Ohpen Operations UK Ltd v Invesco Fund Managers Ltd

A contractual tiered dispute-resolution clause may create an enforceable condition precedent to court proceedings. The procedure must be expressed in mandatory terms and be sufficiently clear and certain by reference to objective criteria, including machinery enabling the process to operate without further agreement. Such obligations ordinarily survive termination where they regulate the resolution or enforcement of accrued contractual rights. The court retains a discretion to stay proceedings commenced in breach of the clause. Strong public policy favours enforcing agreed alternative dispute-resolution machinery, subject to the interests of justice and the overriding objective.

Ohpen Operations UK Ltd claimed damages from Invesco Fund Managers Ltd following Invesco’s termination of an agreement for the development and operation of an online investment platform. Invesco applied under CPR 11 for a declaration that the court should not exercise its jurisdiction and for a stay, arguing that the claim had been commenced before completion of the agreement’s escalation and mediation procedure.

The agreement provided for different dispute-resolution procedures during the development and implementation phase and after the commencement date. Termination occurred before the commencement date. The central issues were whether the mediation obligation applied to the dispute, survived termination, operated as a condition precedent to proceedings, and was sufficiently certain to enforce.

1. Enforceable ADR obligation. The agreement used mandatory language requiring the parties first to use reasonable efforts to resolve disputes, escalate them, and refer unresolved disputes to mediation under the CEDR Model Mediation Procedure. The obligation was sufficiently clear and certain to be enforceable. The procedure did not require further agreement because the CEDR rules supplied machinery for selecting the mediator and conducting the mediation. The court could determine objectively whether the parties had participated and whether the dispute remained unresolved.
2. Scope and survival. Clause 11.1.2 applied to disputes arising during the Development and Implementation Phase. It was not limited to disputes that were resolved before that phase ended. That construction avoided a gap for disputes arising during the phase but remaining unresolved when the phase ended. The dispute had arisen before or at termination, while the phase was continuing.
3. Dispute-resolution obligations ordinarily survive discharge of primary contractual obligations: Port Jackson Stevedoring Pty Ltd v Salmond and Spraggon (Australia) Pty [1981] 1 WLR 138 (PC). Clause 11 was, by implication, intended to continue under clause 20.5.2 because it regulated disputes and was necessary for enforcement of the agreement. The absence of the original project phase or ongoing primary obligations did not make the machinery inoperable.
4. Condition precedent and stay. Clause 11.2 made compliance with the dispute procedure a condition precedent to commencing court proceedings. The court had discretion to stay proceedings under section 49(3) of the Senior Courts Act 1981 or its inherent jurisdiction. A strong policy favoured enforcing valid ADR machinery, while the court also had to consider the interests of justice and the overriding objective.
5. The proceedings were stayed from 28 October to 9 December 2019 to permit mediation. The defendant was ordered to serve its Defence and Counterclaim by 27 September 2019, and the claimant its Reply and Defence to Counterclaim by 25 October 2019.

First-instance decision. No appellate history was stated in the judgment.