Capital Structures Plc V Time & Tide Construction Ltd

The adjudicator's award of the sum the contractor was to pay under the settlement agreement should not be enforced by summary judgment where the contractor had an arguable case that the agreement had been procured by the sub-contractor's economic duress

Technology and Construction Court
His Honour Judge David Wilcox
8 March 2006
A settlement agreement was made between the contractor and the sub-contractor by which the contractor was obliged to pay the sub-contractor a specified sum of money. The contractor did not pay that sum of money and the sub-contractor brought adjudication proceedings against the contractor. The adjudicator awarded the sub-contractor that sum of money despite the contractor's contention during the course of the adjudication that the agreement had only been entered into by the contractor under economic duress. The sub-contractor brought court enforcement proceedings to enforce the adjudicator's award by way of summary judgment.
Judge Wilcox refused to order summary judgment in the sub-contractor's favour. He refused to do so on the basis that the contractor had an arguable, albeit shadowy, case as to economic duress and that if the contractor could at trial establish that case and that it had validly avoided the agreement in consequence, the adjudicator would have no jurisdiction. This was because whilst adjudication provisions in a contract survived the termination of that contract, they did not survive the avoidance of the contract on the ground of economic duress (and similarly became void). This proposition was supported by (1) the statement in Mustill & Boyd on Commercial Arbitration that it had to be accepted as a possibility that circumstances which rendered a contract voidable might also affect the arbitration agreement in that contract with the result that any arbitrator appointed under that agreement might not have jurisdiction if proper steps were taken to avoid the agreement and (2) The statement of Lord Macmillan in Hayman v Darwin (1942) that if there had never been a contract, there had never been an arbitration agreement. In the light of the above the contractor should have leave to defend on the basis that it made a payment into court of the amount awarded by the adjudicator with the costs of the sub-contractor's enforcement application to be reserved to the trial judge.