Cygnet Heathcare plc v Higgins City Ltd

The adjudicator's decision should not be enforced where there was also a dispute as to whether a contract had been concluded and arbitration proceedings had been started to resolve this dispute
Disputes arose as to monetary entitlements and as to whether there was any contract in existence. The parties agreed that the disputes then known to be in existence should be referred to arbitration, including whether there was a contract. An arbitration and an adjudication were started at the same time. The contractor contested the adjudicator's jurisdiction on the basis that there could be no right to an adjudication where there was no contract between the parties. The adjudicator nevertheless made a decision in the employer's favour. The employer brought court enforcement proceedings. The contractor applied (in the event that the employer's application for summary judgment was dismissed) to stay the court proceedings. Judge Thornton held that the court should not consider whether the adjudicator's decision in favour of the employer was valid where there was a dispute as to whether there was an underlying contract in existence and where the parties had reached an agreement that this dispute should be resolved by arbitration and had sought to set in train a speedy arbitration process to enable the dispute to be resolved. This was on the basis that the court would (wrongly) have to determine the dispute (before its resolution by arbitration) if it were to consider and determine the enforcement proceedings brought by the employer. The most appropriate procedural course of action to give effect to this finding was to adjourn the employer's application to enforce the adjudicator's (purported) decision by way of summary judgment and the contractor's application to stay the court proceedings brought by the employer under the Arbitration Act 1996 (on the assumption that there was an underlying arbitration agreement in existence) or pursuant to the court's inherent jurisdiction with liberty to apply. This was on the basis that that course of action would least interfere with and potentially affect the resolution by arbitration of the dispute as to whether there existed an underlying contract because that course of action allowed the parties to apply to resume the hearing of either of the applications in the event of circumstances changing. Advice Note Whilst the court will normally resolve whether a construction contract had been concluded, Judge Thornton decided that he should not resolve this question where the parties had already started an adjudication to resolve it.