Barnmore Demolition and Civil Engineering Ltd v Alandale Logistics Ltd and Others

• Jurisdiction: Ireland
• Judge: Mr Justice Feeney
• Judgment Date: 11 November 2010
• Neutral Citation: [2010] IEHC 544
• Court: High Court
• Docket Number: [2010 No. 5910 P]
• Date: 11 November 2010

[2010] IEHC 544

THE HIGH COURT

[No. 5910P/2010]

Barnmore Demolition & Civil Engineering Ltd v Alandale Logistics Ltd & Ors

COMMERCIAL

BETWEEN

BARNMORE DEMOLITION AND CIVIL ENGINEERING LIMITED

PLAINTIFF

AND

ALANDALE LOGISTICS LIMITED, PYNEST LIMITED, DUBLIN AIRPORT AUTHORITY PLC AND BARRY DONOHUE (AS LIQUIDATOR OF PYNEST)

DEFENDANTS

UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION 21.6.1985 ART 8(1)

ARBITRATION ACT 2010 S6

ARBITRATION ACT 2010 SCHED 1

ARBITRATION ACT 2010 S2

UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION 21.6.1985 ART 7

UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION 21.6.1985 ART 7(1)

LESOTHO HIGHLANDS DEVELOPMENT AUTHORITY v IMPREGILO SPA & ORS 2005 3 AER 789 2005 3 WLR 129 2006 1 AC 221 2005 2 LLOYDS REP 310 2005 UKHL 43

UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION 21.6.1985 ART 16(1)

UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION 21.6.1985 ART 7(3)

BORN INTERNATIONAL COMMERCIAL ARBITRATION 3ED 2009 881

ARBITRATION ACT 1996 S30 (UK)

BIRSE CONSTRUCTION LTD v ST DAVID LTD 1999 BLR 194 1999 70 CON LR 10 2000 BLR 57 1999 AER (D) 1235

AL NAIMI (T/A BUILDMASTER CONSTRUCTION SERVICES) v ISLAMIC PRESS AGENCY INC 2000 1 LLOYDS REP 522 2000 70 CON LR 21 2000 BLR 150 2000 AER (D) 86

MCCRORY SCAFFOLDING v MCINERNEY CONSTRUCTION LTD 2004 3 IR 592 2004/34/7774 2004 IEHC 346

O'DONOVAN v SOUTHERN HEALTH BOARD 2001 3 IR 385 2001/18/4927

O'TOOLE v HEAVEY 1993 2 IR 544 1992/12/3982

ARBITRATION

Arbitration clause

Arbitration - Model law - Agreement - Arbitration clause - Dispute as to existence of agreement - Jurisdiction of court to resolve dispute - Prima facie test - Doctrine of separability - Whether court having jurisdiction to resolve dispute - Whether arbitration clause existing - Whether parties accepting arbitration clause - Al-Naimi v Islamic Press [2000] 1 Lloyd's Rep 522; Birse Construction Ltd v St David Ltd (1999) 70 Con LR 10; Harbour Assurance Ltd v Kansa Ltd [1993] QB 701; Lynch Roofing Systems Ltd v Bennett & Son Ltd [1999] 2 IR 450 and McCrory Scaffolding Ltd v McInerney Construction Ltd [2004] IEHC 346, [2004] 3 IR 592 considered - Lesotho Development v Impregilo SpA [2005] UKHL 43, [2006] 1 AC 221; O'Donovan v Southern Health Board [2001] 3 IR 385 and O'Toole v Heavey [1993] 2 IR 544 approved - Arbitration Act 2010 (No 1), ss 2, 6 and Sch 1 - UNCITRAL Model Law on International Commercial Arbitration 1985, articles 7, 8 and 16 - Reference to arbitration refused (2010/5910P - Feeney J - 11/11/2012) [2010] IEHC 544

Barnmore Demolition and Civil Engineering Limited v Alandale Logistics Limited

Facts The first and second named defendants sought an order staying the present court proceedings contending that there was an arbitration agreement in place. The plaintiff"s core ground of opposition was that there was no arbitration agreement between the plaintiff and either of the first or second named defendants. The defendants claimed that there was a binding arbitration agreement in place which could be found in a certain document.

Held by Feeney J in refusing to stay proceedings: The document in question was an unexecuted draft contract and the evidence showed that the contract was never agreed. There was no evidence that the arbitration clause was isolated and formed the subject matter of a separate, distinct or severable agreement. The evidence also established that there was no course of conduct or business dealings between the parties which would lead to the conclusion that the parties expected or knew that an arbitration clause would govern their dealings.

1 Judgment of Mr Justice Feeney delivered on the 11th day of November, 2010.

2 1. The first and second named defendants have sought an order pursuant to Article 8(1) of the Model Law and s. 6 of the Arbitration Act 2010 referring the plaintiff's claim as against the first and second named defendants to arbitration and staying the proceedings as against those defendants. Those defendants assert that the plaintiff's claim is subject to an arbitration agreement within the meaning of the Arbitration Act 2010. That application is resisted by the plaintiff. The plaintiff's core ground of opposition is that there is no arbitration agreement between the plaintiff and either of the first or second named defendants.

3 2. Section 6 of the Arbitration Act 2010 adopts the Model Law and provides that subject to that Act the Model Law shall have the force of law in the State and shall apply to arbitrations under arbitration agreements. The text of the UNCITRAL Model Law on international commercial arbitration is set out in Schedule 1 to the Arbitration Act 2010. Article 8 deals with arbitration agreements and substantive claims before the Court. Article 8(1) provides:

"A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed."

4 The issue in dispute in this case is whether there is an arbitration agreement between the plaintiff and either or both of the first two defendants. Section 2 of the 2010 Act identifies that an arbitration agreement shall be construed in accordance with option 1 of Article 7 of the Model Law. Option 1 Article 7 provides for the definition and form of arbitration agreement in the following terms:

5 (1) '"Arbitration agreement' is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

6 (2) The arbitration agreement shall be in writing.

7 (3) An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means.....

8 (6) The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract."

9 In Article 7(1) arbitration is placed in quotation marks in recognition of a well established concept which emanates from the doctrine of separability which applies to arbitration clauses in contracts. That doctrine recognises that an arbitration agreement has a separate existence from the matrix contract for which it provides the means of resolving disputes. It recognises that the agreement to arbitrate is an independent agreement and it follows that the doctrine of separability is a recognised feature of arbitration clauses. The independence of an arbitration agreement under U.K. law was dealt with in the judgment of Lord Steyn in the case of Lesotho Highlands Development Authority v. Impregilo SpA and Others [2005] UKHL 43 at paragraph 21 of the judgment in the following terms:

"It is part of the very alphabet of arbitration law, as explained in Harbour Assurance Co. (UK) Ltd. v. Kansa General International Insurance Co. Ltd. [1993] QB 701, 724-725, per Hoffman L.J. (now Lord Hoffmann) and spelled out in section 7 of the Act, that the arbitration agreement is a distinct and separable agreement from the underlying or principal contract. It is in the arbitration agreement, read with the curial law, in this case the Arbitration Act 1996, that the powers of the tribunal are to be found and not in the underlying contract. In the present case one is dealing with an ICC arbitration agreement. In such a case the terms of reference which under article 18 of the ICC rules are invariably settled may, of course, amend or supplement the terms of the arbitration agreement. The terms of reference too are a source of the powers of the arbitrator. This is the context in which the terms of reference in the present case expressly provided for the dispute to be settled in accordance with the provisions of the 1996 Act."

10 That analysis is equally applicable to the position in this State under the Arbitration Act 2010. This is clear from Article 16(1) of the Model Law incorporated into law by the Arbitration Act 2010 which states, inter alia, -

"hellip; For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract."

11 3. Whilst it is the case that an arbitration agreement has a separate existence from the matrix contract for which it provides the means of solving disputes, it is not the case that an arbitration agreement does not have to be agreed between the parties for the parties to be bound by such agreement even though such agreement can be independent or separate. Absent there being an agreement to arbitrate a matter is not the subject of an arbitration agreement and therefore is not covered by Article 8.

12 4. The definition of an arbitration agreement set out in Article 7 requires that the arbitration agreement shall be in writing. However there is no requirement for it to be recorded in any particular form as long as it is in writing and Article 7(3) provides that an arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means. It is therefore unnecessary for a party seeking to establish the existence of an arbitration agreement to prove that a particular contract was executed or signed but rather what is required by statute is that the arbitration agreement be in writing....