NHBC - No Enforceable Arbitration Agreement

The NHBC or National House-Building Council seeks to raise

standards in the home building industry to protect UK

homeowners. There are roughly 20,500 registered builders who

commit themselves to building homes in accordance with the NHBC

standards of construction. The NHBC's warranty and

insurance policy, referred to as the Buildmark Scheme, protect

over 30% of existing homes in the UK.

In a recent case involving a home with the benefit of the

NHBC Buildmark Scheme, the TCC considered whether an arbitrator

had been properly appointed in a dispute between a construction

company and home owners. The developer argued that the NHBC

dispute procedure within the Buildmark Scheme was not clear

enough to be a binding arbitration agreement under the

Arbitration Act 1996.

The court agreed with the developer. It held that the NHBC

dispute procedure for disputes between home-owners and NHBC

builders/developers does not contain a binding arbitration

agreement. It instead offers a series of non-binding options

for resolving disputes between home-owners and an NHBC

developer or builder, of which arbitration is one.

This case makes clear that home owners across the UK who

want to bring arbitration proceedings against an NHBC builder

or developer under the Buildmark Scheme considered by the TCC

do not have a contractual right to do so. An arbitration can

only occur if there is a further agreement between the parties

that a dispute be dealt with by arbitration. If the NHBC

intended this to be the case, there may be no need for the

wording of the Buildmark Scheme to be amended. On the other

hand if it was intended that home-owners should have a right to

take disputes to arbitration, the wording of the Scheme will

need amendment.

Reference: Crest Nicholson (Eastern)

Limited v Western [2008] EWHC 1325 (TCC). Please click here to go through to the case

information.

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