MPB v LGK

An arbitration clause may be incorporated into a construction contract by a sufficiently wide reference to a quotation that included the supplier’s standard terms. A reference to a quotation is construed as a reference to the quotation as a whole unless the contract clearly limits it. Standard terms may coexist where one set takes precedence and the other contains an arbitration clause, because silence about dispute resolution is not an inconsistent term. A party that clearly and unequivocally elects to rely on a two-tier adjudication and arbitration mechanism may be prevented from later denying the arbitration limb, even without having received a benefit from the election.

MPB applied under section 67 of the Arbitration Act 1996 to set aside an arbitrator’s jurisdiction award. MPB and LGK had contracted for structural steelwork. The written order referred to LGK’s quotation, which had been supplied with LGK’s standard terms containing a clause providing for adjudication followed by arbitration under the CIMAR rules. The order also incorporated MPB’s standard terms and gave them precedence.

The arbitrator held that LGK’s terms, including the arbitration clause, were incorporated and that he had substantive jurisdiction. The issues were whether the clause had been incorporated and, alternatively, whether MPB could challenge it after relying on it in an earlier adjudication and enforcement proceedings.

1. Application dismissed. The challenge under section 67 was a de novo rehearing. The arbitrator’s award had no automatic legal or evidential weight, although the court could be persuaded by reasoning it found persuasive.
2. LGK’s standard terms formed part of the quotation. The order’s reference to work and price being “based on” the quotation was wide enough to refer to the quotation as a whole, including its appended terms. The reference was not confined to provisions concerning the description of work. The court applied the ordinary principles of contractual construction, considering the language, documentary and commercial context, and the reasonable person’s understanding.
3. MPB’s terms took precedence over inconsistent terms, but their silence on dispute resolution did not create an inconsistency with LGK’s arbitration clause. A contractual arbitration provision is not displaced merely because another incorporated document contains no competing dispute-resolution provision. Clause 11 therefore remained effective.
4. The adjudication-and-arbitration mechanism was an agreement to submit present or future disputes to arbitration within section 6(1) of the Arbitration Act 1996. Section 6(2) was unnecessary on the facts; alternatively, the reference to the quotation was sufficient to make clause 11 part of the agreement.
5. Alternatively, MPB had clearly and unequivocally elected to rely on clause 11 as the applicable dispute-resolution mechanism. Clause 11’s adjudication and arbitration limbs operated together. MPB could not rely on the first limb and later deny the second. A benefit to the electing party was sufficient but not necessary; the wasted costs and prejudice to LGK also supported the conclusion that reprobation would be unjust. The court did not need to decide the wider formulation in Express Newspapers Plc v News (UK) Ltd.
6. The court declined to treat the deletion from the printed order as an aid to construction because the retained wording was not ambiguous. In any event, the deletion did not establish the meaning contended for by LGK.

The award was not set aside. MPB was ordered to pay LGK’s costs.