J Jarvis & Sons Ltd v Blue Circle Dartford Estates Ltd

The High Court may restrain an arbitration under section 37 of the Supreme Court Act 1981, but only where the injunction would not cause injustice to the claimant in the arbitration and continuation would be oppressive, vexatious, unconscionable or an abuse of process. The jurisdiction survives the Arbitration Act 1996, although it must now be exercised very sparingly and with respect for party autonomy and limited court intervention. Delay is a material, and potentially decisive, factor. Concurrent court and arbitral proceedings do not, by themselves, make arbitration vexatious. Issues of liability, causation and quantum should ordinarily be left to the parties’ chosen tribunal. A procedural refusal to stay or adjourn an arbitration will not constitute serious irregularity merely because the tribunal declines to prejudge substantive issues.

Jarvis, the contractor and respondent in an arbitration brought by Blue Circle, sought to restrain the arbitration concerning defects in warehouse foundations and flooring. Blue Circle claimed damages reflecting its potential liability to the property owner and sought an indemnity declaration. Jarvis argued that the arbitration was oppressive because of a risk of double recovery, and vexatious because related court proceedings might be brought by the property owner, creating concurrent proceedings and inconsistent findings.

Jarvis also challenged the arbitrator’s interim procedural award under sections 68 and 69 of the Arbitration Act 1996. The central issues were whether the court should restrain the arbitration, whether the refusal to stay or limit the arbitration was a serious irregularity, and whether leave to appeal on a question of law should be granted.

1. Injunction. The claim for an injunction was dismissed. Section 37 of the Supreme Court Act 1981 confers jurisdiction to restrain an arbitration. The conditions are that the injunction must not cause injustice to the arbitration claimant and that continuation of the arbitration must be oppressive, vexatious, unconscionable or an abuse of process. The discretion is now exercised very sparingly in light of the principles in section 1 of the Arbitration Act 1996. Delay may be fatal. These principles were derived from The ‘Oranie’ and The ‘Tunisie’ [1966] 1 Lloyd’s List LR 477.
2. The risk of Jarvis paying the same damages twice was sufficiently reduced by Blue Circle Industries plc’s undertaking. The arbitration therefore could not be characterised as oppressive on that ground.
3. Potential concurrent proceedings did not make the arbitration vexatious or unconscionable. The mandatory language of section 9 of the Arbitration Act 1996 means that concurrent court and arbitral proceedings will sometimes occur. The earlier approach in Taunton-Collins v Cromie [1964] 1 WLR 633 and the result in The University of Reading v Miller Construction Ltd [1994] 75 BLR 91 would have required reconsideration under the 1996 Act.
4. Arguments concerning the measure and quantification of Blue Circle’s damages, including reliance on Alfred McAlpine Construction v Panatown Ltd [2001] 1 AC 518, were matters for the arbitrator. The court should not intervene to remove those issues from the chosen tribunal or require them to be decided summarily.
5. Section 68. The challenge to the interim award failed. The arbitrator had not breached section 33(1)(b) of the Arbitration Act 1996. He had properly declined to prejudge substantive issues at a procedural hearing, while leaving the matters open for the substantive hearing.
6. Section 69. Leave to appeal was refused. The question whether concurrent litigation had to exist before a stay could be considered was a question of law, but the arbitrator was entitled to conclude that the litigation had not begun and that its timing was uncertain. The remaining proposed questions either raised no question of law or were based on a misreading of the interim award.

Not stated in the judgment.