Adjudication Matters ' March 2021

Published date30 March 2021
Subject MatterCorporate/Commercial Law, Litigation, Mediation & Arbitration, Real Estate and Construction, Contracts and Commercial Law, Arbitration & Dispute Resolution, Construction & Planning
Law FirmWalker Morris
AuthorCarly Thorpe

Will a foreign jurisdiction clause help a party evade an adjudication enforcement?

Motacus Constructions Ltd v Paolo Castelli SpA [2021] EWHC 356 (TCC)

Recently, the Technology & Construction Court (TCC) has heard ever more inventive arguments to resist enforcement of Adjudicator's decisions. This recent case rejected and closed off one potential avenue of escape. Here one party sought to resist enforcement of an Adjudicator's decision by relying upon an argument that the court had no jurisdiction to hear the matter as the jurisdiction clause in the contract meant that legal proceedings could only be brought in France.

Background

An interim payment dispute arose during the fit out of a London hotel where Motacus Constructions Ltd (MCL) were engaged as a sub-contractor to Paolo Castelli SpA (PC). MCL referred the dispute to adjudication. The Adjudicator awarded MCL '454,687.55 plus VAT and interest. PC failed to pay the sum due and MCL commenced adjudication enforcement proceedings in the TCC. PC resisted enforcement on the basis that the contract between the parties contained a 'Governing Law & Dispute Resolution' which specified that the contract was subject to Italian law and the exclusive jurisdiction of the courts of Paris, France.

Key Legal Principles

The key issue for the TCC to consider was "Did this matter fall within the 2005 The Hague Convention Articles (the Convention) and as a result give the English Court jurisdiction?"

In order to decide this the TCC had to consider two questions;

  1. Article 6c of the Convention: whether giving effect to the agreement (of French Jurisdiction) would lead to a 'manifest injustice' or would be 'manifestly contrary' to the public policy of the UK.
  2. Article 7c of the Convention: was the adjudication enforcement an 'interim measure'. If it was, then the Adjudication Award could be enforced in an English Court.

Decision

The TCC dealt with the Article 6c question first. It noted that the burden to persuade the court that upholding the contract would lead to a 'manifest injustice' or be 'manifestly against public policy' lay firmly on the Claimant. The TCC accepted PC's argument that the inclusion of the word 'manifestly' in the Article made this a particularly high threshold to meet. The Explanatory Report which accompanied the Convention confirms that the standard required to prove either of these points was intended to be high.

The TCC found that MCL had failed to prove there would be any injustice or breach of...

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