Impresa Castelli Spa V Cola Holdings Limited

The disputes arising out of the employer's counterclaim against the contractor for alleged breaches of contract in respect of defective workmanship and materials and incomplete work could properly be the subject matter of arbitration or court proceedings
 
IMPRESA CASTELLI SPA v COLA HOLDINGS LTD

Technology and Construction Court
His Honour Judge Anthony Thornton QC
2 May 2002
 

The contractual dispute resolution procedure provided that (1) All disputes were to be referred to arbitration but no reference could be made until practical completion except in relation to a limited number of types of disputes such as whether a payment had been improperly withheld or was not in accordance with the contractual requirements (2) Certain types of disputes, including disputes as to whether the works were being executed in accordance with the contractual requirements, arising before (alleged) practical completion or termination of the contractor’s employment were not to be referred to arbitration but were instead to be referred to adjudication and (3) An adjudicator’s decision on the types of dispute at (b) above were to be deemed to be a contractual provision and binding unless referred to arbitration after practical completion provided that the party dissatisfied with the decision informed the other party of its unacceptability within 14 days of its issue.

 

Disputes arising out of the employer's counterclaim against the contractor for alleged breaches of contract in respect of defective workmanship and materials and incomplete work. The issue for determination was whether this counterclaim could properly be the subject matter of arbitration or court proceedings notwithstanding the contractor's contention that under the contractual dispute resolution procedure they should (first) have been referred to adjudication by reason of the disputes having arisen before practical completion and of an adjudicator's decision in respect of such disputes being a precondition to their being pursued in such proceedings.

 

Judge Thornton held that the disputes could be the subject matter of arbitration or court proceedings without there first being an adjudication. The disputes were not "adjudication matters" within the meaning of the dispute resolution procedure and could not have come to light until after the termination or abandonment of the works since they concerned the damages recoverable as a result of the contractor’s alleged repudiation of the contract. They did not concern whether the works were being executed in accordance with the contractual requirements but instead concerned whether the works had been so executed.

 

Advice Note

Whilst the Construction Act 1996 prohibits any contractual bar to the right to adjudication, that did not mean in this case that an adjudication had to take place before there could be court or arbitration proceedings.
 

Download