Fermanagh District Council v Gibson (Banbridge) Ltd (NI, CA - 17.6.2014)
The employer could not rely on the Arbitration Act 1996 to extend the time to begin an arbitration when it had given notice of its intention to refer disputes as to the adjudicators jurisdiction and decision to arbitration beyond the period required by NEC2
17 June, 2014
FERMANAGH DISTRICT COUNCIL v GIBSON (BANBRIDGE) LTD
Northern Ireland, Court of Appeal
Morgan LCJ and Girvan and Weir LJJ
17th June 2014
The contract incorporated NEC2 and the ICE Arbitration Procedure 1997. The contractor referred a payment dispute to adjudication which resulted in a specified sum being awarded to it. The employer unsuccessfully contested the court enforcement proceedings brought by the contractor. Clause 93.1 of NEC2 requires any reference to arbitration to be made within four weeks of the adjudicator’s decision. The employer served its notice of intention to refer the disputes as to the adjudicator’s jurisdiction and the sum awarded to arbitration and applied under section 12 of the Arbitration Act 1996 to extend the time to do so because it failed to serve the notice within the four week period. Section 12(3)(a) provides that the court may extend time if the circumstances founding the application were outside the parties’ reasonable contemplation when they agreed the time bar provision and it would be just to do so.
The Northern Ireland Court of Appeal held that section 12(3)(a) in the circumstances. The governing principle was that the parties must be taken to have contemplated that any failure to comply with a time limitation in not unusual circumstances arising in the ordinary course of business would result in the claim being time barred. The circumstances of the instant case set out below fell into this category.
The outcome of the adjudication gave rise to a major dispute between the parties with the adjudicator's assessed figure and the employer's view as to the extent of the liability being miles apart. Whilst the employer was contesting the adjudicator's right to adjudicate on the ground that there was no dispute, the issue of quantum and the question of the adjudicator's right to assess the figure fell within the remit of the arbitrator. The employer was going to resist payment of the adjudicator's assessed sum. The giving by the employer of a notice of intention to refer the matter in dispute to arbitration could in no way amount to a waiver of its claim that the adjudicator had no jurisdiction and would be entirely consistent with its argument since compliance with clause 93.1 would not have prejudiced its contention that the adjudicator had no jurisdiction in court proceedings or in arbitration. As was determined by the judge at first instance, the employer’s contention that the adjudicator did not have jurisdiction was in fact misconceived and had no basis in fact.