London Underground Ltd v Citylink Telecommunications Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 20 July 2007 |
| Neutral Citation | [2007] EWHC 1749 (TCC) |
| Docket Number | Case Nos: HT-06–389, HT-06–390 |
| Date | 2007 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2007] EWHC 1749 (TCC)
Mr Justice Ramsey, Sitting in Private
The Honourable Mr Justice Ramsey
Case Nos: HT-06–389, HT-06–390
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Mr. R ter Haar QC, and Ms R Vella (instructed by Lovells) for the Claimant
Mr D Streatfeild-James QC, and Mr P Fraser (instructed by Herbert Smith) for the Defendant
Hearing dates: March 27, 28, & 29 2007
The Honourable Mr Justice Ramsey
Introduction
These proceedings concern arbitration claims under sections 68 and 69 of the Arbitration Act 1996 arising from an arbitration award in relation to the Connect Project.
The Connect Project is a Private Finance Initiative project which, over a period of some 20 years, involves the replacement of the entire communication systems throughout London's underground rail network together with the continued operation of that new system. It is one of the most complex renewal projects ever undertaken on the London Underground network.
The project is intended to deliver a fully integrated communications system across the Underground network to provide radio communications between trains and control rooms and to provide, via hand portable units, radio communications for staff and emergency services across the Underground network and also telephone communications between various LUL assets.
The main parties involved in the Connect Project are Citylink Telecommunications Limited (“CTL”) and London Underground Limited (“LUL”). CTL is a consortium with as its members Fluor Global Services, Thales Telecommunications Services Limited (“Thales”), Motorola Limited (“Motorola”), HSBC Investments and Hyder Investments Limited. LUL is ultimately owned by Transport for London (“TfL”) which is a corporate body established under the Greater London Authority Act 1999.
To implement the Connect Project, LUL and CTL entered into a Contract (“the Connect Contract”) made under Deed on 19 November 1999.
In the period up to 31 October 2001 there had been substantial claims for delay to the project which were settled by an Interim Claim Resolution (“ICR”). Further disputes arose between CTL and LUL as to extensions of time and financial compensation in relation to the period from 31 October 2001 to 31 December 2003 (“the Claim Period”).
Those further disputes were dealt with under the multi-tier dispute resolution process in Schedule 28 of the Connect Contract, which provides, first, for a reference to the Contract Manager then, secondly, for an Adjudication and then finally an Arbitration.
These proceedings concern the Arbitration of those further disputes relating to the Claim Period. The Arbitrator made an award dated 1 December 2006, referred to as the Delay and Disruption Arbitration: Second Interim Award (“the Award”). In the Award the Arbitrator held, in particular, that CTL was entitled to an interim extension of time of 48 weeks under Clause 31.7 of the Connect Contract to reflect LUL's breach of the Corporate Power Obligation in respect of Edgware Road which he found caused 48 weeks of delay to the commissioning of the Corporate Line.
In these proceedings both CTL and LUL make arbitration claims arising out of the Award.
The Connect Project
The New System which is being designed, installed and operated under the Connect Contract consists of two systems: the New Radio System and the New Transmission System. The New Radio System comprises the Radio Network operated in conjunction with the Voice and Data Network. The New Transmission System comprises the Voice and Data Network and the Video Network.
A new cable network is common to the systems. This network is run along the track sections and through designated stations, depots and offices. It includes a fibre optic cable, a series of copper cables and a “Leaky Feeder” cable. The communications equipment is housed in Communication Equipment Rooms (“CERs”) and Communication Equipment Cabinets (“CECs”). At the centre of the New System is a series of 11 core CERs connected by fibre optic transmission cable which forms the “Corporate Line”.
The work of designing, constructing, installing, implementing and testing the New System, referred to as the “EPC work”, was sub-contracted by CTL to Fluor Limited who, in turn, sub-contracted the work for the New Radio System to Motorola and for the New Transmission System to Thales.
Before the construction and installation of the EPC work could be performed, it was necessary for certain building and preparatory work to be carried out, particularly in relation to the CERs. That building and preparatory work was referred to as “Enabling Works” or “EBW”. Under the Connect Contract, EBW was the responsibility of LUL. Until early 2001 LUL used the Infracos (companies to whom it had transferred the Underground infrastructure and who now provide infrastructure services to LUL) to undertake the design and construction of the EBW. Subsequently, LUL used CTL to undertake this work under a variation to the Connect Contract, VN105.
The main ground for CTL's claims in the Arbitration was delay by LUL in carrying out the LUL Obligations under the Connect Contract, particularly related to EBW.
The Arbitration Claims
In this case there are applications by both parties under section 68 of the Arbitration Act 1996 and also an application for leave to appeal by CTL under section 69 of the Act. CTL's Application raises a number grounds under section 69 and also under section 68. LUL raises one ground under section 68.
In those circumstances, the parties were asked to make submissions as to the procedure to be adopted. The parties agreed that it would be sensible for the application for leave to appeal to be considered at the conclusion of the hearing of the section 68 applications of both parties. This course generally followed the procedure adopted by Colman J in Bulfracht (Cyprus) Ltd v Boneset Shipping Co Ltd [2002] 2 Lloyd's Rep 681 where he said at 682:
“The logical approach to multiple applications of this kind is almost invariably to determine the application to set aside or remit for serious irregularity first and to consider the question of permission to appeal once it has been decided whether the award can stand. Although applications for leave to appeal under s. 69 are normally on paper without an oral hearing, the course adopted in the present case of hearing oral argument on the application for leave at the same hearing as for the S. 68 application is a sensible and more cost efficient approach, particularly having regard to the fact that the underlying facts and legal submissions relevant to both applications are so closely related.”
As a result three days were set aside for hearing the applications and at the conclusion I gave a ruling refusing CTL's application for leave to appeal under section 69 of the Act. I reserved my reasons to this judgment.
In dealing with the hearing in this way and because of the overlap between CTL's grounds under sections 68 and 69 of the Act it has been particularly necessary to keep the two distinct processes of judicial analysis separate, as emphasised by Colman J in Alphapoint Shipping Ltd v Rotem Amfert Neper Ltd [2004] EWHC 2232 (Comm).
I now turn to consider the general principles for the determination of the applications under section 68 and under section 69 of the Act and also the particular matters that have been raised on the present applications.
Challenge on the Ground of Serious Irregularity under section 68
Under section 68 of the Act, a party may challenge an award on the grounds of serious irregularity, as that term is defined in sections 68(2)(a) to (i), which has caused or will cause substantial injustice to that party.
There are therefore two questions which have to be addressed in this case: was there an “irregularity” and is there or will there be “substantial injustice”?
As Lord Steyn pointed out in Lesotho Highlands v. Impregilo SpA [2005] 3 WLR 129, at paragraphs 28 and 29, the requirement of “serious irregularity” imposes a high threshold and it must be established that the irregularity caused or would cause substantial injustice to the applicant. He said that these requirements were “designed to eliminate technical and unmeritorious challenges”. The irregularity must fall within the closed list of categories in section 68(2) and nowhere in that subsection is there any hint that a failure by the tribunal to arrive at the “correct” decision is a ground for a challenge under section 68.
LUL's application is based on the ground that there has been a failure under section 68(2)(a) to comply with section 33 of the Act, or under section 68(2)(c) on the ground that there has been a failure to conduct the proceedings in accordance with the agreed procedure.
Although CTL's grounds do not refer to the precise subsections, it is apparent that the application is also made under sections 68(2)(a) and/or (c) on the basis that CTL states that “the Arbitrator reached a number of highly significant conclusions of fact and law in respect of matters not pleaded, not the subject of evidence and/or not raised or dealt with in the submissions to him”. In addition, part of the application is, it seems, brought under section 68(2)(d) on the basis that “the Arbitrator did not deal with a significant issue raised before him.”
I shall now consider the requirements for each of the grounds under sections 68(2)(a), (c) and (d).
Section 68(2)(a)
This ground relates to a failure to comply with section 33 of the Act which provides that:
“The tribunal shall -
act fairly...
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