The High Court declared an arbitrator’s appointment void after finding that a subcontract agreement did not include a clause allowing a domestic subcontractor to pursue a dispute through the main contractor’s name.
Mr Justice Gilligan delivered the judgment on 8 July 2005 in proceedings brought by Anglo Irish Banking Corporation against Tolka Structural Engineering and David Keane. The bank sought a declaration that there was no arbitration agreement between it and Tolka, along with ancillary relief.
Tolka had worked as a domestic subcontractor to Matthew Wallace Limited on building works at the Clarence Hotel in Dublin in the mid-1990s. The bank was the employer and Matthew Wallace was the main contractor. After Matthew Wallace went into receivership, Tolka maintained that it had not been paid for some work and goods supplied.
A letter from Matthew Wallace dated 24 October 1994 said the main form of contract would replace the conditions in Tolka’s tender. Although that form was never signed, the bank accepted that the parties had agreed to be bound by it. Clause 11(f) provided that an aggrieved subcontractor could, subject to conditions, use the contractor’s name in legal proceedings. A note to the clause said it should be struck out where the subcontractor was not nominated or selected by the architect under the main contract.
The parties accepted that if clause 11(f) formed part of their agreement, Tolka could use the main contractor’s name and refer the dispute to arbitration. If it did not, the bank was not entitled to the relief it sought. The bank argued that the clause was not agreed because Tolka was a domestic, rather than nominated, subcontractor. Tolka argued that the clause remained in the contract because the October 1994 letter did not say it was to be removed.
Tolka also relied on a February 2001 letter from solicitors for Matthew Wallace’s receiver, indicating consent to the name-borrowing procedure and that no claim would be made against an award relating purely to Tolka’s entitlement. The judge was not satisfied that this later letter showed clause 11(f) had been agreed in 1994.
The judge found that the note called for clause 11(f) to be struck out for a domestic subcontractor. Keeping it would have given Tolka rights beyond those ordinarily available, and the court found no clear indication in the 1994 agreement that the parties intended that result. It concluded that clause 11(f) was not agreed.
The court therefore granted the bank a declaration that David Keane’s appointment as arbitrator in the dispute between Tolka, as claimant, and the bank, as respondent, was void and of no effect because there was no arbitration agreement between the bank and Tolka. The judgment records that the bank also sought ancillary relief, but does not specify any further order.