ADJUDICATION

Lessons of DB for adjudication

'Everybody has won and all must have prizes' How the Dispute Board process could improve UK adjudication by Murray Armes, Construction Law Journal 2011 Vol 27 No 7.

The author examines the use of dispute boards in international contracts, and advocates their increased use in domestic contracts to enable attempts at dispute avoidance to be succeeded by a binding decision.  He concludes that this is desirable because adjudication has become distant from the original Latham intentions.

Tolent Clauses

Outlawing Tolent clauses and the LDEDC Act 2009: the denouement of section 108 by Dominic Helps, Construction Law Journal 2011 Vol. 27 No. 7

The regular Construction Act Review column considers the LDEDC Act attempt to prevent pre-allocation of costs as a means of inhibiting reference to adjudication by the use of Tolent clauses.  The roles of the Construction Umbrella Bodies Adjudicator Task Group and John Riches in pointing out ongoing lacunae in the legislation are acknowledged and the author concludes that an appellate decision will probably be required to see whether Tolent clauses have or have not been banished successfully.

Construction Law Vol. 22 Issue 9 November 2011

contains the following articles:

Adjudication under the 'new' Construction Act
by Vijay Bange, Trowers & Hamlins

The specialist contractor view
by Marion Rich, British Steelwork Association
(on the LDEDC Act)

11th Annual Case Law Index

Case Law Index by Peter Sheridan Construction Law Journal 2011 Vol. 27 Issue 8 p.649

This is the 11th annual case law index published in the regular Construction Act Review column.  It contains over 400 cases with references in alphabetical order (although this includes some reports of appeals).  The second part of the index is a classification of the cases under over 130 subject headings, ranging from sections of the Act and provisions of Scheme to topics such as the JCT contracts, procedural issues like declaratory relief and adjudicators' decisions.

More than one dispute?

Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] TCLR 8 TCC

The Council, as employer, sought to resist enforcement of the adjudicator's decision on the ground that Beam, the contractor, had referred 4 disputes to adjudication: the first relating to the draft final account, the second to the final account, the third being interest on retention and the fourth for payment of retention, so that the adjudicator lacked jurisdiction.  The court held that these were all aspects of the same dispute, namely what was due and owing to the contractor and that the adjudicator had therefore had jurisdiction.  Summary judgment was given in favour of the contractor. Fastrack Contractors v Morrison (Simon Hargreaves) applied. 

See Lanes Group v Galliford Try Infrastructure under Keating Chambers Reported Cases on second adjudication on same dispute and refusal of enforcement for appearance of bias.

ARBITRATION AND DISPUTE RESOLUTION
International Arbitration Law Review 2011 Vol. 14 Issue 5

contains the following articles:

The new ICC Rules of Arbitration: a brief overview of the main changes
by Thierry Berger and Mark Roberts, Eversheds, London

How far can party autonomy be stretched in setting the grounds for the refusal of arbitral awards?
by Hong-Lin Yu, University of Stirling

'Other international obligations' as the applicable law in investment arbitration
by Charles Kotuby Jr, Jones Day, Washington DC

Contractual claims in treaty-based arbitration – with or without umbrella and forum selection clauses
by Sanja Djajic

China's CIETAC Arbitration – New Rules under review
by Judy Zhu, Mayer Brown

Jivraj v Hashwani – the UK Supreme Court overturns a controversial Court of Appeal ruling on arbitration clauses
by Richard Smith, Angeline Welsh and Manish Aggarwal, Allen & Overy

Mandatory ICC provision in Guatemala's Arbitration Law is declared unconstitutional by the Constitutional Court of Guatemala
by Luis Fernando Bermejo, Guatemala

Mealey's International Arbitration Report Vol. 26 Issue 9 September 2011

contains the following articles:

Arbitration panel impasse results in majority decision award and subsequent set aside in Spanish court
by Calvin Hamilton and Gabriela Torres, Hamilton, Madrid

The new Arbitration legislation in Hong Kong and France, a comparative study
by Alfred Wu, Sidley Austin, Hong Kong

Witness preparation in international arbitration – a cross cultural minefield
by Ian Meredith and Hussain Khan, K&L Gates, London

District Court rejects use of Section 1782 in aid of ICC arbitration
by Mark Beckett, Marc Suskin and Jennifer Glasser, Latham & Watkins, New York

Arbitration Vol. 77 No. 4 November 2011

the journal of the Chartered Institute of Arbitrators contains the following articles:

The influence of the delocalisation and seat theories upon judicial attitudes towards international commercial arbitration
by Masood Ahmed, Birmingham City University

Scott v Avery clauses: o'er judges fingers who straight dream on fees
by Andrew Tweeddale, Corbett & Co and Keren Tweeddale, South Bank University

International arbitration in London: a view from outside
by Kaj Hobér, Mannheimer Swartling, Stockholm

The rise, fall and rise of international arbitration: a view from 2030
by Lucy Greenwood, Fulbright & Jaworski, Houston

Enforcement of a foreign award under Ghana's new Alternative Dispute Resolution Act 2010
by Funmi Iyayi, Accra

Practice Guideline 16: the interviewing of prospective arbitrators
by the Practice and Standards Committee of the CI Arb

The enforcement of adjudicators' awards under the HGCR Act 1996
by Kenneth Salmon, Weightmans, Manchester

The return of normality: the UK Supreme Court decides Jivraj
by Hew Dundas, Centro International de Arbitraje e Mediacion, Quito

Sword of US class arbitration beaten to ploughshares
by Stephen Caplow, Davis Wright Tremain, Seattle

Expert witness immunity swept away
by Michael O'Reilly

Two connected contracts, one with an arbitration clause, one without
by Patrick Taylor

The Journal of International Arbitration Vol. 28 No. 5 October 2011

contains the following articles:

Shifting the burden of proof in the practice of the Iran-United States Claims Tribunal
by Ali Marossi

Harmonization and delocalization of international commercial arbitration
by Renata Brazil-David, ITSO

Negotiation and drafting arbitration agreements with Chinese parties – special considerations of Chinese law and practice
by Paul Friedland and Bin Yang, White & Case, New York

The three mediations (light and shadow of the Italian example)
by Mauro Rubino-Sammartano, European Court of Arbitration

Party autonomy and the constitutionality of Nigerian Arbitration and Conciliation Act 1988 ss7(4) and 34
by Chukwuemka Ibe, Nnamdi Azikiwe University, Nigeria

The expanded role of the appointing authority under the UNCITRAL Arbitration Rules 2010
by Sarah Grimmer, Permanent Court of Arbitration

The new AFA Rules
by Detlev Kühner, BMH Avocats, Paris

Arbitration Law Monthly Vol.11 No.10 November 2011

contains the following articles:

Challenging the award
On Michael Wilson & Partners v Emmott
- serious irregularity and error of law

Anti-suit Injunctions
on AES Ust-Kamenogorsk v Ust Kamenogorsk Hydropower Plant
- a court's jurisdiction to grant an anti-suit injunction

Confidentiality
on Milsom v Ablyazov
- confidentiality in disclosure of documents

Enforcement of arbitration awards
on Uganda Telecom v Hi-Tech Telecom
in the High Court of Australia on grounds for refusal of enforcement under the New York Convention

Arbitration Law Monthly Vol. 12 No. 1 December 2011/January 2012

contains the following articles:

Arbitrability: unfair prejudice petitions
On Fulham Football Club v Richards and the issue of arbitrability of unfair prejudice petitions under the Companies Act 2006

Enforcement of arbitration awards: failed mediation
on Gao Haiyan v Keeneye Holdings
on the enforceability of an award by an arbitrator who had engaged in Med-Arb

Enforcement of arbitration awards: Summary enforcement
on Sovarex v Romero Alvarez
on whether summary enforcement should be stayed pending foreign proceedings

Agreement to arbitrate: scope of arbitration clause
on PT Thiess Contractors Indonesia v PT Kaltim Prima Coal
on the scope of an arbitration clause where different disputes were allocated to different dispute resolution mechanisms

Mealey's International Arbitration Report Vol. 26 Issue 10 October 2011

contains the following articles

Arbitration clause drafting: court examines meaning of 'in connection with'
by Calvin Hamilton and Gabriela Torres, Hamilton, Madrid

Obtaining injunctions in aid of arbitration in United States Federal Courts: addressing a potential threshold jurisdictional bar
by Joseph Profaizer and Daniel Prince, Paul Hastings

Purchase price accounting arbitration: why courts sometimes find that disputes about purchase price are not subject to purchase price arbitration
by David Herrington and Jerilin Buzzetta, Cleary Gottlieb, New York

CONSTRUCTION AND ENGINEERING
CONTRACT DISPUTES LAW

Concurrent delay

City Inn Ltd v Shepherd Construction Ltd [2011] 136 Con LR 51 Court of Session Inner House

This is the Scottish case which caused much interest by advocating the use of 'apportionment' between relevant event and other events on a fair and reasonable basis, even in situations where it was not possible to identify a 'dominant cause' of delay.  Lord Osborne delivered the majority opinion, setting out five main propositions, of which the fifth contains the above proposition. It appears unlikely that the English courts will follow this approach.

Fitness for purpose

Makers (UK) Ltd v BSS Group plc [2011] BLM Vol. 28 No. 8 Court of Appeal

The CA dismissed the appeal by suppliers BSS against the finding of the court that they had breached the implied term of their contract that goods supplied would be reasonably fit for their purpose under s.14(3) Sale of Goods Act 1979.  The suppliers had impliedly been made aware of the purpose of the materials, which were adaptors and valves for the plumbing of a public house, by previous orders.  They should have realised that the transaction in question linked back to previous orders and should have ensured that the products supplied were similarly compatible with the purchasers' purpose.

Breach of Building Regulations breaches contract

Lowe v W. Machell Joinery Ltd [2011] BLM Vol. 28 No. 8 Court of Appeal
 
The non-compliance of a staircase with Building Regulations meant that it breached the requirements of satisfactory quality and fitness for purpose under the Sale of Goods Act. The fact that it could be made to comply relatively easily did not change this finding and accordingly the purchasers had been entitled to reject the staircase. The suppliers' appeal failed.

Time and Concurrent Delay

Time for completion and concurrent delay Adyard Abu Dhabi v SD Marine Services
by Michael Curtis QC
Construction Law Journal 2011 Vol. 27 No. 7. 560

This article considers the Adyard case (Adam Constable QC and Lucy Garrett), a marine case concerning the supplier's entitlement to an extension of time in circumstances of alleged concurrent delay. The author defines the prevention principle and review the classic cases including Multiplex Constructions v Honeywell (David Thomas QC and Marc Rowlands). He concludes that the apportionment approach taken by the Scottish courts in City Inn v Shepherd is unlikely to be applied by the English judges. There is extensive consideration of Royal Brompton v Hammond (No. 7) ( Adrian Williamson QC, Marcus Taverner QCand Abdul Jinadu) and of Henry Boot v Malmaison ( Finola O'Farrell QC). The author doubts the dominant cause analysis, as well as apportionment, as a solution.

Note that the case of Adyard v SD Marine is reported in this issue of Con LJ: it has already been noted in the September 2011 issue.

Delay Analysis

Delay analysis, the application of common sense to facts and the curious case of City Inn Ltd v Shepherd Construction Co
by Keith Pickavance, Hill International, Construction Law Journal 2011 Vol. 27 No. 8

This is a very critical analysis of City Inn v Shepherd, suggesting that the concurrency issue should never have arisen, that the decision of the Outer House was wrong and that the decision of the Inner House cannot be relied upon in England/ Wales.

Construction Law Vol. 22 Issue 9 November 2011

contains the following articles:

The Peak effect
by James Pickavance and Michael Mendelblat, Herbert Smith, on concurrency and the prevention principle

City Inn v Shepherd lost at sea
by Sean Brannigan QC and Elspeth Owens,
4 Pump Court, on Adyard Abu Dhabi v SD Marine (Adam Constable QC and Lucy Garrett)

Arbitrators are not employees
by David Owen and Rebecca Podd, Clyde & Co
(on Jivraj v Hashwani)

Unjust enrichment argument fails
MacDonald v Costello
[2011] 137 Con LR 55
[2011] BLR 544 Court of Appeal

The claimant contractors sought to obtain payment from the individuals who owned the client, a shell company, by means of an unjust enrichment claim relating to moneys taken out of the company by them.  The claim failed, the CA holding that to allow the unjust enrichment claim would undermine the contractual arrangement between the parties.

CONTRACT AND PROCUREMENT LAW

Anti-competitive tendering penalties

GF Tomlinson v Office of Fair Trading [2011] 136 Con LR 152 Competition Appeal Tribunal

A number of English contractors appealed to the Tribunal against fines imposed for 'cover pricing', i.e. the collusive submission of tenders at artificial prices to provide 'cover' for other tenders, in the sense of making them appear competitive. This is a breach of the Competition Act 1998 s.2(1).

The Tribunal held that it was relevant in assessing the penalties levied that many contractors had thought cover pricing to be legitimate. The maximum penalty was 10% of the contractor's turnover, which was in the years of the decision, not the infringement.  Appeals based on the OFT's raising of fines for deterrence were successful, but the OFT was entitled to impose fines for each infringement.  OFT should have taken into account in fixing the fines the fact that much of a contractor's turnover goes to subcontractors.

Construction Law Vol. 22 Issue 9 November 2011

contains the following articles:

Interim certificate abuse tackled
by Michael Phipps, Thurston Consultants on changes in the 2011 JCT contracts

Scoping your financial exposure
by Anne-Marie Friel, Pinsent Masons

Employers' risk and insurance responsibility
by John Wright, JD Risk Associates

Construction Newsletter September/ October 2011

contains the following article:

Industry Talk
by Richard Pike, Stephenson Harwood on Hackney Empire v Aviva Insurance
(David Thomas QC): on the extent of performance bond obligations

GENERAL AND PROFESSIONAL NEGLIGENCE

Consequential loss

Network Rail Infrastructure Ltd v Conarken Group Ltd [2011] 136 Con LR 1 [2011] BLR 462 Court of Appeal

The CA dismissed the appeal by the defendants in a claim for damage by vehicles to the railway infrastructure.  The court had held at first instance that the railway network owners could claim as consequential loss the payments which they had to make, by way of compensation, including loss of profit, to the main operating companies.  The Con LR included "robust editorial comments" in support of the first instance decision and these were indicated by the CA's finding that the sums payable by Network Rail to the train companies were neither unenforceable, nor too remote, which fall to be considered together.

See Tinseltime v Roberts under Keating Chambers Reported Cases on the liability of independent contractors when exceptionally hazardous activities are being undertaken.

Negligent valuation duty in buy-to-let

Scullion v Bank of Scotland [2011] BLR 449 Court of Appeal

The CA allowed the appeal by the defendant valuers against the finding that they owed a duty of care to a purchaser of buy-to-let properties who claimed to be entitled to rely upon the valuation which they had carried out for the lending institution. This was distinguished from Smith v Eric S. Bush on the ground that the transaction was essentially commercial in nature.

Recovery from trade association

A lesser splash: trade associations, builder insolvency and tort liability
by Philip Britton
Construction Law Journal 2011 Vol. 27 No. 7 p.535

Using the case of Patchett v Swimming Pool & Allied Trades, the author considers three issues: whether there can be liability for inaccurate or misleading online information provided by a website leading to pure economic loss, the role of trade associations in relation to inquiries by intending employers and the adequacy of consumer protection for individuals in construction. The author deplores the lack of comprehensive statutory protection for consumers, such as is found in Australia, and suggests that reliance upon trade associations in the UK may be both more common and more hazardous.  He criticises the uncertain application of general principles of tort liability to such issues.

Defective Construction and Defective Premises Act

Harrison v Shepherd Homes Ltd [2011] Construction Law Journal Vol. 27 Issue 8 TCC

The case concerned serious defects in 94 large houses on a former landfill site in Hartlepool.  The claimant sought damages, including damages for loss of amenity, stress and inconvenience for breach of contract and under the Defective Premises Act.  The court had to interpret the meaning of the obligation to complete the works "in a good and workmanlike manner" in the context of a fitness for occupation/habitation duty.  The proper measure of damages was held to be diminution in value, as repair cost was inappropriate because the cost of reinstatement would be unreasonable. The loss  of amenity would not be based on Farley v Skinner, because it was a contract for the purchase of a new house and would be assessed at £150 per person per year of duration of the problem.

Latent damage claim

Broster v Galliard Docklands Ltd [2011] 137 Con LR 26 and [2011] BLR 569 (TCC)

Developers Galliard contracted to build 6 terraced house with ECL, the contractor, which they sold to 6 different purchasers.  8 years later, strong winds caused the roof to lift.  The then individual owners sued Galliard and ECL, seeking to rely (inter alia) on the 'complex structure' theory and the Latent Damage Act 1986 Section 3.  The court rejected the argument that the roof was a separate part of a complex structure causing damage to other property and thus actionable in negligence, because the terrace was a single structure and it would be artificial to treat the roofs as separate.  The Latent Damage Act s.3 could not assist, because Galliard's claim against ECL would only be for minor remedial works, so relying on that would not help the owners.

PRACTICE AND PROCEDURE

SeeMouchel v Van Oord (No. 2) under Keating Chambers Reported Cases on the costs recoverable in contribution proceedings following settlement with a third party.

See Carillion JM v Phi Group under Keating Chambers Reported Cases on the strict requirements for a letter to comprise a Part 36 offer.

Part 36 Offer

C v D (No 2) [2011] 136 Con LR 109 Court of Appeal

The Con LR Editors emphasise that Part 36 is "a carefully structured regime with a particular purpose, to which normal rules of contract law do not apply."  Specifically, the doctrine of lapse would not apply.  Whereas an offer in contract law open for 21 days would lapse after that time, a Part 36 offer open for 21 days would continue to be available for acceptance until withdrawn formally.

The Commercial Litigation Journal No 39 Sept/Oct 2011

contains the following articles:

Partnership: when partners fall out
by Peter Dodge, Radcliffe Chambers

Arbitration: being picky
by Philippa Charles, Mayer Brown

Disclosure: call of duty
by Mark Surguy, Eversheds

Intellectual property – Episode III: The final showdown
by Sarah Bazaraa (on the Copyright Designs and Patents Act)

Hold the line
by Simon Baggs and  Rachel Barber, Wiggin, (on injunctions under the Copyright Designs and Patents Act)

We can work it out
by Christopher Gilbert (on arbitration)

Through the looking glass
by Dov Ohrenstein, Radcliffe Chambers,  on reflective losses and derivative claims by shareholders.

County Court Jurisdiction Limit

The Civil Justice Council has announced support of Ministry of Justice plans to raise County Court limit from £25,000 to £100,000.  It also supports an increase in small claims limit, although amount is to be resolved.

Lloyds Maritime and Commercial Law Quarterly Part 4 November 2011

contains the following articles:

Restitutionary claims for services: identifying and quantifying the benefit
by Charles Mitchell, University College London

The uncertain future of Walford v Miles
by Alistair Mills and Rebecca Loveridge, Pupil Barristers at Landmark Chambers and Fountain Court Chambers (on agreements to negotiate and their enforceability)

See Rust Consulting v PB under Keating Chambers Reported Cases on the extent of liabilities under an indemnity in an asset purchase agreement.

See Mouchel v Van Oord (UK) (No. 2) under Keating Chambers Reported Cases on contributions to costs and interest in a Civil Liability (Contribution) Act case.

Performance bonds appeal dismissed

Meritz Fire and Marine Insurance Co Ltd v Jan de Nul NV [2011] 137 Con LR 41 and [2011] BLR 535 Court of Appeal

This is the appeal against the decision of the Commercial Court noted on the status of advance payment guarantees, which were held to be performance bonds.  The Court of Appeal, dismissing the appeal, upheld the finding that the guarantees required a literal translation, operating without regard to the underlying contract.  The buyers' demands were payable on receipt of the buyers' signed demand, certifying its conformity with the contract and that the contractor had not repaid the advance.

Time bar in insurance

William McIlroy (Swindon) Ltd v Quinn Insurance Ltd [2011] BLR 579 Court of Appeal

Sub-contractors' public liability insurer faced claims under the Third Parties (Rights Against Insurers) Act 1930 when the sub-contractor went into liquidation, following claims against it in respect of a fire.  The insurers sought to rely upon a time-bar defence but the CA, allowing the appeal, held that liability under an indemnity policy did not accrue unless and until the existence and amount of the liability to the relevant third parties had been established.

KEATING CHAMBERS REPORTED CASES

Carillion JM Ltd v Phi Group Ltd [2011] BLR 504 TCC

The case concerned Part 36 offers and the prescriptive nature of the requirements to be met in order to come within Part 36.  The letter sent by Phi was held not to comply with Part 36 because it did not specify a minimum period of 21 days before the accrual of costs consequences.
Simon Hughes QC

Tinseltime Ltd v Roberts [2011] BLR 515 TCC

The case concerns a negligence/nuisance claim brought against the highway authorities and their contractors and sub-contractors who carried out part of a road-building scheme in Wales.  Issues to be decided included whether the claimant company had a sufficient interest in the land for a nuisance claim or whether it was held under a personal licence by a director.  Tinseltime had acquired rights to sue by assignment from the previous company.  The court held that generally the client would not be liable for the torts of its independent contractor, either in negligence or nuisance, and the ultra hazardous activities exception should be confined to a minimum.  Tinseltime could sue the contractors and sub-contractors but not the highway authorities.
Richard Coplin

Alstom Transport v Eurostar International Ltd [2011] TCLR 5 Ch. Div

The court considered Alstom's application for an interim injunction to restrain Eurostar from entering into a contract with Siemens for the design, supply and maintenance of high speed trains.  Alstom alleged that Eurostar was in breach of the Utilities Contracts Regulations 2006.  The court decided that, whilst there was a serious issue to be tried and damages was not an adequate remedy, on the balance of convenience relating to the public interest, the application should not be granted.
Sarah Hannaford QC
Jessica Stephens

Mouchel Ltd v Van Oord (UK) Ltd (No. 2) [2011] 137 Con LR 105 [2011] BLR 492 TCC

In the first hearing, the court determined contribution proceedings between joint tortfeasors who were both sub-contractors to the main contractor on a combined cycle power station.  Mouchel's liability arose from inadequate design of a protective system and Van Oord's from failure to install one.  Mouchel's liability was assessed at 65% and Mouchel's at 35% on the facts, applying the Civil Liability (Contribution) Act 1978 and the test in Royal Brompton Hospital v Hammond (No. 3) ( Marcus Taverner QC)

The court now dealt with costs and interest, determining Van Oord's contribution to interest, Van Oord's contribution to the costs of main contractor Kier, which it assessed in the same proportion as its contribution to damages and Mouchel's claim for costs from Van Oord, which was rejected.  The court applied the CA decision in BICC v Cumbrian Industrials ( Ian Pennicott QC and Marcus Taverner QC)
Jonathan Selby

Lanes Group plc v Galliford Try Infrastructure Ltd [2011] 137 Con LR 1 and [2011] BLR 553 TCC

This is a continuation of litigation. There was held to be no bar to starting a second adjudication relating to the same dispute as the first adjudication; it would not have been an abuse of process to raise this point in enforcement proceedings.  However, enforcement of the decision was refused because of the adjudicator's preparation of a 'preliminary views document' which could have raised the suspicion in the minds of a reasonable person that the adjudicator had made up his mind before receiving all the submissions.
Jonathan Selby

Rust Consulting Ltd v PB Ltd [2011] 137 Con LR 92

This is the Court of Appeal decision, on the case concerned the interpretation of an asset purchase agreement by which PB took over Rust, a geotechnical engineering consultancy.  One of Rust's clients pressed the liquidators of Rust to enforce indemnities given by PB under the asset purchase agreement, having obtained a consent judgment for breach of professional obligations by Rust.  The Court of Appeal, which was "very critical of the 'convoluted' drafting" as the Con LR Editors noted, held that the purchaser assumed all the liabilities of the vendor as attributable to the business.
David Thomas QC
Justin Mort


The articles and papers published by Keating Chambers are for the purpose of raising general awareness of issues and stimulating discussion. The contents must not be relied upon or applied in any given situation. There is no substitute for taking appropriate professional advice.

This material is prepared for Chambers by our Director of Research and Professional Development, Professor Anthony Lavers (LL.B., M.Phil, Ph.D. MCI.Arb, MRICS Barrister), Visiting Professor of Law, Oxford Brookes University.

The articles and papers published by Keating Chambers are for the purpose of raising general awareness of issues and stimulating discussion. The contents must not be relied upon or applied in any given situation. There is no substitute for taking appropriate professional advice.

This material is prepared for Chambers by our Director of Research and Professional Development, Professor Anthony Lavers (LL.B. M.Phil Ph.D. D.Litt MCI.Arb FRICS Barrister) Visiting Professor of Law, Oxford Brookes University.

www.keatingchambers.com