Will The Court Stay Proceedings In Favour Of Adjudication?

It is well known that, following the case of Hershel Engineering Limited v Breen Property Limited [2000] EWHC TCC 178, section 108 of the Housing Grants Construction & Regeneration Act 1996 means exactly what it says. An adjudication can be commenced at any time, even if there are court proceedings already in progress. However, until the case of DGT Steel and Cladding Ltd v Cubitt Building and Interiors Ltd [2007] EWHC 1584 (TCC), which came before His Honour Judge Coulson QC, the reverse question had not come before the courts.

DGT were engaged by Cubitt to carry out external cladding works under a sub contract, based on Cubitt's standard terms, which contained adjudication provisions. Clause 19.1 provided that:

"Any dispute, question or difference arising under or in connection with the sub contract shall, in the first instance, be submitted to adjudication Ö"

DGT duly referred a claim for some £193k to adjudication. This claim was rejected by the adjudicator. DGT then commenced proceedings in the TCC for some £242k. Cubitt said that the claim brought in the court was very different to that brought in the adjudication and that as a result of there being a binding adjudication agreement in the contract, the litigation should be stayed until the new claim had been adjudicated. DGT said there was no mandatory adjudication provision and even if there was, the new claim was essentially the same as that which had already been adjudicated. In the alternative, DGT said the Court should exercise its discretion against exercising a stay in any event.

Judge Coulson QC noted that if the parties have agreed on a particular method by which their disputes are to be resolved, then the Court has an inherent jurisdiction to stay proceedings brought in breach of that agreement. He referred, by way of example, to the case of Channel Tunnel Group Limited v Balfour Beatty Construction Limited [1993] AC334 where proceedings had been commenced despite there being a term in the contract providing for an initial reference of disputes to a panel of experts. As noted above, in Herschel, Dyson J had refused an application for an injunction restraining an adjudication which had been commenced at a time when County Court proceedings were already on foot.

In addition, Judge Coulson noted that the Courts have exercised their own inherent jurisdiction to grant a stay even where the relevant term of the contract merely stated that if disputes or claims arising out of the...