What Was The Extent Or Scope Of A Settlement Of An Arbitration? When Did The Arbitrator Become Functus Officio Or Cease To Have Jurisdiction?

The case of Dawes v Treasure & Son Ltd [2010] EWHC 3218 (TCC), which came before Mr. Justice Akenhead raised issues about the point or stage at which an arbitrator becomes functus officio or ceases to have jurisdiction and the extent, ambit or scope of a settlement of an arbitration.

The Facts

Treasure and Son Ltd ("Treasure") was a contractor engaged by Mr Dawes to carry out construction works pursuant to a building contract which incorporated the JCT Standard Form of Prime Cost Contract (1998 Edition with Amendments 1 and 2).

Treasure obtained an adjudication decision requiring Mr Dawes to pay to Treasure a certain amount. That decision was not honoured and Treasure successfully enforced that decision in the Court, with the Court giving judgment on 25 October 2007. A dispute was then referred to Court regarding whether payment in relation to the judgment had been made by Mr Dawes' daughter.

Before the first set of court proceedings, on 6 July 2007 Treasure referred a dispute to arbitration. The dispute arose from Mr Dawes' alleged failures to pay sums due under the contract as well as for Mr Dawes' alleged breaches of contract. At this stage, the dispute relating to the repayment of the sum which was to be the subject matter of the adjudicator's decision had not been referred to arbitration; this money was not paid out until after the enforcement in Court, in November 2007.

The parties entered into a settlement agreement during the arbitration proceedings, but Mr Dawes then commenced further proceedings relating to defects in Treasure's works. The arbitrator ruled that Mr Dawes' defects claims had been settled. Mr Dawes argued that he had only used the defects as a defence and they were not at that stage advanced as a counterclaim. Mr Dawes subsequently commenced Court proceedings that raised the following issues.

The Issues

Did the arbitrator become functus officio, apart from issues relating to costs, either immediately upon or shortly after the settlement between the parties or at least after the 1st Costs Award?

If he retained jurisdiction, was he right to find that the settlement effectively compromised amongst other things all claims for defects raised in the arbitration proceedings?

The Decision

Mr Dawes' two claims against Treasure were dismissed.

The Judge decided that:

the arbitrator did have jurisdiction to consider and decide whether the settlement agreement between the parties covered all claims for the defects specifically...