Comsite Projects Ltd v Andritz AG [2003] EWHC 958 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

A clause conferring a foreign jurisdiction will not prevent a party from commencing an adjudication, so long as the contract in question is a "construction contract". The adjudicator's award will be enforceable by the English courts.

HHJ Kirkham, Queens Bench Division (Birmingham TCC)

30 April 2003

C had entered into a building services sub-contract with A to install various services at a new wastewater treatment works and sewage-recycling centre at Sandown, Isle of Wight. Disputes arose between the parties. Clause 20 of the building services sub-contract provided that "All disputes arising in interpretation or execution of the present contract, its annexes or in connection with documents issued by both parties to the contract, including additional agreements concerning modifications to the contract… the jurisdiction…will be in Austria, Graz. Austrian Law will be applied…"

A began proceedings in Graz pursuant to Clause 20 and Article 23 of EC Council Regulation No:44/2001 (which provides that exclusive jurisdiction agreements are enforceable), which C took steps to defend. C also issued Part 8 proceedings in the English courts seeking a declaration that their contract works fell within the definition of "construction operations" set out in s104 of the HGCRA. A argued that the court did not have jurisdiction to hear the Part 8 application as the contract conferred jurisdiction on the Austrian courts. Further, as the contract was for the installation of plant on a site where the primary activity was water treatment for the purposes of s105(2)(c)(i) of the Act, and as the plant could not be lawfully operated without those services, A argued that the building services contract was not a "construction contract" and the Act therefore did not apply in any event.

The court held that, as the Part 8 dispute concerned the application of HGCRA, it did not fall within the type of dispute contemplated by Clause 20 and therefore the court did have jurisdiction to hear the application. Judge Kirkham considered the application of Article 23 and stated that, as Article 23 applies to agreements as to the jurisdiction to "settle" disputes between the parties, and as a "settlement" of a dispute is its final resolution, then Article 23 would not apply to an adjudicator's decision, nor its enforcement by an English court, as the decision was by its very nature not final. Accordingly, whilst the Austrian court may be the forum for finally resolving the dispute, this would not prevent the English courts enforcing an adjudicator's decision made in accordance with the Act.

If the contract is a "construction contract", the Act will apply to that contract. If the contract's payment and dispute resolution provisions do not comply with the Act then the Scheme would apply. If there is a breach of those payment provisions then a claim can be brought for that breach, irrespective of the governing law of the contract. Any other dispute can also be referred to an adjudicator, however the referring party may need to make additional submissions to the adjudicator on the operation of the applicable foreign law.

Finally, the court held that although the installed services were necessary for the lawful operation of the plant, this was not sufficient to determine that they were required for the actual operation of the plant. On the facts, none of the works were connected to the plant nor did they enable the plant to be operated, instead they were required for the operation of a particular building at the plant. As such, the works were "construction operations" and the Act did therefore apply to this contract.

This summary was provided by CMS Cameron McKenna LLP.

For more information visit http://www.cms-cmck.com/Construction/Construction-Disputes

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