Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd

A contractual adjudication procedure must be construed so that amendments are given practical effect. Where an amendment would otherwise be pointless, the court may construe it as preserving the underlying procedure. A party may waive reliance on a contractual adjudication procedure by its informed conduct and stated position. On enforcement, the court enforces what the adjudicator decided. It should not grant substantially wider relief, such as delivery up of documents, where the adjudicator made only a declaration and there has been no breach. Summary or mandatory relief should also be refused where material factual and proportionality issues remain unresolved.

ICI applied to enforce an adjudicator’s decision requiring MMT to recognise ICI’s entitlement to specified project documents and to reimburse the adjudicator’s fees. ICI also sought delivery up of the documents. MMT challenged the decision, arguing that the adjudicator had been appointed by the wrong nominating body and had used the wrong adjudication procedure.

The contract contained amended NEC3 provisions, an Appendix 2 dispute procedure referring to the Housing Grants, Construction and Regeneration Act 1996, and conflicting references to CIArb, RICS and TeCSA rules. The central issues were the proper construction of those provisions, waiver, and the extent of the court’s enforcement jurisdiction.

1. Jurisdiction and contractual construction. The wording requiring Option W2 to be deleted and replaced did not remove the clause for all purposes. The later amendment adding wording to Option W2 would otherwise have no purpose. The contract therefore preserved Option W2, including CIArb as the nominating body and the Option W2 procedure. The adjudicator was validly appointed and followed the applicable procedure.
2. Alternative analysis. Even if Appendix 2 supplied the applicable procedure, the square brackets around RICS indicated a provisional or default choice. The express identification of CIArb in the Contract Data prevailed. MMT had also waived any right to insist on the TeCSA rules. Its stated position was that neither party supported those rules, and the adjudicator was entitled to follow Option W2. There was no breach of natural justice and no want of jurisdiction.
3. The consultation obligation in Appendix 2 was expressly without prejudice to the right to refer a dispute to adjudication under the Housing Grants, Construction and Regeneration Act 1996. It did not prevent either party referring a dispute at any time.
4. Enforcement. The first question in an enforcement application is whether the adjudicator’s decision has been complied with. The adjudicator declared ICI’s entitlement to documents but made no order for delivery up. Since there was no breach of that decision, the court could not use enforcement proceedings to make the wider order sought.
5. The court was also unable to determine fairly which documents were useful or necessary. Triable issues existed concerning the documents’ utility, the cause of defective welds and the extent of ICI’s need. Mandatory relief was inappropriate on a summary judgment application. The court declared the adjudicator’s decision valid and binding, enforced the adjudicator’s fees with VAT and interest, and refused delivery up.