When I drafted my article for the previous edition of IQ, which can be accessed here, I did not have a Part 2 in mind. My conclusion was clear on the valuable reminder from the recent English court cases about the need for care when drafting any Notice of Dissatisfaction (or "NOD"). If you do not, there is a real risk that a failure to follow the contract will result in the decision or determination in question becoming binding, something which will apply to challenges both to the merits and any jurisdictional objection. Well, we have a saying in the UK, that you wait ages for one bus and then two or three come along together.
And so, on 9 January 2023, another decision case about NODs, Ravestein B.V. v Trant Engineering Ltd [2023] EWHC 11 (TCC), was released by the Technology & Construction Court. Trant had engaged Ravestein to carry out certain engineering works under an amended version of the NEC3 form. Clauses W2.3(11) and W2.4(2) provided that an adjudicator's decision would be final and binding unless, within four weeks of the decision, one of the parties served a NOD setting out that it was dissatisfied with a matter decided by the adjudicator and that it intended to refer that matter to the tribunal.
On 11 April 2021, an adjudicator ordered Ravestein to pay Trant some £455k plus VAT. Ravestein did not pay. The next day, on 12 April 2021, Ravestein issued two e-mails addressed to the adjudicator and copied to Trant. In the first e-mail, Ravestein stated that: "we do not accept this adjudication and your jurisdiction in this case, therefore we do not recognition your ruling." In the second, Ravestein said that the adjudicator was not entitled to make any rulings and stated that, if they did not withdraw the ruling, their solicitor would file a request to reverse the ruling.
Ravestein commenced arbitration proceedings on 27 October 2021. The parties agreed that the arbitrator should first decide whether or not a valid Notice of Dissatisfaction had been served. It was not in dispute that, if Ravestein had not given a valid Notice of Dissatisfaction, the adjudicator's decision had become final and binding and could not be the subject of a further dispute resolution process. The arbitrator held that the April email was not a valid NOD, in that it did not contest the underlying decision. The NOD was:
"clearly a reference to the jurisdictional challenge. Nothing is said as to the correctness of the Decision."
Ravestein issued an application for permission to appeal the arbitrator's award pursuant to section 69 of the 1996 Arbitration Act. The key question for the court was whether the arbitrator's conclusion was obviously wrong or open to any serious doubt.
HHJ Kelly made it clear that:
"Objections as to an adjudicator's jurisdiction, if they are to bar enforcement of the award, have to be made in enforcement proceedings. Questions which relate to the merits of the dispute must be dealt with in arbitration. The courts strive to uphold adjudication and arbitration awards."
The Judge went on to confirm that the threshold of being obviously wrong is a high one and the correct legal test for this type of case was that adopted and applied correctly by the arbitrator here, namely:
"(1) that the notice requires the identification of the matter which the party disputes and that he intends to refer the matter to the tribunal;
(2) it was not sufficient simply to notify the other party that you do not accept that the adjudication decision is final and binding;"
Here, the wording used by Ravestein in the email was not sufficient, objectively read, either to identify the matter about which Ravestein was dissatisfied as including a dispute on the merits, nor that there was an intention to refer the matter to arbitration.
Conclusion
Ravestein had argued that the only requirement of the NOD here was to communicate to the other party that it did not accept the adjudicator's decision as being final and binding. The court here confirmed that this was not the case. On the contrary, a valid NOD under the NEC Form must set out the grounds on which the decision was disputed to make it clear that it was not simply a jurisdictional challenge that was being made, but that there was a challenge to the underlying correctness of the adjudicator's decision.
Clause W2.4(2) of the NEC Form here provided that:
"(2) If, after the Adjudicator notifies his decision a Party is dissatisfied, that Party may notify the other Party of the matter which he disputes and state that he intends to refer it to the tribunal. The dispute may not be referred to the tribunal unless this notification is given within four weeks of the notification of the Adjudicator's decision." [My emphasis]
Clause 21.4.4(b) of the FIDIC 2022 update which also requires that the NOD must be given within 28 says, says something very similar:
"(b) this NOD shall state that it is a Notice of Dissatisfaction with the DAAB's Decision and shall set out the matter in Dispute and the reason(s) for dissatisfaction."
So, the court would have reached a similar conclusion had the FIDIC form been being used.
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