Imperial Chemical Industries Ltd v Merit merrell technology Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Edwards-Stuart |
| Judgment Date | 23 October 2015 |
| Neutral Citation | [2015] EWHC 2915 (TCC) |
| Date | 23 October 2015 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2015-000256 |
[2015] EWHC 2915 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
London EC4A 1NL
Mr. Justice Edwards-Stuart
Case No: HT-2015-000256
Ms. Finola O'Farrell QC (instructed by Clyde & Co LLP) for the Claimant
Justin Mort Esq, QC (instructed by Mills & Co LLP) for the Defendant
Hearing date: 9 th October 2015
Introduction
This is an application by the Claimant, Imperial Chemical Industries Ltd ("ICI"), to enforce the decision of an adjudicator made on 15 June 2015. That decision was in the following terms:
"1. Imperial Chemical Industries Limited is entitled to the documents listed in Schedule 1 of the Notice of Adjudication and as repeated at Appendix 1 of this Decision.
2. I make no order for delivery up by Merit Merrell Technology Limited to Imperial Chemical Industries Limited.
3. Merit Merrell Technology Limited shall be responsible for the Adjudicator's fees in the sum of £17,690 + VAT. On Imperial Chemical Industries Limited paying in full the total Adjudicator's fees then Merit Merrell Technology Limited shall reimburse to Imperial Chemical Industries Limited the total of the Adjudicator's fees forthwith."
By way of enforcement ICI seeks a declaration in the terms of paragraph 1 of the Adjudicator's Decision and an order for payment of the Adjudicator's fees in accordance with paragraph 3 of the Decision. In addition, ICI seeks delivery up of all the documents listed in Appendix 1. The first and third parts of the relief claimed are opposed on the ground that the adjudicator had no jurisdiction to reach the decision he did. The second part of the relief claimed is resisted not only on that ground but also on other grounds, the principal one being that the Court cannot by way of enforcement make an order that the adjudicator expressly decided not to make.
This was the second decision made by the same adjudicator ("Adjudication No 2"). Since then, he has made a third decision on a further referral by the Defendant, Merit Merrell Technology Ltd ("MMT"), but his decision in that case — in favour of MMT on a dispute as to which party terminated the contract — is not before the court.
MMT contends that in Adjudication No 2 the adjudicator was nominated by the wrong nominating body and, further, either that ICI made contradictory submissions about which the procedural rules applied to the adjudication or that the adjudicator himself did not adopt the procedure stipulated by the contract. Each of these two factors, it submits, is sufficient by itself to make the decision invalid.
ICI submits that the adjudicator had the jurisdiction to make the decision that he did and, further, that the only practical way in which to give effect to his first declaration is to make an order for delivery up of the documents.
On the application before me ICI was represented by Ms. Finola O'Farrell QC, instructed by Clyde & Co, and MMT was represented by Mr. Justin Mort QC, instructed by Mills & Co.
The background
MMT, a process engineering contractor, entered into a contract with ICI for the installation of Steelwork and Tank Works at ICI's new paint processing plant in Ashington, Northumberland. The contract was made on the basis of an amended NEC3 form of contract. The initial contract sum was for just under £2 million. It is not in dispute that during the course of the work MMT was instructed to carry out a great deal of extra work. MMT asserts that the value of its works is in excess of £23 million.
In due course disputes arose about the quality of the welding carried out by MMT and as to the value of MMT's work. These resulted in a referral to adjudication in January 2015 by MMT ("Adjudication No 1") in which it claimed about £7,500,000 following service of an Interim Payment Notice on 21 November 2014. The adjudicator decided that ICI had not served a valid Payment Notice with the result that MMT was entitled to the sum claimed.
In that adjudication the request for an appointment of an adjudicator was made to the Chartered Institute of Arbitrators ("CIArb"). In its Adjudication Notice MMT's solicitors, Mills & Co, said this:
"We note that the Contract Data Part One identifies the Adjudicator Nominating Body as The Chartered Institute of Arbitrators but Appendix 2 refers to the Nominating Body as The Royal Institution of Chartered Surveyors. Unless you advise otherwise by return we will be applying to the Chartered Institute of Arbitrators for the nomination of an Adjudicator."
ICI's solicitors, Clyde & Co, responded to this letter by asserting that TeCSA was the nominating body under the contract. In the event, the adjudicator was appointed by CIArb and the adjudicator recorded that there had been no challenge to his jurisdiction by ICI. So far as the rules for the adjudication are concerned, the Option W2 procedure was adopted by the adjudicator, apparently without objection from either side.
During the course of that referral the contract was terminated. As I have already said, that gave rise to a third adjudication ("Adjudication No 3"). The same adjudicator was appointed by the same nominating body and the adjudication was conducted in accordance with the Option W2 procedure. Although I have not seen the decision, I understand that the adjudicator found in favour of MMT on the termination issue.
The relevance of the termination is that it gave rise to an argument by MMT in Adjudication No 2 that it was not obliged to perform any further obligations under the contract, at least so far as the provision of documents was concerned, because it was discharged from doing so by the termination.
The relevant terms of the contract
The contract, that was signed as a deed on 18 December 2012, set out the documents that formed part of it. They were as follows:
Invitation to tender letter.
The instructions to tenderers ("ITT").
This form of tender.
The Contract Data part one (and all Annexes)
Contract Data part two.
The form of agreement.
The Works information.
The Site information.
The scope of works, specifications and drawings provided by the Project Manager.
Agreed technical and commercial queries provided and authorised by the Project Manager.
The documents ran to nearly 400 pages.
Page 3 of the ITT included the following, under the heading "Secondary Option Clauses":
"This Engineering and Construction Contract conditions of contract are the core clauses, dispute resolution Option W2 and the clauses for Secondary Options X2, X4, X7, X13, X16, Y(UK)2, Y (UK)3, X18 and Z of the NEC3 Engineering and Construction contract June 2005 (with amendments June 2006 and September 2011) as amended by the Additional Conditions of Contract (Option Z)."
About two months later, on 11 February 2013, the parties entered into a Memorandum of Agreement, which consisted of a schedule of amendments to the contract. It was signed by Mr. Masterson, the Commercial Director of MMT on 11 February 2013. One of the clauses amended by that schedule was Option W2.
Option W2 is the Dispute Resolution provision in the NEC 3 contract. In its original form it looks like this:
" Option W2
Dispute resolution procedure (used in the United Kingdom when the Housing Grants, construction and Regeneration Act 1996 applies).
Dispute resolution W2
W2.1
(1) A dispute arising under or in connection with this contract is referred to and decided by the Adjudicator. A Party may refer a dispute to the Adjudicator at any time.
(2) In this Option, time periods stated in days exclude Christmas Day, Good Friday and bank holidays.
The Adjudicator
W2.2
(1) The Parties appoint the Adjudicator under the NEC Adjudicators Contract current at the starting date.
(2) The Adjudicator acts impartially and decides the dispute as an independent adjudicator and not as an arbitrator.
(3) If the Adjudicator is not identified in the Contract Data or if the Adjudicator resigns or becomes unable to act
• the Parties may choose an adjudicator jointly or
• a Party may ask the Adjudicator nominating body to choose an adjudicator
The Adjudicator nominating body chooses an adjudicator within four days of the request. The chosen adjudicator becomes the Adjudicator."
The procedure goes on to provide time limits for certain steps to be taken, the powers of the adjudicator and so on. The Contract Data contained a provision stating that the Adjudicator nominating body was CIArb.
In Schedule 1, which contains the Z clauses, page 43 is in the following form:
" DISPUTE RESOLUTION OPTION
Option W2
Dispute resolution procedure (used in the United Kingdom when the Housing Grants, Construction and Regeneration Act 1996 applies)
Delete and replace with 'The Contractor and the Employer acknowledge and agree that all Disputes shall be resolved in accordance with Appendix 2'."
Appendix 2 included the following:
[APPENDIX 2
Dispute Resolution Procedure
1. Disputes
Any Dispute shall be resolved in accordance with this Appendix 2.
2. Consultation
The Contractor and the Employer shall (without prejudice to any right they may have to refer any Dispute to adjudication in accordance with the Housing Grants, Construction and Regeneration Act 1996 ("Act") or any replacement or amendment to such Act) consult in good faith in an attempt to come to an agreement in relation to the Dispute. Any Dispute shall be resolved in accordance with this Appendix 2.
3. Assistance to Dispute Resolution
…
4....
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