Case Law Updates – October 2023

Potential Reform of the Arbitration Act 1996

After almost 27 years since the introduction of the Arbitration Act 1996 (“Arbitration Act”), discussions have arisen as to potential amendments, including but not limited to:

1. Simplifying the rules for determining the law governing the arbitration agreement – the law of the seat prevails in the absence of any express provisions;
2. Codifying the arbitrator’s duty of disclosure – the arbitrator must disclose any relevant circumstances which may impact impartiality; and
3. Revising the process for challenging arbitrators’ decisions based on a lack of jurisdiction – the Courts are prevented from re-hearing all the jurisdictional issues previously determined by a tribunal.

For further information, please see: https://www.lawcom.gov.uk/improvements-recommended-to- arbitration-act-1996-to-ensure-uk-position-as-international-arbitration-leader/

Avantage (Cheshire) Ltd & Ors v GB Building Solutions Ltd & Ors [2023] EWHC 802 (TCC)

Facts

A fire occurred at a retirement village in Crewe on 8 August 2019, which destroyed almost the entire building.

As a result of the fire, the claimants (consisting of the PFI contractor and freehold and leasehold owners) are seeking damages from the defendants (consisting of the contractor, architect, subcontractor, fire engineering consultant and employer’s agent).

The value of the claim is more than £40 million, on the basis that there were defects in the design and construction of the building and it lacked measurements for inhibiting a fire, including cavity barriers, sprinklers and compartmentation.

The claimants issued proceedings against the defendants on 9 October 2019, but a stay was granted by the Court to allow parties to comply with the pre-action protocol and for investigations to be carried out.

A case management conference was held in October 2021, during which, directions to the trial were given and details of the expert witnesses were clarified, including the issues they were to address.

Two of these experts included, a fire engineer, Mr Wise who was responsible for providing evidence on the fire strategy, and a forensic scientist, Ms Hooton, who was responsible for providing evidence in relation to the causation, origin and spread of the fire.

During October 2022, parties attempted to settle the dispute via mediation and as a result, no longer complied with the timetable set out in the directions.

In February 2023, the claimants made an application to adjourn the trial (with the consent of all parties), due to an illness suffered by Ms Hooton. The application was successful and the trial was adjourned in later February 2023, until April 2024.

During March 2023 and due to the severity of Ms Hooton’s illness, the claimants issued an application to replace Ms Hooton, with another expert, Dr Ketchell to give evidence on the same issues. On the same date, the claimants also submitted an application to replace Mr Wise with Dr Ketchell, except the grounds for this application were vague.

Issues

Can Dr Ketchell replace the current experts, Ms Hooton and Mr Wise, and if so, do all documents relating to the dispute and in their possession (draft or final expert reports, meeting notes etc.), need to be disclosed?

Judgment

The Court granted permission for the replacement expert, Dr Ketchell to:

1. Provide evidence relating to the fire (origin, causation and spread) instead of the current expert, Ms Hooton, on the basis that Ms Hooton’s site inspection reports or note, and witness interview notes are disclosed; and
2. Provide evidence relating to the adequacy of the fire strategy instead of the current expert, Mr Wise, on the basis that Mr Wise’s expert reports (whether draft or final), and any other documents produced by him relating to the dispute are disclosed.

For further information, please see: https://www.bailii.org/ew/cases/EWHC/TCC/2023/802.html

Ravestein B.V v Trant Engineering Limited [2023] EWHC 11 TCC

Facts

Ravestein (“the Claimant”), a shipyard and construction company incorporated in the Netherlands, and Trant Engineering (“the Defendant”), an engineering and construction company, entered into an amended Option A NEC3 Engineering and Construction Subcontract June 2005 (with amendments June 2006) (“the Subcontract”) on 14 September 2010.

The Defendant alleged the works carried out by the Claimant were defective and sought damages, therefore referred this dispute to an adjudicator. The adjudicator decided in the Defendant’s favour and ordered the Claimant to pay damages. However, the Claimant failed to pay and the Defendant obtained a default judgment.

The Claimant subsequently referred the dispute to arbitration and both parties agreed the arbitrator should determine whether the Claimant complied with the dispute resolution provisions under the Subcontract (to serve a valid Notice of Dissatisfaction), prior to referring the dispute to the arbitrator.

The arbitrator found the Claimant failed to serve a valid Notice of Dissatisfaction (under clause W2.4(2) of the Subcontract) and therefore, the arbitrator lacked jurisdiction and the decision from the adjudication was final and binding.

Issues

The Claimant disagreed their Notice of Dissatisfaction was invalid, for failing to:

1. a)  set out the issue in dispute and their intention to refer it to tribunal; and
2. b)  challenge the adjudicator’s decision, instead of solely the jurisdiction.

The Claimant sought to appeal the arbitrator’s decision.

Judgment

The Court dismissed the Claimant’s permission to appeal, on the basis that:

1. The requirements under W2.4(2) of the Subcontract, were not complied with and the Claimant failed to notify the Defendant of the matter in dispute and their intention to refer it to the tribunal; and

2. The Claimant only sought to challenge the adjudicator’s jurisdiction, rather than decision, therefore, the Notice of Dissatisfaction was invalid.

For further information, please see: https://www.bailii.org/ew/cases/EWHC/TCC/2023/11.html

Introduction of the New JCT Suite of Contracts (2024)

These new contracts will cover various changes to reflect events over recent years, including but not limited to:

1. Adding new provisions to deal with the risk of contaminated materials and asbestos;
2. Ensuring there is consistency with the Housing Grants, Construction and Regeneration Act1996 (Construction Act), particularly relating to termination provisions;
3. Allowing the Contractor to claim loss and expense for optional additional grounds, such as forepidemics and the exercise of statutory powers which directly impact the works;
4. Extending the “Relevant Events” to allow the Contractor to claim extensions of time as a result of epidemics. The new provisions reduce the period of reply the Employer has to assessextensions of time from 12 to 8 weeks; and
5. Clarifying the position regarding liquidated damages, so these can only be applied up to thetermination of a contract, subsequent to which, only general damages for delay may be claimed.

For further information, please see: https://corporate.jctltd.co.uk/jct-the-next-evolution/