Anglian Water Services Ltd v Laing O'Rourke Utilities Ltd

Part II of the Housing, Grants, Construction and Regeneration Act 1996 does not prevent a construction contract from requiring adjudication before arbitration. The statutory right to refer a dispute to adjudication at any time is distinct from any contractual right to commence arbitration.

Contractual communication provisions may prescribe the only effective method of service where certainty of receipt triggers contractual time limits. Actual receipt by the intended individuals does not necessarily cure non-compliance. However, an address may be notified for a particular category of communication, and a notice preserving the right to arbitrate may be relevant to the adjudication because it prevents the adjudicator’s decision becoming finally binding.

Under section 12 of the Arbitration Act 1996, time may be extended where the other party’s conduct materially caused the failure to comply and it would be unjust to enforce the time bar.

The claimant engaged the defendant under an NEC Engineering and Construction Contract to design and construct tanks at a sewage treatment works. The contractual adjudication provisions did not comply with Part II of the Housing, Grants, Construction and Regeneration Act 1996, so the adjudication provisions in the Scheme for Construction Contracts applied.

An adjudicator issued a decision on 24 February 2010. The claimant sent its notice of dissatisfaction and notice to refer to arbitration by fax to the defendant’s solicitors on 22 March, within the contractual four-week period. The solicitors acknowledged safe receipt, but the defendant later argued that service was invalid because the documents had not been sent to the contract address.

The claimant sought a declaration that the notice was validly served. Alternatively, it sought an extension of time under section 12 of the Arbitration Act 1996. The central issues were the interaction between the Scheme and the arbitration clause, the effect of the contractual communication provision, and whether the defendant’s conduct justified an extension.

1. Validity of the arbitration clause. The requirement in clause 93.1 to pursue adjudication before arbitration did not restrict the statutory right under sections 108(1) and 108(2) of the Housing, Grants, Construction and Regeneration Act 1996 to refer a dispute to adjudication at any time. The Act did not confer a right to commence litigation or arbitration at any time. Clause 93.1 was therefore compatible with Part II.
2. Interaction with the Scheme. Paragraph 19 of the Scheme for Construction Contracts and clause 93.1 could operate together. Paragraph 19(2) provided a fresh adjudication route if the adjudicator failed to decide within the required time. Clause 93.1 remained the operative contractual machinery for referring the dispute to arbitration and was not an adjudication provision replaced by the Scheme.
3. Contractual service requirements. Clause 13.2 required a communication to be received at the recipient’s last notified address. That was the only effective contractual method of delivery. Although actual receipt by the relevant personnel might be faster or more advantageous, it did not cure delivery to the wrong address. A communication notifying a different address was itself subject to the contractual method of communication.
4. Application to the facts. The defendant’s solicitors had confirmed that they would accept service of documents relevant to the adjudication. Their Bristol office was consequently the notified address for that category of communication. The notice of intention to refer to arbitration was relevant to the adjudication because, if served in time, it prevented the adjudicator’s decision from becoming finally binding. The claimant was therefore entitled to the declaration sought.
5. Alternative extension of time. If service had been invalid, section 12(3)(b) of the Arbitration Act 1996 would have justified an extension. The solicitors’ unqualified acknowledgment of receipt materially contributed to the claimant’s failure to serve the notice at the St Neots address. In light of the claimant’s actual timely delivery to the defendant’s responsible personnel and the absence of difficulty in making direct service, it would have been unjust to enforce the time bar. The court would therefore have extended time.