The High Court has referred a developer’s dispute with its building contractor over alleged defects in 24 apartments in Kilrush, Co Clare, to arbitration. The court found no basis under Article 8 of the UNCITRAL Model Law to refuse the referral.
The judgment, delivered by Mr Justice Ryan on 4 June 2014, concerned an application by the first defendant, L&M Keating Limited, under section 6 of the Arbitration Act 2010 and Article 8, or the court’s inherent jurisdiction, to stay the court proceedings pending arbitration. The developer, Franmer Developments Limited, and the contractor had a building contract containing an arbitration clause.
The developer alleges that the defendants failed in their respective duties in connection with the development, including by carrying out substandard work, failing to comply with building regulations and using substandard materials. Its claims against the contractor include alleged breach of contract and negligence. It also brought claims against other defendants, including the architect and quantity surveyor. These are allegations described in the judgment, not findings on liability.
The contractor argued that the arbitration clause entitled it to have the dispute with the developer referred to arbitration. The developer accepted that the clause applied between it and the contractor, but argued that the dispute could not practicably be separated from its claims against the other defendants. It said that deciding the contractor’s liability without determining the architect’s role could create difficulties or inconsistent findings.
Mr Justice Ryan held that the other defendants could not be compelled to join an arbitration under the contract. However, their presence in the court case did not make the arbitration agreement null and void, inoperative or incapable of being performed. The court said that complexity or inconvenience in resolving the claims in separate forums was not enough to meet Article 8’s exception.
The judge also observed that the court would have to consider the separate causes of action against each defendant even if the case proceeded with all defendants before it. The judgment noted that claims involving the contractor between defendants could remain in the High Court proceedings, and that provision could be made for such claims in the referral order.
The court proposed to grant the contractor’s application and refer the developer’s claim against it to arbitration under clause 38(b) and Article 8. The judgment does not determine whether any defendant is liable for the alleged defects.