|
|
|
Main and subcontract arbitration proceduresBy Victoria Russell |
|
|
Lafarge v Shephard Shephard were engaged by Essex County Council under the ICE Fifth Edition form of Civil Engineering Contract. Shephard in turn engaged Lafarge on the FCEC blue form of subcontract to carry out asphalting work. Disputes arose and Lafarge served notice of arbitration in respect of their various claims. Shephard served notice that the disputes should be dealt with jointly with the disputes they had under the main contract and negotiations then took place between Shephard and Essex County Council. These negotiations were not successful. After two years Lafarge sought declaratory relief that it was entitled to have the subcontract dispute separately referred to arbitration, with Shephard contending that it was entitled to defer pursuing the arbitration whilst it negotiated with the employer. It was held by the House of Lords that a contractor who wished to invoke against a subcontractor the procedure under clause 18(2) of the subcontract was bound to initiate and progress the procedure under clause 66 of the main contract within a reasonable time. In particular, that contractor was not entitled to defer the procedure while he negotiated with the employer. What was a reasonable time was a question of fact. The contractor's duty was encapsulated by one of the judges as being to proceed "with all deliberate speed". In this case Shephard manifestly had not fulfilled that condition, had thus forfeited the benefit of clause 18(2) and Lafarge were free to pursue arbitration of the subcontract dispute alone. The judges were not unanimous in their view as to how the arbitration procedures should be handled; two of the judges called for a main contract arbitration in which the subcontractor was to be allowed active, albeit informal, participation and the other three suggested two separate arbitrations with the same arbitrator appointed to both and with concurrent hearings for similar disputes. Dredging v Delta This was another engineering dispute, with the main contract being the ICE Sixth Edition form of Civil Engineering Contract and the subcontract between the parties the FCEC blue form of subcontract. Delta sought to have disputes under the subcontract arbitrated but Dredging gave notice under clause 18(8) of the subcontract requiring that these disputes be dealt with jointly with the main contract dispute. An arbitrator was appointed to hear the subcontract disputes and made orders concerning the effect of the notices served by Dredging and concerning his own jurisdiction. Both parties appealed to the court. Proceedings were remitted to the arbitrator to decide which of the subcontract disputes remained within his jurisdiction and the arbitrator subsequently made an order holding that Dredging's failure to arrange a tripartite arbitration resulted in all of the subcontract disputes being within his jurisdiction. Dredging appealed this award. The issue was thus whether Dredging had failed timeously to arrange a tripartite arbitration and, in consequence, whether the arbitrator then had jurisdiction to hear all the subcontract disputes raised by Delta. HHJ Wilcox held that, on these facts, this was not the case. Any delay which had occurred was not wholly the contractor's fault. The contractor had commenced arbitration under the main contract and had invited the subcontractor to participate. As it remained possible for the subcontract disputes to be heard in the main contract arbitration, jurisdiction did not revert to the subcontract arbitrator. This judgment provides some further guidance as to what constitutes compliance with the obligation to secure joint dealing of the subcontract and the main contract disputes following service of notice under clause 18 of the FCEC form. The judge decided in this case that this obligation had been met and therefore that the disputes covered by the notices were still excluded from the jurisdiction of the arbitrator appointed under the subcontract. In passing, the judge commented that the power to remove an arbitrator was draconian and was not to be exercised lightly. Separate ProceduresAl Shaya v Retek This dispute centred on parallel software licensing and maintenance agreements which contained completely separate procedures for the resolution of disputes. One contained a provision for the reference of any dispute to arbitration and the other contained no arbitration provision at all. It was held that it was appropriate to ignore the provision for arbitration
in one of the agreements rather than to write an arbitration provision
into the other; any attempt to squeeze the dispute under the agreement
containing an arbitration clause by saying that it arose in connection
with it was "a step too far". The judge said that "the
need for consistency of treatment of the disputes under both agreements
was a powerful factor". |
|
|
|
|