UK: Case Law Update - February 2012

ADJUDICATION

More than one dispute?

Witney Town Council v Beam Construction (Cheltenham) Ltd [2011] BLR 709 TCC

The Council, as employer, sought to resist enforcement of the adjudicator's decision on the ground that Beam, the contractor, had referred four 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 on retention, so that the adjudicator lacked jurisdiction on the last.  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.  Fastrack Contractors v Morrison (Simon Hargreaves QC) was applied.
 
See Jerram Falkus v Fenice Investments under Keating Chambers Reported Cases on time limit for challenge of adjudicator's decision.

Natural justice as a defence to enforcement and stay

NAP Anglia Ltd v Sun-Land Development Co Ltd [2012] BLM Vol. 29 No. 1 TCC

The court rejected criticisms by the defendant of the adjudicator's timetable, which gave the claimant first and last word and more time than the defendant received and also rejected complaints that the adjudicator had not understood or had not had regard to some of the defendant's arguments. There is not necessarily a breach of natural justice in failure to address particular aspects of a case or evidence, although failure to consider a substantive defence could be different.  The court would not grant a full stay on the facts on grounds of the claimant's financial status, but reduced the amount payable immediately by one third for this reason.

See Lanes Group v Galliford Try under Keating Chambers Reported Cases on jurisdiction of adjudicator on lapse and apparent bias.

See Sprunt v London Borough of Camden under Keating Chambers Reported Cases on agreement in writing under s.107 and adjudicator nominating body.

See Partner Projects v Corinthian Nominees under Keating Chambers Reported Cases on adjudicator's powers to award interest and financial status of defendant as ground for resisting summary enforcement.

ARBITRATION AND DISPUTE RESOLUTION

2012 ICC Rules in force

1st January 2012 was the date for the new ICC Rules of Arbitration to come into effect.  They apply to arbitrations commenced on or after that date, subject to express contrary agreement by the parties.

The 2012 Rules replace the 1998 Rules.

They contain important new provisions to encourage the tribunal and the parties to proceed in a cost-effective and efficient manner, both by emphasising their obligations in this respect and by providing for case management conferences.  Failures in this regard can be the subject of cost sanctions.  Arbitrators' obligations are impartiality and independence, rather than just the latter.

There are a number of other significant changes, notably relating to multiple parties, joinder and consolidation of arbitrations and to emergency arbitrator appointments.

Global Arbitration Review
European and Middle Eastern Arbitration Review
Special Issue 2012

contains the following articles:

Lost in translation? The independence of experts under the 2010 IBA Rules
by James Barratt, O'Melveny and Myers

Calculating pre-judgment interest
by James Nicholson, Noel Matthews and Alexandre Riviére, FTI Consulting

If all else fails: putting post-award remedies in perspective
by Jean-Pierre Harb, Edward Poulton and Matthias Wittinghofer, Baker & McKenzie

Recent developments in the jurisprudence of investment arbitration tribunals
by Charles Claypoole, Latham & Watkins

Sports arbitration
by Antonio Rigozzi and William McAuliffe, Lévy Kaufman

The remainder of the special issue is devoted to country updates:

Austria by Barbara Helene Steindl, Brauneis Klauser Prändl

Belgium by Johan Billiet and Dilyara Nigmatullina, Association for International Arbitration

Czech Republic by Miloa Olik, Rowan Legal

Finland by Jussi Lehrinen and Heidi Yildiz, Dittmar & Indrenius

France by Tim Portwood, Bredin Prat

Italy by Ferdinando Emanuele and Milo Molfa, Cleary Gottlieb Steen & Hamilton

Netherlands by Bommel van der Bend and Kirstin Nijburg, De Brauw Blackstone Westbroek

Oman by Abdelrahman El Nafie, SNR Denton

Poland by Maciej Jamka and Agnieszka Wojeiechowska, K&I Gates Jamka

Romania by Crenguta Leaua, Leaua & Associatii

Russia by Alexander Khrenov and Andrey Yukov, Yukov, Khrenov & Partners

Spain by Félix Montero Muriel, Pérez-Llorca

Switzerland by Elliott Geisinger and Angelina Petti, Schellenberg Wittmer

Turkey by Coşar Avukatlik Bürosu

Ukraine by Markiyan Kliuchkovskyi, Kseniia Koriukalova and Serhi Uvarov

UK by Audley Sheppard, Clifford Chance

Journal of International Arbitration Vol. 28 No. 6 December 2011

contains the following articles:

The arbitrator as mediator and mediator as arbitrator
by Paul Mason, Veirano Advogados

Judicial review of arbitral awards in international arbitration: a case for an efficient system of judicial review
by Hossein Abedian, Iran – US Claims Tribunal

Keeping the golden goose alive: could Alternative Fee Arrangements reduce the cost of international arbitration?
by Lucy Greenwood, Fulbright & Jaworski

Recent developments in arbitration in Australia
by Justice Clyde Croft, Victoria

Enforcement of arbitral awards annulled in Russia
by Albert Jan Van Den Berg

Big trouble in 'Little China': could a constitutional dilemma concerning state immunity threaten Hong Kong's position as a pre-eminent arbitration seat?
by Ashley Bell, O'Melveny & Myers, Singapore

Global Arbitration Review 2011 Vol. 6 Issue 6

contains the following articles:

Islam and arbitration
by Alison Ross

Don't bury your head in the sand
by Toby Landau QC
(on investor-state proceedings)

Disposing of the problem of meritless claims
by Adam Radiv, Wilmer Cutler Pickering Hale & Dorr, Washington DC

CONTRACT AND PROCUREMENT LAW

See Alstom Transport v Eurostar International under Keating Chambers Reported Cases on the criteria for the applicability of the utilities and public contracts regimes.

GENERAL AND PROFESSIONAL NEGLIGENCE

Negligence as a component of nuisance

Barr v Biffa Waste Services Ltd [2012] BLM Vol. 29 No. 1 TCC

The nuisance claim by local residents against operators of a landfill site was dismissed by Coulson J, since the operators were operating within the detailed terms of their permit and without negligence.  Despite the odours emanating, the use of the site amounted to a reasonable user and not a nuisance, although statutory authority could not be relied on.  The most interesting element of the decision may be the role of negligence in establishing nuisance: the BLM Editors note that "The finding that negligence is a necessary ingredient of these claims may prove to be controversial given that the relationship between negligence and nuisance has proved to be a vexed one".

PRACTICE AND PROCEDURE

See Hackney Empire v Aviva Insurance under Keating Chambers Reported Cases on effect of on-demand bond and obligations under side agreement.

See RBIL v Ryhurst under Keating Chambers Reported Cases on security for costs.

Extension of time following consent

Pannone LLP v Aardvark Digital Ltd [2011] BLR 695 Court of Appeal

Aardvark, a company represented by two directors, failed in its appeal against a decision that Pannone should receive a small extension of time in its service of reply and defence to counterclaim.  Pannone had agreed to a very rigorous time schedule which it narrowly failed to meet.  The court held that it still had the power to extend time even when the parties had agreed the order.  It is inherent in the CPR that the court can relieve parties from sanctions in respect of all orders, including those expressed as consent orders. 

'Conclusive evidence' clause in bond

North Shore Ventures Ltd v Anstead Holdings Inc [2011] BLR 757 Court of Appeal

This non-construction case is included in BLR, according to the Editors, because of the 'conclusive evidence' clause in the load agreement.  The Court of Appeal allowed (in part) the appeal by the Guarantor, since the simple enforcement of the clause could have had "the effect of transforming a straightforward guarantee, which is not phrased in terms of a performance bond payable simply on demand without proof of default, into something analogous thereto."  The certificate of breach in this case contained a "manifest error."

Exclusion clause and deliberate breach

Astra Zeneca UK Ltd v Albemarle International Corporation p2012] BLM No. 1 29 No. 1 Commercial Court

The law, in the view of the BLM Editors, is in "some disarray" as to whether an exclusion/limitation clause covers a deliberate repudiatory breach of contract. A Deputy Judge in Internet Broadcasting v MAR had held that there would be "a strong presumption" against an exemption clause covering deliberate breach. The Commercial Court in Astra Zeneca was very critical of this statement and the reasoning which produced it. It was found that there had, on the facts, been no such deliberate breach, but the court rejected perceived attempts to "revive the doctrine of fundamental breach" and refused to adopt an interpretation which would have denied the defendant any remedy in respect of the claimant's breach.

See Alstom Power & Somi Impianti under Keating Chambers Reported Cases on criteria for granting an injunction for return of documentation held by defendant.

KEATING CHAMBERS REPORTED CASES

Hackney Empire Ltd v Aviva Insurance UK Ltd [2011] BLR 728 TCC

Already reported in Con LR, the case concerns the effect and extent of a bond issued by Aviva to guarantee obligations of the contractor on the Hackney Empire theatre refurbishment. Obligations assumed by the contractor under a side agreement were held not to be within the scope of the guarantee by Aviva and so it had no liability in respect of the sums arising from those.  The court had to consider the extent to which the surety was prejudiced by payments on account made to the contractor, for claims which were never fully substantiated.
David Thomas QC

RBIL v Ryhurst [2011] BLR 721 TCC

In a dispute concerning a management services agreement, the defendant, a real estate investor, belatedly sought security for costs after a trial date had been fixed, following significant delay occasioned by amendments to claim and counterclaim.  The court held that the threshold for security of costs had been met, because on available information the claimant would probably be unable to pay costs if it lost.  The court exercised its discretion to reduce the gross amount to be taken into account to allow for the lateness of the application; a reduction from £2 million to £1 million was made to achieve a reasonable allowance for security which is not oppressive.
Marc Rowlands

Alstom Transport v Eurostar International Ltd [2012] EWHC 28(Ch) – 20 January 2012

The court had to decide whether the Utilities Contracts Regulations 2006 or the Public Contracts Regulations 2006 (as amended) applied to the procurement of the design, supply and maintenance of high-speed trains. Alstom claimed that the tender process conducted by Eurostar breached the EU procurement regime and challenged the award of the contract to Siemens.

The court considered the criteria for the application of the utilities regime as regards status and activity and the definition of 'contracting authority' for the public sector regime. Alstom sought to rely on the provision of State aid to the contracting authority as indicative of public sector status.

In the result, Eurostar was held not to be a utility for the purposes of the Utilities Contracts Regulations, nor a contracting authority for the purposes of the Public Contracts Regulations. Nor had it been so at any time between the start of the procurement and the conclusion of the contract with Siemens.
Sarah Hannaford QC
Jessica Stephens

Alstom Power Ltd v Somi Impianti [2012] CILL 3113 TCC

Main contractor Alstom succeeded in obtaining an interim injunction requiring the return of 'turnover package' documentation held by sub-contractor Somi, following termination of the sub-contract by Alstom. The documents had been removed from the site by Somi and taken back to Italy. The court recognised the importance of the documents to Alstom and that damages would not be an adequate remedy, since these would be substantial, due to the cost to Alstom of not getting the documents and the likelihood that Somi could not pay them.
Justin Mort

Galliford Try Infrastructure Ltd [2012] CILL 3116 Court of Appeal

Lanes challenged the judge's finding at first instance that the adjudicator still had jurisdiction, even though the referring party had failed to pursue the first reference to adjudication. GTI challenged the judge's finding of apparent bias on the ground that the adjudicator had given a preliminary statement of his views of the dispute.

The CA recognised the right to re-start an adjudication and the right to adjudicate would not be irrevocably lost by failure to serve a referral notice. The adjudicator accordingly had jurisdiction.  There was no apparent bias, since a fair-minded observer would characterise the Preliminary Views Document as a provisional view for the assistance of the parties and not as a final determination.
John Marrin QC

Jerram Falkus Construction Ltd v Fenice Investment Inc. (No. 4) [2012] BLM Vol. 29 No. 1 TCC

The case is described as part of a long-running saga of disputes between the parties.  It was reported in 138 Con LR.  The decision provides interpretation of the time limits for claims under the contract (JCT Design and Build 2005), holding that the 28 day deadline meant that the losing party in an adjudication would have to challenge the result within that time, by commencing arbitration or litigation. The BLM report does not include the (obiter) discussion of the prevention principle, for which see the Con LR.
William Webb


Sprunt Ltd v London Borough of Camden [2012] CILL 3124 TCC

Building consultant Sprunt entered into a framework agreement with Camden LBC by which it provided consultancy services as architect.  The dispute resolution provisions of the agreement enabled either party to refer disputes to arbitration, but identified Camden as the adjudicator nominating body.  Sprunt referred a dispute instead to the RICS and Camden sought to resist enforcement of the decision on two grounds: absence of a contract in writing for (the old) s.107 purposes and absence of entitlement of Sprunt to refer a dispute to RICS. The court found in favour of Sprunt on both grounds. Sprunt's letter with an amended (reduced) fee proposal accepted by Camden expressly incorporated the terms of the framework agreement and was therefore an agreement in writing. The provision for a party to be the adjudicator-nominating body offended against s.108 and against policy. The Scheme would therefore apply, under which a reference to RICS was an appropriate nomination.
Justin Mort

Partner Projects Ltd v Corinthian Nominees Ltd [2012] CILL 3120 and [2012] BLM Vol. 29 No. 1 TCC

Contractors Partner applied to enforce an adjudication decision including interest in their favour.  Owner Corinthian resisted, arguing that the adjudicator had exceeded his powers in the award of interest and that they should be granted a stay on the grounds of Partner's precarious financial position, which meant they would be unable to repay any interim award. The court held that the adjudicator was empowered to award interest under the contract and this could include interest on sums not certified by the architect, as well as those certified but not paid, because the contract gave him power to open up, review and revise any decision. No stay would be granted because Partner's financial position was caused largely by Corinthian's failure to pay.
Jonathan Selby

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.

Further Information
For further information on how our members can assist you, please contact the Director of Clerking, Paul Cooklin or Senior Clerk, Nick Child in the first instance on +44 20 7544 2600. The teams of Clerks will be pleased to advise you on the member of Keating Chambers appropriate to your requirements.

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.

www.keatingchambers.com

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