A dispute had arisen between the contractors and the developer with respect to the building shell contract in connection with the construction of a new psychiatric hospital. The contractors had raised a claim of approximately DKK 80m against the developer. The developer had tried to pass on a large part of the claim to the full-service consultant attached to the hospital project, claiming damages and reduction in the full-service consultant’s fee.

Plesner represented the full-service consultant, a partnership consisting of two firms of architects, as well as the full-service consultant's insurance company in the proceedings.

The Danish Building and Construction Arbitration Board found in favour of the full-service consultant on largely all points. It was found in the main proceedings that the developer is to pay DKK 40m plus interest to the contractors. The full-service consultant was only found to be liable in damages for an amount of DKK 1m and is accordingly the only party to the proceedings that is not to pay any legal costs to the Arbitration Board.

Refused to reduce fee

The proceedings confirm an increasing tendency for claims for the reduction in consultants' fees. Such claims are particularly hard on consultants, as they are not covered by insurance.

It is significant that the Arbitration Board rejected the developer's claims for the full-service contractor's fee to be reduced. The award substantiates that the bar for reducing a fee is and should be set relatively high.

This is the first of several arbitration proceedings concerning the psychiatric hospital construction project worth billions in which the full-service consultant is also involved and is represented by Plesner.