Scrabster Harbour Trust+mowlem Plc Trading As Mowlem Marine V. Mowlem Plc Trading As Mowlem Marine+scrabster Harbour Trust
| Jurisdiction | Scotland |
| Judge | Lord President,Lady Cosgrove,Sir David Edward |
| Judgment Date | 22 February 2006 |
| Neutral Citation | [2006] CSIH 12 |
| Court | Court of Session |
| Docket Number | A225/05; |
| Published date | 22 February 2006 |
| Date | 22 February 2006 |
| FIRST DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord President Lady Cosgrove Sir David Edward, Q.C. | [2006] CSIH 12 A225/05; A226/05 OPINION OF THE COURT delivered by TEMPORARY JUDGE SIR DAVID EDWARD, Q.C. in RECLAIMING MOTIONS by SCRABSTER HARBOUR TRUST Pursuers and Reclaimers; against MOWLEM plc, trading as MOWLEM MARINE Defenders and Respondents: and MOWLEM plc, trading as MOWLEM MARINE Pursuers and Respondents; against SCRABSTER HARBOUR TRUST Defenders and Reclaimers: _______ |
Alt: Reid, Q.C.; Burness (for Scrabster)
22 February 2006
Introduction
[1] These are Reclaiming Motions at the instance of Scrabster Harbour Trust ("Scrabster") against interlocutors dated 23 March 2005 pronounced by the Lord Ordinary in two commercial actions, one by Scrabster against Mowlem Plc (trading as Mowlem Marine) ("Mowlem"), and the other by Mowlem against Scrabster.
[2] The actions arise out a contract between the parties which was subject to the ICE Conditions of Contract (5th Edition) as amended by ICE/5th Edition/HGCR/March 1998 and ICE/ScotArb/April 2001.
[3] The issue in both cases is the same - namely, whether a letter dated 15 September 2004 from Mowlem to Scrabster was a valid notice requiring arbitration in relation to certain disputes which had been the subject of a decision by an adjudicator. In one action Scrabster seek declarator that the purported notice was invalid and of no effect and that the decision of the adjudicator was final and binding. In the other Mowlem seek declarator that the notice was valid.
[4] Scrabster contend that the letter of 15 September 2004 was invalid as a notice requiring arbitration because it did not comply in a number of respects with the requirements of Article 1:3 of the Scottish Arbitration Code ("the Code"). In particular, it did not comply with the requirements of Article 1:3(g) of the Code in that it did not propose the name of an arbiter. (The Code uses the term 'arbitrator' rather than 'arbiter', presumably because it is intended for use outside as well as within Scotland.) Other aspects of non-compliance are raised in the pleadings but these were not pressed before us as going to invalidity.
[5] Scrabster contend that compliance with the Code, including Article 1:3, was made a condition of the contract by Clause 67(2)(a) of the ICE Conditions as amended, and that the consequence of non-compliance was to deprive them of the opportunity to put into motion the subsequent provisions of the Code in relation to the appointment of an arbiter.
[6] Mowlem contend, first, that Clause 67(2)(a) did not have the effect of incorporating Article 1:3 into the contract, but second, esto it was so incorporated, compliance with all the requirements of Article 1:3 was not mandatory, so that non-compliance was not such as to render the letter of 15 September 2004 invalid as a notice requiring arbitration.
[7] The Lord Ordinary dismissed the action at the instance of Scrabster and granted decree of declarator as sought in the action at the instance of Mowlem. The Lord Ordinary's Opinion is reported at 2005 SLT 499.
[8] Scrabster moved us to recall the Lord Ordinary's interlocutor, to grant them the declarator they seek and to dismiss the action at the instance of Mowlem.
[9] The terms of Mowlem's letter of 15 September 2004 are set out in paragraph 7 of the Lord Ordinary's Opinion and need not be repeated here.
The Contract between the Parties
[10] The contract between the parties provided, so far as material, as follows:-
"The Conditions of Contract referred to in the Tender shall be the Conditions of Contract (Fifth Edition) prepared by the Institution of Civil Engineers ... dated June 1973 (Revised January 1979) ... including ... ICE/5th Edition/HGCR/March 1998; ... ICE/ScotArb/April 2001, ... with addendum's(sic), alterations and special conditions as shown in Part 2 below and these conditions shall be deemed to form and shall be read and construed as part of this Contract".
[11] The only relevant "addendum, alteration or special condition" provided as follows:-
"Clause 67 APPLICATION TO SCOTLAND
Sub-Clause (1) is deleted and substituted by the following:-
If the Works are situated in Scotland the Contract shall in all respects be construed and operate as a Scottish contract and shall be interpreted in accordance with Scots law and where any dispute in connection with the Contract is to be determined by a Court that Court shall be either the Court of Sessions (sic), Edinburgh or a Sheriff Court in Scotland".
[12] The relevant conditions of contract so incorporated can be set out in consolidated fashion as follows:-
"Clause 66(9)
Arbitration
(a) All disputes arising under or in connection with the Contract or the
carrying out of the Works other than failure to give effect to a decision of an adjudicator shall be finally determined by reference to arbitration. The party seeking arbitration shall serve on the other party a notice in writing (called a Notice of Arbitration) to refer the dispute to arbitration.
(b) Where an adjudicator has given a decision under Clause 66(6) in
respect of the particular dispute the Notice of Arbitration must be served within three months of the giving of the decision otherwise it shall be final as well as binding.
Clause 66(10)
Appointment of arbitrator
(a) The arbitral tribunal shall be appointed by agreement of the parties.
President or Vice- President to act
(b) Failing agreement of the parties as aforesaid at sub-clause (a) above
the following shall apply.
(i) Reference at Articles 3.5 3.6 3.7 3.8 and 6.2 of the Code to the
Chairman of the Institute of Arbitrators (Scottish Branch) and to the Chairman of the Scottish Council for International Arbitration shall be deemed to be a reference to the President of the Institution of Civil Engineers as defined at (ii) below.
(ii) 'President' means the President for the time being of the
Institution of Civil Engineers or any Vice President acting on his behalf or such other person as may have been nominated in the arbitration agreement to appoint the arbitrator in default of agreement between the parties.
Clause 66(11)
Arbitration - procedure and powers
(a) Neither party shall be limited in the arbitration to the evidence or
arguments put to the Engineer or to any adjudicator pursuant to Clause 66 (2) or 66(6) respectively.
(b) Unless the parties otherwise agree in writing any reference to
arbitration may proceed notwithstanding that the Works are not then complete or alleged to be complete.
Clause 67
(1) If the Works are situated in Scotland the Contract shall in all respects be construed and operate as a Scottish contract and shall be interpreted in accordance with Scots law and where any dispute in connection with the Contract is to be determined by a Court that Court shall be either the Court of Sessions (sic), Edinburgh or a Sheriff Court in Scotland.
(2) In the application of these Conditions and in particular Clause 66 thereof
(a) any reference to arbitration under these Conditions shall be conducted
in accordance with the law of Scotland "The Scottish Arbitration Code 1999" prepared by the Scottish Council for International Arbitration the Chartered Institute of Arbitrators (Scottish Branch) and the Scottish Building Contract Committee together with the ICE Appendix (2001) thereto or any amendment to or modification of the Appendix being in force at the time of appointment of the arbitrator. Such arbitrator shall have full power to open up review and revise any decision opinion instruction direction certificate or valuation of the Engineer or an adjudicator.
(b)-(d) [Effect has been given to these sub-clauses above]
(e) notwithstanding any of the other provisions of these Conditions or of
the Code (including in particular Articles 22.7 and 22.8) nothing therein shall exclude or be construed as excluding recourse to the Court of Session under Section 3 of the Administration of Justice of (Scotland) Act 1972
(f) [not relevant here]
(g) [not relevant here]
(h) The application of Articles 1.6 1.8 1.9 and 1.10 of the Scottish
Arbitration Code 1999 shall be subject to the provisions of Clause 66(2) of the Contract unless the Arbitrator otherwise directs. [Note: the effect of this provision is that disputes giving rise to counterclaims must first have been submitted for decision by the Engineer.]".
The Scottish Arbitration Code
[13] Article 1 of the Code provides, so far as material, as follows:-
"Commencement of Arbitration
1:1 The party commencing arbitration (the Claimant) shall give to the other party (the Respondent) a Notice of Arbitration.
1:2 Arbitral proceedings shall be deemed to commence on the date on which the Notice of Arbitration is received by the Respondent.
1:3 The Notice of Arbitration shall include the following:
(a) The full names and addresses of the parties (including
telephone, facsimile, telex numbers and e-mail addresses if known).
(b) A reference to the arbitration clause or the separate arbitration
agreement that is involved.
(c) A short statement of the Claimant's claim, including the nature
of the claim, the sum or sums claimed, and the Respondent's defence if known to the Claimant.
(d) The relief or remedy sought.
(e) A demand that the matter be referred to arbitration.
(f) If the arbitration agreement calls for each party to appoint an
Arbitrator, the name and address (and telephone, facsimile, telex number and e-mail address if known) of the Arbitrator nominated by the Claimant.
(g) If the arbitration agreement does not call for each party to
appoint an Arbitrator, a proposal by the Claimant of the name of an Arbitrator with his full name and address (and his telephone, facsimile, telex number and e-mail address if known).
(h) Within thirty days after receipt of the Notice of Arbitration the
Respondent shall deliver to the Claimant a Notice of Defence. Failure to deliver a Notice of...
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