Taylor Woodrow Construction v RMD Kwikform Ltd

Section 14(1) of the Arbitration Act 1996 requires an agreement as to when arbitral proceedings are to be regarded as commenced. The agreement need not expressly mention the Arbitration or Limitation Acts, but it must identify the relevant commencement event. An arbitration clause providing for notice of a dispute and subsequent appointment of an arbitrator does not, without clear wording, amount to such an agreement. Where no agreement exists, section 14(4) applies where the arbitrator is to be appointed by the parties. The notice must objectively make clear that the dispute is being referred to arbitration and must require, expressly or by necessary implication, agreement to the appointment of an arbitrator. A letter threatening or contemplating litigation, while asking whether the other party insists on arbitration, is insufficient.

Taylor Woodrow Construction Limited sought determination of preliminary questions concerning arbitral proceedings arising from a scaffolding sub-contract with RMD Kwikform Limited. Taylor Woodrow relied on a January 2003 letter as commencing arbitration and on a subsequent application to the Chartered Institute of Arbitrators for appointment of an arbitrator.

The parties agreed that the court should determine whether the arbitrator had been validly appointed and, for the purposes of section 14 of the Arbitration Act 1996, when the arbitral proceedings had commenced. The central issues were whether the arbitration clause constituted an agreement under section 14(1), and whether the January 2003 letter was sufficient notice under section 14(4).

1. The court determined that clause 26.1 did not constitute an agreement under section 14(1) of the Arbitration Act 1996. Although an agreement may be expressed simply, it must state when arbitral proceedings are to be regarded as commenced. Clause 26.1 referred to notice of a dispute and provided machinery for agreeing or appointing an arbitrator, but did not identify any step as the commencement of arbitration. No such agreement could be inferred in the absence of appropriate express wording.

2. Section 14(2) therefore applied. Because the primary appointment mechanism required appointment by the parties, section 14(4) governed commencement. The existence of a secondary default appointment mechanism did not alter that conclusion.

3. Applying the broad and flexible approach described in Seabridge Shipping AB v AC Orssleff’s Eftf’s S/A [1999] 2 Lloyd’s Rep. 685 and Atlanska Plovidba v Consignaciones Asturianas SA (The “Lapad”) [2004] 2 Lloyd’s Rep. 109, the notice still had to be objectively clear. It had to identify the dispute, make clear an intention to refer it to arbitration, and require the other party to appoint or agree to the appointment of an arbitrator.

4. The January 2003 letter did not satisfy that test. It enclosed draft particulars of claim, referred to the possibility of litigation and asked whether RMD would insist on arbitration. It was a precursor to litigation, not an operative reference to arbitration. The analogy with Nea Agrex SA v Baltic Shipping (The “Agios Lazaros”) [1996] 2 Lloyd’s Rep. 47 was rejected because the wording in that case contained an effective requirement to proceed to arbitration.

5. The letter was therefore insufficient under section 14. The later application for appointment was invalid because the contractual 14-day period had not been triggered, and Dr Standinger’s appointment was invalid. The court invited further submissions on the form of the declarations and ancillary matters.

First-instance determination in the Technology and Construction Court. The proceedings had initially been commenced in the Commercial Court and were transferred by order to the Technology and Construction Court.