Clause 93.1 of the Engineering and Construction Contract’s Core Clauses permits a party dissatisfied with an adjudicator’s decision to refer the matter to arbitration, provided it notifies the other party of its intention within four weeks of the notification of the adjudicator’s decision or the within the time scale stated in the contract should the adjudicator fail to notify his decision within that time; whichever is the earlier. Tribunal proceedings may not be commenced before the completion of the entire works, or earlier termination.
Laing O’Rourke (LOR) alleged that Anglian Water Services Ltd. (AWS) had failed to serve a notice of dissatisfaction under clause 93.1 within four weeks of the adjudicator giving his decision. This was not an alleged failure to send the notice within the four week period, but an alleged failure to send it to what LOR maintained was the correct address. LOR relied upon clause 13 of the Core Clauses which dealt with “communication”.
At 16.19 on the 22nd March 2010, AWS’ solicitors, CMS Cameron McKenna, CMS, faxed a letter to LOR’s solicitors Pinsent Masons. This was a notice of dissatisfaction from the adjudicator, Dr. Robert Gaitskell’s decision which was issued on 24 February 2010. It was accompanied by a separate Notice to Refer a Dispute to Arbitration. Pinsent Masons’ Mr. Shelling acknowledged receipt of this in an e-mail at 17.03 on the same day. Pinsent Masons forwarded this the two people at LOR who were responsible for dealing with the dispute with AWS. The time limit for serving the notice expired at the end of the following day. Believing that all was in hand, neither firm of solicitors took further action, until a week later when CMS received a letter from Pinsent Masons which said that they would take instructions from their clients as to whether they were instructed to accept service and asked CMS to confirm that the relevant notice under clause 93.1 of the contract had been served on their clients in accordance with the contract.
THE VALIDITY OF CLAUSE 93.1
Whilst s.108(2) of the Act requires a contract to permit a party to refer a dispute to adjudication “at any time”, it is silent on whether a referral to adjudication should be a pre-condition of commencing proceedings in the courts or at arbitration. The judge was of the opinion that if a contract does require a party to refer a dispute to adjudication as a pre-condition to pursuing it at arbitration or in the courts, it does not prevent the party from seeking to refer disputes to adjudication “at any time”. It does, however, prevent a party from making a referral to arbitration at any time without having sought adjudication first. The Housing Grants Construction and Regeneration Act 1996 does not give a party a right to commence litigation or arbitration at any time, as AWS was in effect seeking to do.
The Act entitles a party to refer a dispute at any time from Day One of the contract. The fact that a party cannot start proceedings by way of arbitration in respect of any particular dispute until he has obtained a decision from an adjudicator on that dispute has no bearing whatever on his ability to choose when to refer a dispute to adjudication.
THE PROVISIONS OF THE NEC CONTRACT
Clause 90 of the contract had been subject to a number of amendments. Clause 90 sets out the initial steps of the dispute resolution process, whilst clause 93.1 deals with the situation once an adjudication award has been made within the required time, or the adjudicator has failed to make a decision within that time. Paragraph 19(1) of the Scheme sets down the time limits in which an adjudicator must make his decision. Paragraph 19 and clause 93.1 can be operated together and are not mutually exclusive. Read together, they provide that if an adjudicator fails to provide a decision in time, a party may refer the dispute to arbitration under that clause, provided he notifies of his intention to do so within four weeks of the date upon which the adjudication decision should have been given. It does not give that party the residual right to refer the dispute to a fresh adjudicator.
Clause 93 did not form part of the contract’s adjudication provisions. Although it was relevant to the adjudication provisions to the extent that non-compliance with its provisions would make an adjudicator’s decision final and binding, in form and substance it concerned the right to refer a dispute to arbitration. Although the clause did not sit easily with the Scheme, it was not incompatible, and did not need to be deleted because of the incorporation of the Scheme’s provisions.
WAS DELIVERY OF THE NOTICE OF DISSATISFACTION EFFECTIVE?
The commercial purpose of clause 13 was to enable each party to the contract to work on the basis that all communications in relation to the contract would be channelled through one particular office, with the obvious advantage of that every incoming document could be properly filed and its arrival properly recorded. In the judge’s view, compliance with the method of delivery specified in clause 13.2 was the only means of securing effective delivery of a communication under the contract because the communication only took effect when it was received at the prescribed address. Even though the notice was received in time by the relevant personnel at LOR, service had still not been accordance with the contract and was not effective service. However, the fact that AWS’ notice of arbitration was brought to the attention of the relevant officers at LOR within the required time would be a relevant factor if an application to extend time under section 12 of the Arbitration Act 1996 had to be heard.
WAS THE NOTICE ON INTENTION TO REFER TO ARBITRATION A COMMUNICATION RELEVANT TO THE ADJUDICATION?
The adjudicator had sent the parties his decision on 24 February 2010, on 22 March 2010 CMS had sent fax to Pinsent Masons which had stated “Notice to Refer a Dispute to Arbitration”, which had referred to the adjudication decision and indicating their dissatisfaction with it. The latest date for AWS to issue this notice would have been 23 or 24 March 2010. Pinsent Masons’ Mr. Shelling had replied by e-mail on the same day confirming safe receipt of the fax. The first issue raised by this exchange is whether or not the letter giving notice of AWS’ intention to refer the dispute to arbitration was a communication “relevant to the adjudication” and was therefore one which Pinsent Masons had confirmed could be served on Pinsent Masons instead of LOR.
Although the judge had already concluded that clause 93 did not form part of the adjudication provisions of the contract, it did not follow that a notice of intention to refer to arbitration a dispute decided by the adjudicator was not a communication relevant to the adjudication. If no notice of intention to refer were served within the four week period, the adjudicator’s decision became finally binding on the parties. A valid notice of intention to refer served in time was therefore relevant to the adjudication because it prevented the adjudicator’s decision being final. Whilst it is not part of the adjudication process itself, it was relevant to the adjudication for this reason.
AUTHORITY TO ACCEPT SERVICE
Pinsent Masons’ Mr. Harris had not had the ostensible or actual authority to accept service of the Notice to Refer because he had only had such authority in relation to the adjudication, and he had not done so. The fax of 22 March 2010 had not said that the notice of intention to refer was being sent by way of service: it just said that CMS were putting Pinsent Masons on notice that AWS wished to refer the matter to arbitration. The court did not accept that the consequence of not following the contractually prescribed method of service could be overcome by the fact that the documents were in fact passed on to the people who ultimately needed to receive them. The contract stated that service would take effect when received at LOR’s last notified address (or the address in the Contract Data if not changed). However, the letter of 22 March 2010 had been validly sent to Pinsent Masons because it was a document relevant to the adjudication.
APPLICATION FOR AN EXTENSION OF TIME UNDER SECTION 12 OF THE ARBITRATION ACT 1996
AWS argued that Pinsent Masons’ conduct in acknowledging the letter and notice from CMS had been the effective cause of CMS taking any further steps to serve the relevant documents to LOR’s office on the following day. The court accepted that it was clear that CMS had thought they had made effective when they sent the document to Pinsent Masons. They had used this method many times before without any challenge. Given this, the court found that it would be unjust to hold AWS to the strict provisions, and the court exercised its discretion and awarded an extension of time.
Anglian Water Services Ltd. v Laing O'Rourke Utilities Ltd.  EWHC 1529 (TCC)