Surrey County Council v Suez Recyling and Recovery Surrey Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Alexander Nissen |
| Judgment Date | 16 July 2021 |
| Neutral Citation | [2021] EWHC 2015 (TCC) |
| Docket Number | Case No: HT-2021-000103 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2021] EWHC 2015 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Royal Courts of Justice
Rolls Building, London, EC4A 1NL
Mr Alexander Nissen QC
(SITTING AS A JUDGE OF THE HIGH COURT)
Case No: HT-2021-000103
Adam Constable QC and Paul Buckingham (instructed by Gowling WLG (UK) LLP) for the Claimant
Simon Hargreaves QC and David Sheard (instructed by Addleshaw Goddard LLP) for the Defendant
Hearing dates: 24 June 2021
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Alexander Nissen QC:
Introduction
The application before the Court is for a stay of proceedings in accordance with s.9 Arbitration Act 1996 and/or in accordance with the Court's inherent jurisdiction to stay proceedings. This is one of those cases where the parties have entered into a number of contracts and it is necessary to determine what they ultimately agreed should be the appropriate forum for dispute resolution.
The procedural background to this application can be stated quite shortly. On 24 March 2021, the Claimant, Surrey County Council (“Surrey”), issued a Claim Form against the Defendant, Suez Recycling and Recovery Surrey Ltd (“Suez”). Particulars of Claim accompanied the Claim Form. In the proceedings, Surrey claims declaratory relief against Suez arising out of a Waste Disposal Project Agreement entered into between the parties. The declarations concern the identification of the Target Facility Completion Date; the passing of the Longstop Date; the failure by Suez to meet the requirements for an Acceptance Certificate; and that, in consequence, Surrey has an entitlement to issue a Notice of Termination under Clause 35.1 on the basis of an Event of Default under Clause 34.1.6. Suez acknowledged service stating its intention to dispute the Court's jurisdiction and, on 22 April 2021, issued the application presently before the Court. The application was supported by one witness statement of Jonathan Tattersall, solicitor for Suez, and was responded to by one witness statement of Frank Smith, the Commercial Programme Director for Surrey. The application itself was heard (remotely) over a full day. Suez was represented by Mr Simon Hargreaves QC and Mr David Sheard. Surrey was represented by Mr Adam Constable QC and Mr Paul Buckingham. I am grateful to all counsel for their assistance.
Background
The relevant factual and contractual background to this dispute is quite extensive and involves no less than four connected agreements.
The Waste Disposal Project Agreement dated 22 June 1999
Surrey and Suez entered into a Waste Disposal Project Agreement (“WDPA”) in respect of the disposal of waste in the County of Surrey. It was a long-term PFI contract due to last 25 years. The stated objective was to secure the most economically advantageous long-term solution for the disposal of all waste by Suez for Surrey, for which Surrey is otherwise responsible as the waste disposal authority. Pursuant to the WDPA, Surrey was to be responsible for waste collection and delivery. Suez was to run the recycling centres, waste transfer stations, subcontract haulage, materials recycling, food waste, black bag and green waste disposal. Part of the works provided for under the WDPA included the development, construction and operation of two mass burn EfW (energy from waste) facilities.
At this stage I observe that it is a contract only between Surrey and Suez. It has 23 attached schedules. Most relevant for present purposes are: (a) Schedule 2 which contains the Service Specification, together with its four appendices; and (b) Schedule 14, which contains the Service Delivery Plan with four annexes.
I will refer to the dispute resolution terms of the WDPA in due course but, in summary, the provisions operated as follows. Certain types of identified disputes were referrable for Expert Determination pursuant to Clause 51. A decision of an Expert reached under this process was to be final, conclusive and binding. A party in receipt of a Clause 51 notice who believed that the dispute in question was not within Clause 51 or which involved other issues can, pursuant to Clause 51.14, give a notice to that effect, in which case the dispute will be determined in accordance with Clause 52. Pursuant to Clause 52, any dispute arising out of or in connection with the WDPA, not being a Clause 51 dispute, was to be resolved initially by conciliation and then by arbitration pursuant to the Rules of the LCIA. Clause 63 stated that the WDPA would be governed by the laws of England and that the parties submitted to the exclusive jurisdiction of the courts of England and Wales.
Due to planning objections, it was not possible for either of the two mass burn facilities to be constructed. Further planning applications were made but they also failed or were not pursued. An arbitration took place between Suez and Surrey in July 2005 to determine responsibility for the delay caused by the planning issues.
Deed of Variation No.1
In light of the planning difficulties in respect of the construction of the mass burn facilities, the parties reached agreement on a way to resurrect that aspect of the project using different sites. This agreement, dated 6 March 2007, was called a Deed of Variation and Clarification of the WDPA and is described by the parties to this application as “DOV1”. Recital 1.4 stated that:
“The parties have agreed following the arbitral award and in light of certain legislative and strategic developments in the waste sectors (such as Waste Strategy 2000) and the passage of time that there should be a variation in accordance with the terms of the WDPA and clarification of a number of matters in the WDPA.”
DOV1 created a two-stage enabling process, contained within a new Schedule 24, to progress EfW projects that required both planning consents and third-party finance to be procured. Stage 1 comprised the issue of a Council Variation requesting Suez to work with it to produce a Stage 1 Report containing an outline solution for the development project, which Surrey would then either accept or reject. If Surrey accepted it, Stage 2 would comprise the further development of the scheme, including detailed costings leading to a Stage 2 Report. This phased approach mitigated the risk of wasted effort and third-party costs until full planning permission was obtained.
I will set out the dispute resolution terms of DOV1 in due course. At this stage, I can summarise some of the other characteristics and ingredients of DOV1. Clause 3 set out conditions following which, pursuant to Clause 4, the WDPA was to be varied and clarified in various respects. The WDPA was otherwise to remain in full force and effect. The variations related to a number of original clauses within WDPA and introduced some new ones. Amongst the amended clauses, the parties made various changes to Clause 51 dealing with Expert Determination. However, neither Clause 52 of the WDPA, dealing with arbitration, nor Clause 63, dealing with jurisdiction, was amended. Under Clause 6 of DOV1, Surrey acquired a new right to terminate the entire WDPA if it was unwilling or unable to provide funding for the first EfW plant. If Surrey was entitled to terminate for that reason but decided not to do so, the WDPA was to continue in full force and effect but without the obligation to construct any EfW plant. The parties agreed a wholesale replacement to Schedule 2 (Service Specification) and Schedule 14 to the WDPA (Service Delivery Plan). As I have said, a new Schedule 24 (Development Project Process) was introduced. This contained a Project Approvals Process with two stages, leading to Stage 1 and Stage 2 Reports respectively. A feature of this newly created Schedule was that it included reference to Expert Determination under Clause 51 of the WDPA for certain disputes arising out of it.
At Clause 15.2, DOV1 provided its own governing law and jurisdiction clause which provided for the Courts of England to have exclusive jurisdiction over any claim, dispute or difference concerning it or any matter arising therefrom.
I would also add that, unlike the WDPA, DOV1 was a tri-partite agreement since Suez Environnement S.A, a company incorporated in France, was named as the SE Guarantor. The SE Guarantor was a guarantor of obligations imposed on Suez under the WDPA and, by DOV1, agreed to the changes made and ratified and confirmed that the guarantee continued in full force and effect, applying to the WDPA as varied and clarified by DOV1. Clause 5 of DOV1 was in those terms.
The earlier planning problems persisted and, as a result, in late 2009 Surrey decided forever not to proceed with the construction of the original mass burn EfW facilities.
The August 2010 DOV
On 2 February 2010, Surrey proposed and approved a new strategy which abandoned the development of large EfW facilities for residual waste treatment and instead proposed much smaller facilities in a way that was seen to be more politically acceptable. Working with Suez, Surrey concluded that a gasification process delivered within the existing WDPA would be the most beneficial overall solution taking into account technology assessment, legal risk and financial cost. This led to a proposal for what became known as the EcoPark at Charlton Lane. This was already an existing waste...
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