UK: Will The Court Stay Proceedings In Favour Of Adjudication?

Last Updated: 19 July 2007
Article by Jeremy Glover

It is well known that, following the case of Hershel Engineering Limited v Breen Property Limited [2000] EWHC TCC 178, section 108 of the Housing Grants Construction & Regeneration Act 1996 means exactly what it says. An adjudication can be commenced at any time, even if there are court proceedings already in progress. However, until the case of DGT Steel and Cladding Ltd v Cubitt Building and Interiors Ltd [2007] EWHC 1584 (TCC), which came before His Honour Judge Coulson QC, the reverse question had not come before the courts.

DGT were engaged by Cubitt to carry out external cladding works under a sub contract, based on Cubitt’s standard terms, which contained adjudication provisions. Clause 19.1 provided that:

"Any dispute, question or difference arising under or in connection with the sub contract shall, in the first instance, be submitted to adjudication …"

DGT duly referred a claim for some £193k to adjudication. This claim was rejected by the adjudicator. DGT then commenced proceedings in the TCC for some £242k. Cubitt said that the claim brought in the court was very different to that brought in the adjudication and that as a result of there being a binding adjudication agreement in the contract, the litigation should be stayed until the new claim had been adjudicated. DGT said there was no mandatory adjudication provision and even if there was, the new claim was essentially the same as that which had already been adjudicated. In the alternative, DGT said the Court should exercise its discretion against exercising a stay in any event.

Judge Coulson QC noted that if the parties have agreed on a particular method by which their disputes are to be resolved, then the Court has an inherent jurisdiction to stay proceedings brought in breach of that agreement. He referred, by way of example, to the case of Channel Tunnel Group Limited v Balfour Beatty Construction Limited [1993] AC334 where proceedings had been commenced despite there being a term in the contract providing for an initial reference of disputes to a panel of experts. As noted above, in Herschel, Dyson J had refused an application for an injunction restraining an adjudication which had been commenced at a time when County Court proceedings were already on foot.

In addition, Judge Coulson noted that the Courts have exercised their own inherent jurisdiction to grant a stay even where the relevant term of the contract merely stated that if disputes or claims arising out of the contract were not resolved by negotiations, the parties would attempt in good faith to resolve the dispute through ADR. This was the case of Cable & Wireless Plc v IBM United Kingdom Limited [2002] EWHC 2059 where Colman J held that the ADR procedure set out in the contract was of sufficient certainty to be enforceable.

Judge Coulson summarised the law as follows:

"(a)The court will not grant an injunction to prevent one party from commencing and pursuing adjudication proceedings, even if there is already court or arbitration proceedings in respect of the same dispute…

(b) The court has an inherent jurisdiction to stay court proceedings issued in breach of an agreement to adjudicate …just as it has with any other enforceable agreement for ADR;…

(c) The court's discretion as to whether or not to grant a stay should be exercised in accordance with the principles noted above. If a binding adjudication agreement has been identified then the persuasive burden is on the party seeking to resist the stay to justify that stance; …

Judge Coulson was of the view that the adjudication clause, because of the use of the word "shall" was mandatory. Therefore any dispute should be submitted to adjudication in the first instance. This was both a right and an obligation. It was not discretionary. And it is important to remember that the right to adjudicate was a contractual one. Thus the provisions of the Housing Grants Construction & Regeneration Act were irrelevant to the dispute here. Having decided this, the next task was for the Judge was to consider whether he should exercise his discretion to order a stay to enable the adjudication to be concluded.

The original adjudication brought by DGT was a technical one based on the alleged failure by Cubitt to operate the contractual mechanism correctly. It was not a claim which was based upon or required any detailed evaluation of the work done by DGT. In the Court proceedings, DGT sought a sum representing the total value of work properly executed and the total value of materials delivered to site. It was therefore a valuation dispute dealing with the correctness (or not) of the DGT valuation of its sub-contract works. Therefore the disputes were substantially different.

In considering whether or not to exercise his discretion and order a stay, Judge Coulson identified two important factors. These were:-

  1. Failure to comply with the TCC pre-action protocol; and
  2. Suitability of the Tribunal

DGT had not complied with the TCC pre-action protocol. For example, there had been no face to face without prejudice meeting between the parties, which is, as the Judge said an "essential requisite" of the protocol. Therefore even if there had been no adjudication agreement, he would have ordered a stay of the proceedings. For a further example of the problems caused by not following the protocol, please see our article dated 10 May 2007, headed "Paying the Price of Failing to Comply With the Pre Action Protocol".

Further, this was a final account dispute. The majority of disputes were matters of valuation. Therefore in the view of the Judge, a construction professional would be a better placed to consider the dispute, at least in the first instance, than a Judge. Further, the Judge did not accept that it was much cheaper to litigate than to adjudicate. Such an argument was entirely dependent on there being an early settlement of the litigation. It was also not the case that DGT would be debarred from pursuing their claim. There would simply be a temporary stay of the Court proceedings which would last for a few weeks until after the adjudication.


Accordingly, the Judge decided that there was no reason for the Court not to exercise its inherent jurisdiction to stay the proceedings whilst the adjudication took place.

This article is based on an article from a forthcoming issue of the Fenwick Elliott Dispatch, a monthly newsletter which summarises recent key developments relating to contentious and non-contentious construction law issues. To see the current issue please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Jeremy Glover
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