NHBC – No enforceable arbitration agreement

The NHBC or National House-Building Council seeks to raise standards in the home building industry to protect UK homeowners. There are roughly 20,500 registered builders who commit themselves to building homes in accordance with the NHBC standards of construction. The NHBC’s warranty and insurance policy, referred to as the Buildmark Scheme, protect over 30% of existing homes in the UK.

In a recent case involving a home with the benefit of the NHBC Buildmark Scheme, the TCC considered whether an arbitrator had been properly appointed in a dispute between a construction company and home owners. The developer argued that the NHBC dispute procedure within the Buildmark Scheme was not clear enough to be a binding arbitration agreement under the Arbitration Act 1996.

The court agreed with the developer. It held that the NHBC dispute procedure for disputes between home-owners and NHBC builders/developers does not contain a binding arbitration agreement. It instead offers a series of non-binding options for resolving disputes between home-owners and an NHBC developer or builder, of which arbitration is one.

This case makes clear that home owners across the UK who want to bring arbitration proceedings against an NHBC builder or developer under the Buildmark Scheme considered by the TCC do not have a contractual right to do so. An arbitration can only occur if there is a further agreement between the parties that a dispute be dealt with by arbitration. If the NHBC intended this to be the case, there may be no need for the wording of the Buildmark Scheme to be amended. On the other hand if it was intended that home-owners should have a right to take disputes to arbitration, the wording of the Scheme will need amendment.

Reference

:

Crest Nicholson (Eastern) Limited v Western

[2008] EWHC 1325 (TCC). Please click here to go through to the case information.