WHEN MIGHT A MAIN CONTRACTOR BE ABLE TO ARGUE THAT A SUBCONTRACTOR SHOULD PROPERLY BE CLASSIFIED AS NOMINATED RATHER THAN SELECTED?

Our courts or an arbitrator may be persuaded to follow the British case of St Modwen Developments & Kirkland Limited (1996). Here the contract between the parties stipulated a fairly standard procedure for the procurement of domestic subcontractors:

- The main contractor could choose whichever subcontractor it wished; or
- A list of potential subcontractors may be inserted into the Bills of Quantities by the employer and the main contractor may at its sole discretion choose a subcontractor from that list. But the procedure was not followed. "The general practice was for the architect or engineer on behalf of St Modwen Developments to obtain quotations from specialist subcontractors for supply and installation of the specialist work. When the appropriate subcontractor was identified by the design team, an instruction was given by Bowmer & Kirkland (B&K) to expend the relevant provisional sum by placing an order with the specialist subcontractor chosen exclusively by the design team."

The judge did not go so far as to say that they were actually nominated subcontractors, but the procedure used meant that they were treated as though they were.

Given this case and general legal principles, the label attached to a particular subcontractor may not necessarily determine that subcontractor's status. What may be of greater significance is the actual procedure used in the procurement process. The key question is the level of control the main contractor was able to exercise in relation to the choice of subcontractor. If the main contractor is allowed to make an unfettered decision, then any subcontractor engaged will properly be a domestic (or selected) subcontractor.

However, the waters become muddied where:

- A list is provided consisting of a small number of potential subcontractors
- The employer interferes with the procurement process, and/or
- The employer ignores objections from the main contractor as to the engagement of a particular subcontractor.

In the above scenarios, the main contractor's control over the selection and subsequent performance of particular subcontractors is lessened and it becomes more difficult to justify placing responsibility on the main contractor for the performance of the subcontractor. Given the decision in Bowmer & Kirkland, and the general principle that a spade doesn't become a shovel by calling it a shovel, the circumstances leading to the appointment of any subcontractor may be as important, if not more so, than the actual label attached to the subcontractor.

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