K&J Townmore Construction Limited v. Kildare and Wicklow Education and Training Board

At a glance

Parties

K&J Townmore Construction Limited (plaintiff) v. Kildare and Wicklow Education and Training Board (defendant)

Case no.

High Court Record No. 2018 No. 1096 S; [2019] IEHC 666

Court

High Court of Ireland (Barniville J.)

Forum and rules

Application under Article 8(1) of the UNCITRAL Model Law (Arbitration Act 2010, s. 6)

Treaty

Clause 13.2 (arbitration) of a Public Works Contract (PWC form) dated 28 October 2015

Sector

Construction; public works (school building)

Outcome

Application to refer the parties to arbitration refused (11 October 2019). The court held that the expert determination agreement had disapplied the arbitration clause for the disputes in the proceedings.

Amount

The plaintiff's summary judgment claim was for €2,954,147.22, based on the expert determinations.

The dispute

The defendant, a statutory board, engaged the plaintiff contractor under a PWC-form building contract dated 28 October 2015 to carry out works at St. Conleth's Community College in Newbridge, Co. Kildare. Clause 13.1 of the contract provided for conciliation and Clause 13.2 for arbitration. Disputes arose in 2016. The parties agreed in August 2016, and expanded in revised terms of engagement signed on 23 January 2017, to refer the disputes to expert determination by LEA Consulting Limited. The expert issued determinations in the plaintiff's favour, and the plaintiff sued for €2,954,147.22 on invoices based on them. The defendant, which had tried to withdraw from the expert process in September 2017, asked the court to refer the dispute to arbitration under Article 8(1) of the Model Law. It argued that the expert determination agreement had replaced only the conciliation clause. The plaintiff replied that the agreement had also displaced the arbitration clause, and that a later conciliation agreement of 16 August 2018 also barred the defendant from relying on arbitration.

Key holdings

1. The party asking for a reference under Article 8(1) must first prove that the dispute is the subject of an arbitration agreement. The burden then shifts to the other party to show that the agreement is null and void, inoperative or incapable of being performed. The court gives the question of whether an arbitration agreement exists full judicial consideration, not a prima facie review. ¶¶ 46–47
2. Read as a whole, the expert determination agreement made the expert's determinations both 'final' and 'binding'. In any event, an expert determination is final and binding by default and can be challenged only on very limited grounds, such as fraud or excess of jurisdiction. The analogy with a 'binding' adjudicator's decision under s. 6(10) of the Construction Contracts Act 2013 was rejected. ¶¶ 82–105
3. The plaintiff's later letter of 11 September 2017 was probably admissible as a subsequent declaration of intent. But it was equivocal, and the court gave it little weight. ¶¶ 113–116
4. Clause 13.2 applies only to disputes that 'may be referred to conciliation' under Clause 13.1. Disputes that the parties agreed to send to expert determination instead of conciliation are not such disputes, so Clause 13.2 does not reach them. The expert determination agreement disapplied Clause 13.2 by necessary implication for those disputes. Clause 13.2 still applies to other disputes. ¶¶ 119–126
5. The defendant failed to prove an arbitration agreement covering the disputes. Alternatively, the plaintiff showed that Clause 13.2 was 'inoperative' for them. The application was refused. The court said this decision gives effect to the parties' agreement and does not weaken the courts' supportive approach to arbitration. ¶¶ 124–126, 135–137
6. Obiter: the conciliation agreement of 16 August 2018 did not give the defendant a right to arbitrate the determination claim. Clause 5 of that agreement gave arbitration options only to the plaintiff. Even if the defendant had kept such a right, Clause 5 would have taken it away. ¶¶ 131–133
7. Obiter: the court doubted the parties' shared view that conciliation under Clause 13.1 is optional. It considered conciliation more likely to be a mandatory step before arbitration under Clause 13.2. ¶ 59

Procedural history

1. 28 October 2015Building contract concluded on the PWC form.
2. 12 August 2016The parties agree initial terms appointing LEA Consulting Limited as expert.
3. 23 January 2017The parties sign revised and expanded terms of engagement (the agreement for expert determination).
4. 15 September 2017The defendant tries to withdraw unilaterally from the expert process. The expert continues and issues further determinations.
5. 24 May 2018The plaintiff issues invoices totalling €2,954,147.22 based on the determinations. They are not paid.
6. 16 August 2018Conciliation agreement with conciliator Ciaran Fahy extends the existing conciliation to the determination claim.
7. 29 August 2018The plaintiff issues High Court proceedings and seeks entry to the commercial list and summary judgment.
8. 5 October 2018The defendant applies for an order under Article 8(1) of the Model Law referring the parties to arbitration.
9. 11 October 2019High Court judgment (Barniville J.) refuses the application.

Tribunal, counsel and experts

Decided by

• David Barniville Judge, High Court of Ireland

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Keywords

• Article 8(1) Model Law
• referral to arbitration
• inoperative arbitration agreement
• expert determination
• final and binding
• conciliation
• Public Works Contract
• construction
• Arbitration Act 2010
• Construction Contracts Act 2013
• contractual interpretation
• ICS principles
• Townmore
• Ireland
• St. Conleth's Community College
• Fiona Trust

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