Provisions seeking to make adjudication the first point of call for parties seeking to resolve a dispute should have clear wording to that effect. It is clear from this case that care should be taken when drafting dispute resolution clauses, particularly where different methods of dispute resolution are being offered.
Mr Justice Akenhead – Queen’s Bench Division, Technology and Construction Court
The claimant engaged the defendant as roofing sub-contractors at a building site. The claimant claimed, after completion of the works, that the defendant was guilty of culpable delay which gave rise to the defendant seeking an extension of time. A question of whether certain terms and conditions were incorporated into the sub-contract was referred to adjudication, but was then aborted. A second adjudication was started by the defendant addressing the same issue. After the decision an arbitration was commenced and was ongoing at the time the current application for declaratory relief. The claimant sought from the court resolution on the issue of whether certain terms and conditions were incorporated into the sub-contract and whether a provision under the contract for the referral of disputes to adjudication before other proceedings was mandatory or not. For the purposes of this case summary, the issue of the adjudication provision is the focus.
Mr Justice Akenhead having held that the certain terms and conditions will form part of the sub-contract between the parties, turned his attention to the wording in those terms and conditions that stated “if any dispute or difference arises under the sub-contract either party may refer it to adjudication…”. Another provision of the terms and conditions stated that “subject to [the provision already quoted], if any dispute or difference… shall arise between the [claimant] and the [defendant]… then it shall be and is hereby referred to arbitration”. The question therefore was whether the referral of a dispute to adjudication was a pre-condition to starting, say, arbitration proceedings or not, i.e. was the referral mandatory. The claimant also argued that the Housing Grants, Construction and Regeneration Act 1996 provided the claimant an entitlement to refer disputes to adjudication first, as such the court should stay the arbitration proceedings until the issue was resolved by adjudication.
Akenhead J held, distinguishing the case of DGT Steel & Cladding Limited, 2007, that the adjudication provision was not mandatory but the arbitration was. It was also stated that that “very much clearer wording [would have been required] to make adjudication a pre-condition to arbitration”. Akenhead J also disagreed with the claimant’s contention that the HGCRA imposed a requirement to refer disputes to adjudication before any other proceedings were commenced. Further, the court suggested, proceedings should not be conducted in such a way so as to prevent a party from adjudicating the same dispute (for example, he suggested building adjudication into the timetable of the other proceedings), but this does not extend to the grant of a stay of proceedings.
Akenhead J held that it was ultimately not for the court to decide whether a stay should be issued but rather a matter for the arbitrator in the arbitration for which the stay was requested.
For full judgment, please click here