MBE Electrical Contractors Ltd V Honeywell Control Systems Ltd

The enforcement proceedings brought by the sub-contractor in respect of the adjudicator's decision in its favour should not be stayed to arbitration pursuant to the arbitraton agreement in the sub-contract


Technology and Construction Court
His Honour Judge Peter Langan QC
3 September 2010
The sub-contract incorporated the contractor’s terms and conditions which included an arbitration agreement but no adjudication agreement with the result that the Scheme for Construction Contracts applied to any adjudication. A final account dispute was referred to adjudication by the sub-contractor which obtained an award of a specified sum by way of award. The sub-contractor brought court enforcement proceedings and applied for summary judgment. The contractor applied for an order that the proceedings be stayed pursuant to section 9 of the Arbitration Act.
The sub-contractor submitted that the right to a stay arose where a claim was brought in respect of a matter which under the agreement was to be referred to arbitration. The arbitration agreement in the sub-contract provided that any dispute arising out of or relating to the sub-contract was to be finally resolved by arbitration. Its claim arose out of or related to the sub-contract with the results that the claim fell within the arbitration agreement and was subject to arbitration and its right to apply for a stay under section 9(1) had been triggered.
Judge Langan agreed with the sub-contractor’s submissions and ordered a stay. The provisions of the Scheme for Construction Contract relied on by the sub-contractor were a clear articulation of the "pay now, argue later" policy which underlay the Construction Act and the Scheme itself. That policy would be stultified if a reference to arbitration under the sub-contract’s arbitration agreement were to put a brake, whether permanently or otherwise, on the carrying through of the adjudication process to enforcement. The contractor was free to take any points open to it in the arbitration but this did not entitle it to set on one side the Scheme which was part and parcel of the agreement into which it entered. Objections as to the adjudicator's jurisdiction, if they were to bar enforcement of his award, would have to be made in the enforcement proceedings. Questions which related to the merits of the dispute had to be left to the arbitration. In that way proper weight was given both to the arbitration clause and to the importation of the Scheme into the contract.