Adjudication
The Supreme Court clarifies that claims arising from payments made pursuant to adjudicator's decisions are fresh causes of action
Aspect Contracts (Asbestos) Limited v Higgins Construction Plc (2015)
The Supreme Court has clarified that any claim arising from a payment made pursuant to a provisional adjudicator's decision, is a fresh cause of action generated by the payment itself and is independent of any contractual limitation period affecting the underlying claim. It therefore remains an option for paying parties who are on the wrong end of such an adjudicator's decision, to subsequently challenge it in court proceedings, even if the limitation period applying to the underlying claim has expired.
Aspect Contracts (Asbestos) Limited was originally retained by Higgins Construction Plc in 2004 to carry out an asbestos survey on a block of maisonettes which Higgins hoped to redevelop. The survey report was delivered in April 2004, however during the redevelopment in early 2005, Higgins found unexpected asbestos containing materials which required removal. After failed attempts at negotiation and mediation with Aspect and after a considerable period of time, Higgins referred the dispute to adjudication, claiming breach of contract and/or tortious duty of care, and damages of over GBP 800,000. The adjudicator issued her decision and ordered Aspect to pay Higgins GBP 490,000 in damages, interest amounting to just over GBP 166,000 and her fees of GBP 8,750 plus VAT. Aspect paid Higgins GBP 658,017 on 6 August 2009. Although Higgins had not recovered the entirety of its claim, it did not commence proceedings for the balance. The limitation period expired in April 2010 for any contractual claim and at the latest by the beginning of 2011 for claims in tort. However, Aspect subsequently issued proceedings in February 2012 to recover the sum it paid pursuant to the adjudicator's decision on the ground that no sum was in fact due to Higgins and thus the GBP 658,017 was repayable. Higgins counterclaimed for the balance of GBP 331,855 owing under its original claim.
In the Technology and Construction Court (TCC), Aspect argued that there was an implied term that a party which had paid money pursuant to an adjudicator's decision, remains entitled to have the decision finally determined by legal proceedings and to have the money repaid if the dispute was finally determined in its favour. The TCC found that there was no such implied term and that Higgins' counterclaim was time-barred. Further, in the absence of mistake or duress or a right to have the adjudicator's decision set aside, there could be no claim in restitution. Disagreeing, the Court of Appeal found there was an implied term that any overpayment relating to an adjudicator's decision could be recovered.
The Supreme Court agreed with the Court of Appeal and, additionally, gave Aspect permission to rely on restitution as an alternative claim to its primary claim for an implied term. It commented that adjudication is perceived as a speedy provisional measure and as such, an inability to recover a payment made pursuant to an adjudicator's decision would not make sense. Lord Mance stated: "it is a necessary legal consequence of the Scheme implied by the 1996 Act into the parties' contractual relationship that Aspect must have a directly enforceable right to recover any overpayment to which the adjudicator's decision can be shown to have led, once there has been a final determination of the dispute." He went on to find that Aspect's cause of action arose from the date of payment to Higgins and as such, a claim could be brought at any time within six years from then. Higgins however, was time-barred from pursuing its counterclaim. This was a consequence of Higgins' own decision not to commence legal proceedings within the relevant limitation periods.
http://www.bailii.org/uk/cases/UKSC/2015/38.html
Anti-Suit Injunctions
Application for anti-suit injunction refused because the application was not made promptly
Essar Shipping v Bank of China (2015)
The High Court emphasises that failing to apply in a timely manner for an anti-suit (or anti enforcement) injunction is likely to be fatal to the application.
The claimant charterer, Essar Shipping Ltd (an Indian shipping corporation and part of the Essar Group), sought an anti-suit injunction restraining the defendant bank, Bank of China Ltd (a state-owned commercial bank), from continuing proceedings in China in breach of a London arbitration agreement. Essar Shipping had waited two months before challenging the jurisdiction of the Chinese courts in those proceedings, and a further seven months (from the deadline for commencing London arbitration proceedings) to bring its application for an anti-suit injunction in England.
The High Court explained that those seeking anti-suit or anti-enforcement injunctions should act promptly since failing to do so increases the risk of the injunction being seen as an inappropriate interference with the foreign court's jurisdiction. The Court clarified that applicants for an injunction were not required to challenge the foreign court's jurisdiction prior to seeking the injunction. The Court refused the injunction since Essar Shipping had not brought the application sufficiently promptly. The application should have been issued and served by the end of November 2014, given that the deadline for bringing London proceedings expired in January 2015. If it had been issued by this time, the Bank of China could have and would have begun protective arbitration proceedings before the deadline for doing so expired.
Thus, the Bank of China had been prejudiced by Essar Shipping's delay. The Court stated: "there can be no doubt that lack of promptness alone may justify refusal of an anti-suit injunction." Additionally, "it is not a question of whether it is reasonable to apply to the foreign court, nor of whether there will be long delay in the foreign court, but a question of whether the application in this court has been made promptly."
http://www.bailii.org/ew/cases/EWHC/Comm/2015/3266.html
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