07.May.2018

Where to enforce an adjudicator’s decision?

Being granted a financial award in construction adjudication is not always the end of the story. Sometimes it is necessary to raise a court action to enforce the award. The recent Court of Session case of BN Rendering Ltd v Everwarm Ltd [2018] CSOH 45 provides a reminder that, where an enforcement action is required, it is important to consider which court can enforce the adjudicator’s award.

Background
The defender, Everwarm Ltd, entered into a subcontract with the pursuer, BN Rendering Ltd, for labour for the installation of external wall insulation at sites in Kirkcaldy. A dispute arose between the parties, which was referred to adjudication. The adjudicator concluded that BN Rendering was due £141,598.20 plus VAT from the defender. The company then sought to enforce this award in the Court of Session, Scotland. 

Everwarm argued that the Court of Session lacked jurisdiction to enforce the adjudicator’s award as, according to them, the contract gave the English courts exclusive jurisdiction to resolve all disputes arising from the contract, overriding the default ground of jurisdiction relied upon by the pursuer – which was the defender’s domicile, in Scotland.

The relevant provision was clause 14 of the defender’s subcontract terms and conditions, which stipulated:

“Subject to any specific agreement to the contrary contained in the Order, any contract governed by these terms and conditions shall be governed by and construed in accordance with the laws of England, and the parties hereby submit to the exclusive jurisdiction of the English courts.”

BN Rendering argued that although Everwarm’s subcontract terms and conditions did form part of the  contract, BN Rendering had not provided the necessary consent to clause 14, as required by the Civil Jurisdiction and Judgements Act 1982. Specific consent to this particular clause was said to be relevant as the case of Bols Distilleries BV v Superior Yacht Services Ltd [2007] 1 WLR 12 established that “claimants must demonstrate ‘clearly and precisely’ that the clause conferring jurisdiction on the court was in fact the subject of consensus between the parties.”

BN Rendering referred to Estasis Salotti Di Colzani Aimo e Gianmario Colzani v RÜWA Polstereimaschinen GmbH [1976] ECR 1831 as authority for the proposition that in order to demonstrate consent to an exclusive jurisdiction clause, a signature is required. Since the pursuer had not signed the subcontract, the exclusive jurisdiction clause was invalid.

Furthermore, BN Rendering’s position was that clause 14 failed to identify which disputes arising out of the subcontract were subject to the exclusive jurisdiction of the English courts. There was, for instance, no reference to “all disputes” in the clause, as might be expected if it were intended to prorogate jurisdiction to the English courts for every dispute under the contract. The pursuer stressed that the unique and UK-wide nature of adjudication should point against a finding that the parties intended to oust the jurisdiction of the Scottish courts in respect of the enforcement of adjudicators’ decisions.

Decision
The judge held that the Court of Session did not have jurisdiction to enforce the adjudicator’s award, because clause 14 of the Everwarm’s subcontract terms and conditions allocated exclusive jurisdiction to the English courts in respect of all disputes arising out of the contract. A signature was not required to demonstrate that the parties provided real consent to this exclusive jurisdiction clause – it was sufficient that the parties’ contract expressly referred to the terms and conditions. Moreover, the judge could not detect any ambiguity in clause 14; the reference to “exclusive” jurisdiction could not be construed in such a way that the English courts would have jurisdiction only in respect of certain disputes. Accordingly, the Lord Ordinary dismissed the pursuer’s action.

Conclusion
As a result of the judge’s dismissal of the action, BN Rendering will likely need to raise an action in the English courts to enforce the adjudicator’s award, which will result in additional costs and will further delay enforcement of the award. Parties seeking to enforce an adjudicator’s award in the courts must, therefore, ensure that they are clear which court or courts have jurisdiction prior to raising an action.

 

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