Subcontract – Adjudication – Arbitration – Dispute arising in connection with roofing contract – Claimant seeking stay of arbitration – Defendant seeking declaration that standard DOM/1 conditions incorporated into subcontract – Whether conditions imposing obligation to adjudicate – Whether court having jurisdiction to order stay of arbitration pending adjudication – Claimant’s application dismissed – Defendant’s application granted
The claimant was the main contractor employed to carry out superstructure works on certain buildings. The claimant engaged the defendant as the roofing subcontractors. The main contract used was the standard form of building contract (1998 ed) Private with Quantities.
Following the completion of the defendant’s works, the claimant indicated that it intended to deduct liquidated damages for an alleged eight-week period of “culpable delay”. The matter was referred to an adjudicator, who decided that the subcontract incorporated the claimant’s standard terms and conditions. The defendant served a notice of arbitration on the claimant.
The claimant in turn brought proceedings for declaratory relief that its terms and conditions had been incorporated into the subcontract between the parties and for injunctions that the defendant should be restrained from continuing with the arbitration and that an adjudication should be carried out before further proceedings took place. The defendant sought a declaration that the DOM/1 conditions (the standard form of subcontract for domestic subcontractors appropriate for use with the main contract) had been incorporated into the subcontract and that the claimant’s application to stay the arbitration should itself be stayed under section 9 of the Arbitration Act 1996.
The claimant argued, inter alia, that if, contrary to its primary contention, the DOM/1 conditions had been incorporated into the subcontract, it was entitled to refer the matter to adjudication under article 3.1 of those conditions or under section 108 of the Housing Grants, Construction and Regeneration Act 1996. Accordingly, it invited the court to exercise its inherent jurisdiction to stay the arbitration while an adjudication took place. The defendant took the view that any question of a stay was for the arbitrator.
Held: The claimant’s applications were dismissed; the defendant’s claim for declaratory relief was allowed.
On the evidence, the court was satisfied that the DOM/1 conditions rather than the claimant’s own term and conditions, had been incorporated into the subcontract.
The question of a stay was entirely a matter for the arbitrator. As a matter of construction of both the DOM/1 contract conditions and the 1996 Act, there was no precondition or obligation requiring either party to refer any disputes to arbitration. A party had a right to proceed to adjudication at any time if it so wished. If the matter proceeded to arbitration, the arbitrator was entitled to lay down a timetable that he considered to be apt.
Per curiam: It was open to any party to apply for relief to the requisite tribunal to enable it to exercise its right to adjudicate. However, it was not necessary to stay any legitimately constituted arbitration or court proceedings where there was merely a discretionary right to adjudicate, rather than a binding preconditional adjudication requirement. Having regard to the overriding objective, if following representation, the court believed that adjudication had a measurably good prospect of finally resolving at least some of the disputes, the court could build time into its trial timetable to enable a party to adjudicate. However, that was different from a stay. A party that had commenced court or arbitration proceedings was entitled to have them resolved as reasonably expeditiously as the court could achieve and justice demanded. It should not be forced to have those proceedings delayed or stayed by being forced to adjudicate when it did not want to exercise its right to do so.
Kim Franklin (instructed by Fenwick Elliott) appeared for the claimant; Gaynor Chambers (instructed by CJ Hough & Co Ltd, of West Sussex) appeared for the defendant.
Eileen O’Grady, barrister
