The High Court has ruled that a dispute between building contractor John G. Burns Limited and subcontractor Grange Construction & Roofing Company Limited was not subject to arbitration under their contract for work on a school extension in Dublin.
The court found that the parties’ subcontract consisted of the contractor’s 19 January 2010 letter and the documents it referred to. Those documents did not incorporate the Construction Industry Federation’s standard subcontract form or contain an arbitration clause. The court therefore ruled that the CIF president had no jurisdiction to appoint an arbitrator.
The decision, delivered by Ms Justice Laffoy on 19 June 2013, followed an application by John G. Burns Limited under section 9 of the Arbitration Act 2010. The company asked the court to decide whether an arbitrator had jurisdiction after he ruled on 12 December 2012 that he could hear the dispute.
The underlying disagreement concerned the subcontractor’s work supplying and installing wall cladding and related materials for a two-storey extension at Mount Sackville Secondary School. The subcontractor claimed that the main contractor had not paid the balance of money due. The main contractor said it had withheld sums over alleged failures in the subcontractor’s performance, including delay. Those claims were background to the jurisdiction application; the court was deciding whether the dispute could proceed to arbitration, not resolving the underlying payment and performance claims.
The subcontractor argued that the CIF standard subcontract form applied. It relied in part on correspondence in which the main contractor referred to clauses in that form and to arbitration. The main contractor’s director said those references were errors. The judge accepted that some references were mistaken and concluded that the contract was already in place before the letters that referred to the CIF form.
The judge distinguished earlier cases in which subcontractors had begun work after receiving letters expressly incorporating identified standard contract terms, including an arbitration clause. Here, the documents forming the agreement contained no such reference. The subcontractor’s commencement of work therefore amounted to acceptance of the terms in those documents, without incorporation of the CIF form, the court held.
The court concluded that no arbitration agreement meeting the requirements of Article 7 of the Model Law governed the parties’ relationship. It set aside the basis for the arbitrator’s appointment by finding that the CIF president lacked jurisdiction to make it. The judgment did not determine which party was owed money or the merits of the construction claims. The judge observed that resolving the dispute through alternative dispute resolution would be preferable to litigation.