Dawes v Treasure and Son Ltd

An arbitrator’s appointment does not ordinarily end merely because the parties settle after arbitration has begun. The parties’ arbitration agreement, settlement terms and applicable arbitral rules determine when jurisdiction is exhausted. Under section 51 of the Arbitration Act 1996, settlement may leave the tribunal with jurisdiction to terminate substantive proceedings, record an agreed award, or determine outstanding costs and other matters. Where jurisdiction remains and the parties’ rules permit further disputes to be referred, the arbitrator may decide whether a later dispute falls within the existing proceedings. A settlement of all claims and counterclaims may include defects claims pleaded as both a defence and cross-claim, even if the defects have not yet been quantified.

Treasure and Son Ltd and Martin Dawes were parties to a construction arbitration arising from extensive works at Dinmore Manor. During the arbitration, Treasure offered to settle all claims and counterclaims for £400,000 plus VAT. Dawes accepted the offer, but the parties did not record the settlement in a consent award.

Costs issues remained before the arbitrator. Dawes later sought to pursue defects claims and challenged the arbitrator’s jurisdiction and a subsequent award deciding that the settlement covered the pleaded defects. The central questions were whether the arbitrator had become functus officio and, if not, whether the settlement extended to the defects claims.

1. Jurisdiction after settlement. The court dismissed both claims. The expression functus officio describes the point at which an arbitrator has exhausted the jurisdiction conferred by the parties’ agreement. It is not a term of art. The starting point is the arbitration agreement and what the parties expressly or impliedly agreed about the duration of the arbitrator’s jurisdiction.
2. The settlement did not, in this case, terminate the arbitrator’s jurisdiction. Section 51 of the Arbitration Act 1996 contemplates that, after settlement, the tribunal may terminate the substantive proceedings, record the settlement in an agreed award, and retain jurisdiction over costs. The parties had not requested termination or a consent award, and costs remained unresolved.
3. The CIMAR Rules and the contract also allowed either party, after appointment, to refer another dispute falling within the arbitration agreement to the same arbitrator. Treasure’s second notice validly referred the dispute over whether the defects claims had been compromised. The arbitrator therefore retained full jurisdiction, subject to the limits imposed by the settlement, until his final award on costs or another final award.
4. Construction of the settlement. The accepted offer to settle all claims and counterclaims covered the defects pleaded in Dawes’s amended defence and cross-claim. The defects were deployed not merely defensively but also as part of the cross-claim and as a basis for determining the sums properly due. The absence of completed remedial costings did not prevent them from forming part of the claims being settled.
5. The arbitrator was therefore entitled to decide that the settlement covered the pleaded defects, and his award was correct. Both claims were dismissed. The defendant’s recoverable costs were assessed at £21,000, payable within 14 days.

First-instance decision. No prior appellate decision is stated in the judgment.