Michael John Construction Ltd v St Peter's Rugby Football Club

An issue determined by the High Court in enforcement proceedings between the parties is binding in later arbitration proceedings where it identified the parties to the underlying contract and arbitration agreement. An arbitrator cannot permit that issue to be reopened merely because further evidence is offered. Reopening is confined to the exceptional circumstances recognised in Arnold v National Westminster Bank plc: the further material must be relevant and incapable of being produced with reasonable diligence in the earlier proceedings. Evidence previously available, particularly evidence inconsistent with earlier sworn accounts and admissions, cannot satisfy that test.

Michael John Construction Ltd challenged under section 67 of the Arbitration Act 1996 a preliminary jurisdiction award made in an arbitration concerning a construction contract for a new clubhouse. The arbitrator permitted the respondent to reopen the identity of the employer and the parties to the arbitration agreement.

In earlier enforcement proceedings, summary judgment had been entered against the three trustees of the club after the High Court determined that they were the employers under the contract. That decision, reported as 2006 EWHC page 71, was not appealed. The central issue was whether the arbitrator could revisit that determination on the basis of further evidence.

1. Appeal allowed. The arbitrator’s award of 19 October 2006 was varied to provide that there was no arbitration agreement between Michael John Construction Ltd and the respondent as representative of the club members as at 15 October 2003.
2. The earlier enforcement judgment had determined who were the parties to the construction contract and therefore to the arbitration agreement. That determination was binding in the later arbitration. It was not merely provisional or subject to being displaced by subsequent arbitration.
3. The applicable principle was issue estoppel. As explained in Arnold v National Westminster Bank plc, an issue already litigated and decided may be reopened only in exceptional circumstances where further material relevant to its correct determination could not, by reasonable diligence, have been adduced earlier.
4. The arbitrator erred in law by treating the enforcement judgment and the adjudicator’s award as provisional and by admitting further evidence without applying that exceptional-circumstances test. The evidence relied upon had been available before the enforcement proceedings and could have been produced then. The defendants’ new account was also inconsistent with their earlier sworn evidence and admissions.
5. In any event, the evidence did not establish that the January 2003 extraordinary general meeting authorised Mr Matthews to sign the building contract for all club members. The resolution was insufficiently wide for that purpose. The costs of the arbitration and preliminary issue were ordered against the respondent, on the standard basis if not agreed.

• High Court enforcement proceedings: Summary judgment was granted against the three original trustees after the court determined the identity of the employers under the construction contract. The decision, reported as 2006 EWHC page 71, was not appealed.
• High Court (Technology and Construction Court): The section 67 challenge succeeded. The arbitrator’s jurisdictional award was varied.