contractor to show in respect of each interim payment that the sums claimed by it are justified by its “accounts and records” and therefore fall to be included within defined cost (and therefore PWDD) rather than disallowed cost. The onus therefore lay on the contractor to justify the accumulated PWDD throughout.
    • Secondly the arbitrator wrongly attached significance to the parties’ departure from the contractual payment mechanism to the extent that the agreement or assessment of interim payments overrode the provisions placing the burden of proof on the contractor.


  • The court upheld the appeal and confirmed that the party challenging a certificate bears the burden of proof. In doing so, Lord Glennie considered the following:
    • Any assessment made by the project manager, and any certificate issued by him, is capable of being corrected by a subsequent assessment and certificate.
    • It does not follow from the non-binding nature of the project manager’s assessment and payment certificate that they should simply be ignored when calculating the final account, or when a party either seeks additional payment or recovery of overpayment.
    • The sum assessed and certified by the project manager becomes due on the assessment date.
    • Unless corrected at a later date by the project manager, or by an adjudicator or arbitrator, that sum remains for the purpose of future calculations the sum which is to be regarded as having been due at the assessment date.
    • Therefore, any party seeking correction of a prior assessment “must at least bear the burden of persuasion”.
    • The arbitrator (and under Option W1, an adjudicator) has the power to review and revise any actions or inactions by the project manager but a payment certificate would still stand until and unless corrected. In such circumstances, the onus must be on the party seeking to persuade the arbitrator (or adjudicator) to depart from the assessment of PWDD as made by the project manager.