Walter Llewellyn & Sons Ltd & Anr v University Hospitals Coventry and Warwickshire NHS Trust [2010] EWHC 3415 (TCC)

Here, Mr Justice Akenhead had to consider whether a stay should be granted under section 9 of the Arbitration Act 1996. What this meant was that he had to examine the dispute resolution provisions within the subcontract to ascertain whether the parties had, or had not, chosen arbitration. Llewellyn was a main contractor employed to design and build 121 timber framed buildings in South London. They employed Excel to carry out certain works on the site between mid-2002 and December 2003. In December 2003, Llewellyn’s business and assets were sold to Rok. The assets included the benefi t of the subcontract with Excel. Damage was discovered in a number of the properties in August 2004. Llewellyn and Rok claimed that this was the contractual and/ or tortious responsibility of Excel.

The subcontract included a Subcontract Order which was a pro forma document. This incorporated the second edition of the NEC Subcontract including Option A as well as numerous amendments contained primarily in an Additions Document. The Additions Document was said to override NEC2. Its purpose was to make the subcontract compliant with the Housing Grants Act. The Subcontract Data which forms part of NEC2 had not been fi lled in. Llewellyn argued that the NEC2 provided for arbitration only if the parties had expressly selected that form of dispute resolution.

The Judge held that, as a matter of construction, the parties had not selected arbitration. There was nothing in any of the subcontract documents which demonstrated an express or conscious agreement that arbitration should be used. In particular, the Additions Document was predicated upon a conditional hypothesis (“if the standard subcontract form makes a provision for settlement of disputes by arbitration”); the NEC2 provided for a tribunal but did not defi ne it; and the Subcontract Data itself was predicated upon the condition that if the tribunal was an arbitral tribunal then it should be identifi ed. A party must make express and clearly drafted choices for their dispute resolution processes. Where the NEC2 Subcontract or its more recent forms are used it is essential to fi ll in the Subcontract Data. Failure to do this can result in expensive and unnecessary arguments that can be easily avoided.