Peterborough City Council v Enterprise Managed Services Ltd (TCC - 10.10.2014)
The dispute resolution clauses of the contract between the council and the contractor provided that disputes were to be adjudicated by a Dispute Adjudication Board appointed 28 days after a party notified its intention to refer but the dispute could be referred directly to the court if no DAB was then in place. A dispute arose as to whether as to whether the contractor was liable to pay liquidated damages. An unsuccessful mediation took place. The contractor gave notice of its intention to refer the dispute to adjudication under the contract. The council issued court proceedings and served particulars of claim. The contractor contended that the council was obliged to refer the dispute to a DAB, applied successfully for the appointment of a DAB adjudicator and applied for the court proceedings to be stayed on the ground that any dispute was to be referred to adjudication by a DAB as a precondition of any action in the courts.
Edwards-Stuart J held that (i) The dispute as to whether the contractor was liable to pay liquidated damages fell to be determined by way of adjudication and amicable settlement and in the event of their failure by court proceedings and (ii) The court proceedings begun by the employer claiming liquidated damages should be stayed pending the conclusion of the adjudication process.
The words "if a dispute arises ... and there is no DAB in place" applied to a situation where there was no DAB in place at the time when the dispute arose. On the council’s approach to the construction of the dispute resolution clauses, there could never be a reference of a dispute to adjudication in any contract which provided that the DAB was to be appointed. The provision for the dispute to be referred directly to the court if no DAB was in place probably only applied in cases where the contract provided for a standing DAB, rather than the procedure of appointing an ad hoc DAB after a dispute had arisen.
The authorities showed that there is a presumption in favour of leaving the parties to resolve their dispute in the manner provided for by their contract. The various factors were too finally balanced for the court to conclude that the council overall had made out a sufficiently compelling case to displace the presumption in favour of adopting the method of dispute resolution chosen by the parties in their contract.