EWHC 1878 (QB)
Rawlings made an application for the stay to arbitration of a Part 8 claim. Maelor had engaged Rawlings to carry out works at a meat processing premises in Wrexham on the basis of the 2011 JCT standard building contract with approximate quantities. Disputes arose and an adjudicator issued a decision in favour of Rawlings for some £720k. Maelor then issued the Part 8 proceedings noting amongst other things that:
- The objections to the adjudicator’s jurisdiction would be relied upon in defence of any enforcement proceedings.
- Maelor sought the court’s determination of issues of law which arose in the adjudication.
- In the adjudication, as well as disputing the adjudicator’s jurisdiction Maelor submitted that the interim payment notice (IPN) was invalid so that no pay less notice was required to be served and no sum was payable to Rawlings.
- The adjudicator rightly accepted that in order to succeed in a reference the IPN had to be contractually valid, but wrongly decided that the IPN was valid.
Article 8 of the Contract provided that any dispute or difference between the parties of any kind whatsoever arising out of or in connection with this contract should be referred to arbitration in accordance with CIMAR. However, Article 8 also provides for two exceptions to that arbitration provision. The second exception was:
“Any disputes or differences in connection with the enforcement of any decision of an adjudicator.”
The question for the court was whether the dispute between the parties contained in the Part 8 claim form was governed by the arbitration agreement or the exception. If the dispute was within that exception, then there could be no stay because the dispute would not be covered by the arbitration agreement.
Maelor said that if one focused on the dispute at hand, the reality of the situation here was that the Part 8 claim was a response to the adjudication award and a way of forestalling enforcement. Thus it was a defence to enforcement. Mr Justice Eyre QC disagreed. The dispute did not fall within the exception and was not a dispute in connection with the enforcement of a decision of an adjudicator. The wording of the exception specifically referred to “the enforcement of” an adjudicator’s decision.
The Judge said that:
“The use of those words and the need to give effect to them is…significant in the context where the underlying approach to adjudication awards is one of ‘pay now, argue later’, but where there are categories of challenge to an award which can operate as a defence to enforcement. One can see ample sense in the parties excluding from arbitration an application actually to enforce an adjudication award and a line of defence which relates closely and directly to enforceability of such an award.”
The wording of the Part 8 claim also included not only that: “The objections to the adjudicator’s jurisdiction will be relied upon in defence of any enforcement proceedings”, but also that “the employer seeks the court’s determination of issues of law which arose in the adjudication”. Maelor were seeking declarations said to be a matter of law as to the invalidity of the IPN, the incorrectness in law of the adjudicator’s decision and of whether sums were due pursuant to the IPN. Maelor referred to the Part 8 claim as being a “pre-emptive strike to defeat enforcement of the [adjudicator’s] decision”. This led the Judge to “pause for thought”, but in the end the Judge said that this could not prevail against the wording of the arbitration clause here and the emphasis in that clause on disputes in connection with the enforcement of a decision:
“The fact that a challenge by way of Part 8 claim, or indeed otherwise, to the correctness of an adjudicator’s decision might be a pre-emptive strike if made and determined in time, and might at the end of the day render nugatory the relief awarded by way of enforcement of an adjudicator’s decision, does not mean that it is a dispute or difference in connection with enforcement.”