4) Stay of enforcement to arbitration refused: Northumbrian Water Ltd v Doosan Enpure Ltd and another [2022] EWHC 2881 (TCC) Mrs Justice O’Farrell DBE The claimant (NWL) contacted with the defendant joint venture (D) on an NEC 3 form for the design and construction of a waste water treatment works. Although part of the water treatment work did not fall within the ambit of the Act by reason of s105(2), the parties agreed to adopt Option W2 and to provide under a tiered dispute resolution clause for adjudication followed by arbitration. A complex dispute arose over the validity of NWL’s termination and its consequences with a difference between the parties of some £80m. NWL referred the dispute to adjudication seeking determination of the net sum due on the termination account. Although the adjudicator granted D an extension of time, NWL was substantially successful and were awarded just under £22.5m. Without complying with the award, D served a notice of dissatisfaction and commenced arbitration proceedings for the final determination of the termination account. They did not raise any jurisdictional issue in relation the award. NWL issued proceedings in the TCC to enforce the award and D countered with an application for a stay of the court action to arbitration under s9 of the Arbitration Act 1996. The court held that the contractual tiered dispute resolution provision made it clear that the adjudication award was final and binding unless and until following a notice of dissatisfaction, a final determination was made at arbitration. The notice of dissatisfaction did not raise any jurisdictional issues about enforcement and thus there was no dispute about enforcement capable of being referred to arbitration.
What D was submitting would require an intermediate step between the adjudicator’s award and enforcement, namely the need to refer the award to arbitration to confirm the right to enforce it, and then back to court to enforce the arbitral award. That construction of the contract was uncommercial and contrary to the policy of the Act. However, since this was a contractual adjudication, the court had to look at the terms of the contract to decide their true meaning and effect. Doing so, the court placed significant weight on the parties’ having agreed that the adjudication award was binding on an interim basis. Enforcement by the lengthy process suggested would deprive it of efficacy and it would render it not ‘binding’ in any real sense. The court decided that such presumed intention meant reading the arbitration clause as excluding disputes concerning the enforcement of adjudicator’s decisions. D faced a further difficulty. Either the award was valid and enforceable, or it was a nullity. If a nullity, then following Macob[12] it was not caught by the arbitration clause, because it had no status under the contract and could not therefore be the subject of a dispute arising ‘under or in connection with’ the contract. The decision follows the judgment earlier in 2022 of Metropolitan Borough Council of Sefton v Allenbuild Ltd [13] where faced with similar issues, the court reached similar conclusions, albeit in that case the contract was subject to the Act and adjudication was pursuant to the Scheme, meaning that public policy considerations and the ‘pay now, argue later’ principle were key to the decision.
Comment
This is another example of the court looking to treat ‘contractual’ adjudication in the same manner as its big brother statutory adjudication, at least when it comes to enforcement and provided the terms of the contract so permit.
[12] Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] 3 EGLR 7 [13] HHJ Hodge KC [2022] EWHC 1443 (TCC)
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