ZVI Construction Co LLC v The University of Notre Dame (USA) In England

A party may confer jurisdiction on an expert determination by agreement, waiver or estoppel arising from words and conduct, even where the contract does not otherwise confer that jurisdiction. Whether there has been a clear submission is fact-sensitive. Active participation without reservation may establish an implied agreement, waiver or estoppel, but the scope of that agreement is confined to the dispute actually referred. A contractual non-waiver clause does not prevent variation, waiver or estoppel by conduct where the parties’ intention is established on the balance of probabilities. A foreign decision does not create an issue estoppel unless the same issue was finally determined and the decision is final according to the law of the foreign court.

ZVI was a party to a development agreement under which building works were undertaken for the University of Notre Dame. The agreement provided for disputes concerning rights and obligations to be determined by an expert, while disputes concerning its meaning or construction were to be arbitrated.

Following allegations of extensive defects, ZVI participated jointly with the seller in an expert determination without reserving any jurisdictional objection. The expert found liability. After a United States federal court confirmed the determination for attachment purposes, ZVI commenced Part 8 proceedings seeking declarations that the expert lacked jurisdiction, that ZVI was not party to the arbitration agreement, and that it owed no substantive obligations under the development agreement. The principal issues were submission, waiver, estoppel by convention, issue estoppel and the utility of the declarations.

1. Jurisdiction by conduct. The court held that a party may expressly or impliedly confer jurisdiction on an expert by words or conduct. The question is whether the circumstances demonstrate a clear submission to the expert’s jurisdiction. The approach in Rhodia Chirex Ltd v Laker Vent Engineering Ltd [2003] EWCA Civ 1859 was applicable, and the guidance in Aedifice Partnership Ltd v Mr Ashwin Shah [2010] EWHC 2106 (TCC) was useful by analogy.
2. ZVI and TJAC had exchanged correspondence, submitted jointly to the expert, agreed the formulation of questions, commented on the draft determination and participated in the quantum phase without reservation. That course of conduct showed with sufficient clarity that ZVI had agreed to submit the dispute concerning liability for the defects and remedial costs to the expert. ZVI was therefore bound by the provision making the determination final and binding.
3. The implied agreement was limited. It did not confer jurisdiction to decide whether ZVI owed substantive obligations under the development agreement, or to determine disputes concerning the meaning or construction of that agreement. Those matters fell within the separate arbitration provision and had not been referred to the expert.
4. An estoppel by convention also arose. The parties shared the assumption that ZVI owed relevant obligations and that the expert had jurisdiction over the referred dispute. UND relied on that assumption by continuing the expert process and pursuing related proceedings. Reliance and detriment could be inferred from the circumstances. The same conduct amounted to waiver.
5. The non-waiver provision did not prevent the parties from varying or waiving contractual requirements by conduct, nor did it prevent reliance on estoppel. The question was fact-sensitive and fell to be decided on the balance of probabilities. The reasoning in Globe Motors Inc v TRW Lucas Varity Electric Steering Ltd [2016] EWCA Civ 396 and MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553 supported that conclusion.
6. No issue estoppel arose from the United States order. Although the jurisdiction issue under the expert determination provision had been decided adversely to ZVI, the United States court had not entered a final judgment and remained seized of the matter. The burden of establishing finality had not been discharged.
7. The injunction was refused and all three declarations were declined. Costs and any further relief were reserved.

First-instance Part 8 proceedings. The judgment records a United States District Court order dated 7 April 2016 and states that an appeal was pending, but no appellate decision is given.