Cadent Gas Limited v CityFibre Limited

Under section 96(3) of the New Roads and Street Works Act 1991, whether a dispute is subject to mandatory arbitration depends on how the Part III provision creating the relevant right or liability is expressed. The exception for a provision expressed as conferring a right to compensation operates as a proviso to the general arbitration requirement. A claim may therefore concern recovery of costs or expenses and initially fall within the general requirement, but be excluded by the proviso.

Section 82(1), including section 82(1)(b), is expressed as conferring a right to compensation because its opening words require the undertaker to compensate. A dispute under that provision is consequently not subject to mandatory statutory arbitration.

CityFibre alleged that Cadent damaged CityFibre's network apparatus while carrying out street works. CityFibre referred a claim for the reasonable expense of making good the damage, and associated expenses, to arbitration under sections 82 and 96(1) of the New Roads and Street Works Act 1991.

The arbitrator held that he had substantive jurisdiction. On Cadent's challenge under section 67 of the Arbitration Act 1996, HH Judge Hodge KC set aside that partial award, holding that the claim was excluded from the mandatory arbitration regime: [2025] EWHC 910 (Comm). CityFibre appealed.

The central issue was whether a claim under section 82(1)(b) arose under a provision expressed as conferring a right to compensation, and was therefore excluded from section 96(3)'s arbitration requirement.

1. Appeal dismissed unanimously. Miles LJ, with whom Phillips and Popplewell LJJ agreed, held that the judge was correct to set aside the arbitrator's partial award for want of substantive jurisdiction.

2. Section 96(3) must be read as a whole and in the context of Part III of the New Roads and Street Works Act 1991. Its first sentence requires arbitration of disputes concerning the recovery of costs or expenses under a Part III provision. The second sentence both identifies forms of provision within that requirement and creates exclusions. The exclusion for a provision expressed as conferring a right to compensation is a proviso to the first sentence.

3. The statutory inquiry concerns the form of the provision which creates the entitlement, rather than the abstract or substantive character of the particular claim. A claim may fall within the first sentence because it concerns incurred costs or expenses, yet also fall within an exclusion in the second sentence. There was no basis for reading the first sentence as confined to provisions solely concerned with costs and expenses.

4. The opening words of section 82(1), requiring an undertaker to compensate, govern both paragraphs (a) and (b). Section 82(1)(b) therefore creates a compensatory liability in respect of reasonable make-good expenses. Its limited measure of recovery does not deprive it of that character. It is a provision expressed as conferring a right to compensation, so the mandatory arbitration requirement does not apply.

5. Arguments about the comparative convenience, speed or cost of arbitration and court proceedings were inconclusive. They could not displace the provision-specific statutory wording. The observation in Yorkshire Electricity Distribution Plc v Telewest Ltd about avoiding future court proceedings was obiter, concerned the parties before that court, and did not address compulsory arbitration under section 96(3).

• Court of Appeal (Civil Division): dismissed CityFibre's appeal and upheld the setting aside of the arbitrator's partial award for want of substantive jurisdiction: [2026] EWCA Civ 46.
• High Court, London Circuit Commercial Court: HH Judge Hodge KC held that a section 82(1)(b) claim was excluded from mandatory arbitration by section 96(3) of the New Roads and Street Works Act 1991, set aside the partial award, and granted permission to appeal: [2025] EWHC 910 (Comm).