Capital Structures Plc v Time & Tide Construction Ltd [2006] EWHC 591 (TCC)

This summary was provided by CMS Cameron McKenna LLP.

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

Where there has never been a contract because it has been avoided on the grounds of duress, it logically follows that any arbitration or adjudication provision in that contract also becomes void. 

His Honour Judge David Wilcox, Technology and Construction Court

 

The Claimant (‘Capital’) was appointed as subcontractor by the defendant main contractor (‘Time’) in respect of the supply, delivery and installation of structural steelwork and cladding and the supply of labour and plant for a project. Disputes arose regarding valuations and interim payments and Capital withdrew from the site. Kerrington (Time’s employers) threatened to take over the development which action, according to Time, could have resulted in Time’s liquidation.

The parties eventually signed a settlement agreement, complete with an adjudication clause, in full and final settlement of all existing and future claims by Capital. Time made part payment of the sums due under the settlement agreement  but refused to pay the balance.  Capital referred the matter to adjudication. Time challenged the adjudicator’s jurisdiction on the basis that it had entered into the settlement agreement under economic duress and elected to have the agreement set aside. The adjudicator rejected Time’s plea and made an award in Capital’s favour, which Time refused to pay.

Capital applied for summary judgment for the enforcement of the adjudicator’s award.  Capital maintained that the facts did not support a plea for economic duress and that, even if the agreement had been avoided for duress, the adjudication provisions of the agreement would have survived.

Acknowledging that a court must be wary of encouraging complex satellite litigation where summary judgement is sought in the context of the enforcement of adjudication awards, Judge Wilcox held that:

  • If there has never been a contract from which the adjudicator’s jurisdiction derives because, on the grounds of duress, proper steps are taken to avoid an agreement, it logically follows that any arbitration or adjudication provision also becomes void. 
  • On the facts Judge Wilcox held there to be an arguable, albeit ‘shadowy’, case for economic duress.  Time’s plea in the response to the referral notice, and the supporting documentary evidence, could be effective to evidence that they were avoiding the settlement agreement.

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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