Uniform Construction Ltd v Cappawhite Contractors Ltd

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 29 August 2007
• Neutral Citation: [2007] IEHC 295
• Court: High Court
• Date: 29 August 2007

[2007] IEHC 295

THE HIGH COURT

No. 287 SP/2006

Uniform Construction Ltd v Cappawhite Contractors Ltd

IN THE MATTER OF THE ARBITRATION ACTS, 1954 - 1998

AND IN THE MATTER OF AN ARBITRATION

BETWEEN/

UNIFORM CONSTRUCTION LIMITED

PLAINTIFF

AND

CAPPAWHITE CONTRACTORS LIMITED

DEFENDANT

ARBITRATION ACT 1954 S36

ARBITRATION ACT 1954 S38

MUTUAL SHIPPING CORPORATION v BAYSHORE SHIPPING CO LTD 1985 1 WLR 625

ARBITRATION ACT 1979 S1 (UK)

TAME SHIPPING LTD v EASY NAVIGATION LTD (THE "EASY RIDER") 2004 1 LLR 626

ARBITRATION ACT 1996 S68 (UK)

ARBITRATION ACT 1954 S36(1)

KEENAN v SHIELD INSURANCE CO LTD 1988 IR 89

MCSTAY v ASSICURAZIONI GENERALI SPA 1991 ILRM 237 1991 ILT 126

RSC O.84(b)

RSC O.84(c)

HONGKONG FIR SHIPPING CO LTD v KAWASAKI KISEN KAISHA LTD 1962 2 QB 26

SOCIETE FRANCO-TUNISIENNE D'ARMEMENT TUNIS v GOVERNMENT OF CEYLON 1959 3 AER 25

LIMERICK CITY COUNCIL v UNIFORM CONSTRUCTION LTD UNREP CLARKE 1.11.2005 2005/36/7522 2005 IEHC 347

MCCARTHY v KEANE & ORS 2004 3 IR 617 2005 2 ILRM 241

MCCARRICK v GAIETY (SLIGO) LTD 2001 2 IR 266 2002 1 ILRM 55

KING & ANOR v THOMAS McKENNA LTD & ANOR 1991 2 QB 480

DECRO-WALL INTERNATIONAL SA v PRACTITIONERS IN MARKETING LTD 1971 2 AER 216 1971 1 WLR 361

ARBITRATION

Award

Remittal of award - Whether grounds for remitting or setting aside award - Whether error so fundamental as to require that award be remitted or set aside - Whether arbitrator misconducting himself so as to require award to be set aside - Reasoned award - Extent to which party can rely on reasons published separately from award - Mutual Shipping v Bayshore Shipping [1985] 1 WLR 625, Tame Shipping Limited v Easy Navigation Limited (The "Easy Rider") [2004] 1 Lloyd's Rep 626 and McCarthy v Keane [2004] 3 IR 617 considered - Arbitration Act 1954 (No 26), ss 36 and 38 - Proceedings dismissed (2006/287SP - Laffoy J - 29/8/2007) [2007] IEHC 295

Uniform Construction Ltd v Cappawhite Contractors Ltd

The plaintiff was engaged as a main construction contractor by the defendant. The defendant terminated a sub-contract, alleging a repudiatory breach on the part of the plaintiff. The plaintiffs sought to set aside the award of an arbitrator and to remit the award to the arbitrator, alleging inter alia that the arbitrator took into account post-termination events and drew inferences that were not pleaded. The defendants alleged that the Court could not examine the reasons for the award given the agreement set out that an unreasoned award should apply.

Held by Laffoy J. that the plaintiff could not establish any error of law and that the plaintiff could not establish any misconduct.

Reporter: E.F

1 Judgment of Miss Justice Laffoy delivered on 29th August, 2007.

The proceedings

2 These proceedings arise out of an arbitration in which the defendant (Cappawhite) was claimant and the plaintiff (Uniform) was respondent and counter-claimant. The arbitrator, Ciaran Fahey (the Arbitrator), published his Interim Award on 17th May, 2006 (the Award).

3 In the proceedings the plaintiff claims the following reliefs:

4 (a) an order pursuant to s. 36 of the Arbitration Act, 1954 (the Act of 1954) that the Award be remitted to the Arbitrator for his reconsideration; or

5 (b) an order pursuant to s. 38 of the Act of 1954 that the Award be set aside.

6 In relation to both reliefs, Uniform also invokes the court's common law jurisdiction.

The arbitration

7 In February, 2001 Uniform was engaged by Limerick County Council as the main contractor for the construction of certain road works forming part of the Limerick Southern Ring Road project. By a sub-contract dated 14th March, 2001 (the sub-contract) Cappawhite was appointed by Uniform as sub-contractor to carry out the main drainage, drainage and water mains works for the road works. The main contract was the standard form Institute of Engineers of Ireland (IEI) Conditions of Contract, 3rd edition, as revised and re-printed in 1990, as amended by the parties thereto. The sub-contract was in the standard form for use with the IEI Conditions of Contract, as amended by Uniform and Cappawhite. Clause 18 provided for the referral of any dispute between Uniform and Cappawhite to the arbitration and final decision of a person agreed between the parties or, failing agreement, appointed by the President for the time being of IEI. It was provided that such reference should be conducted in accordance with the IEI Arbitration Procedure, 1987 or any amendment or modification thereof in force at the time of the appointment of the Arbitrator.

8 Cappawhite entered on site in May, 2001 pursuant to the sub-contract. Having been approximately ten months on site Cappawhite terminated the sub-contract on 4th March, 2002 on the basis that it was entitled to do so because of a repudiatory breach on the part of Uniform. Thereafter the dispute was referred to arbitration pursuant to the sub-contract.

9 It is clear from the evidence that throughout the course of the arbitration, from the acceptance by the Arbitrator of his appointment by the President of the IEI on 1st November, 2002 to the publication of the Award, the issues were addressed thoroughly and comprehensively by the parties and their legal advisers and by the Arbitrator. The claim and defence and counterclaim were the subject of extensive pleadings. The hearing took place over thirteen days between 25th April, 2005 and 22nd November, 2005. Following the hearing the Arbitrator received closing submissions in writing from each party. The closing submissions of Uniform, which were furnished on 6th January, 2006, including an appendix, ran to 71 pages. The closing submissions of Cappawhite, which were furnished on 17th January, 2006, ran to 53 pages. Each party was given the opportunity to furnish a rebuttal submission in relation to the opponent's closing submission and each did so on 10th April, 2006. That of Uniform, including appendices, ran to 47 pages, while that of Cappawhite ran to 27 pages.

10 The Award was a reasoned award. In pages 1 to 49 the Arbitrator outlined the claim, made findings of fact, recorded his understanding of the issues, and the submissions made by the parties and his conclusions on the issues and his reasons therefor. In essence, the Arbitrator found that Cappawhite was entitled to terminate the sub-contract. He dismissed Uniform's counterclaim and he assessed the damages to which Cappawhite was entitled at €336,011.37. On pages 50 and 51 of the Award he set out in tabular form the breakdown of the Award under various headings.

Preliminary objection

11 It was submitted on behalf of Cappawhite, by way of preliminary objection, that the court should not examine the reasons set out in the Award because, it was contended, there was an agreement between the parties for an unreasoned award.

12 In accordance with clause 18 of the sub-contract, the IEI Arbitration Procedure 2000 governed the conduct of the arbitration. Rule 20.1 thereof governed whether the Arbitrator should provide reasons for his award and, insofar as is relevant for present purposes, provided as follows:

"The Arbitrator shall not provide reasons for the award unless requested to do so by at least one of the parties. If so requested and unless both parties request that reasons form part of the award, the Arbitrator shall have a discretion as to whether such reasons form part of the award or are provided in a separate document not forming part of the award."

13 Cappawhite's preliminary objection was premised on a factual matter which was in controversy. Cappawhite's contention was that neither party requested the Arbitrator to provide reasons. Uniform, on the other hand, contended that it had requested the Arbitrator to furnish reasons. I will return to that controversy later. However, I propose considering Cappawhite's objection on the assumption that neither party requested the Arbitrator to provide reasons and that, therefore, the provision of reasons contravened rule 20.1 quoted above.

14 While the parties were unable to point to any Irish authority in point, the court was referred to two authorities from the United Kingdom which do give guidance on the issue.

15 The earliest is a decision of the Court of Appeal in Mutual Shipping v. Bayshore Shipping [1985] 1 W.L.R. 625. In that case, a dispute between the owners and charterers of The Montan was referred to a sole arbitrator. The arbitrator was not asked to give reasons for his award but, in accordance with the practice of London Maritime Arbitrators, he provided the parties with written reasons on the basis that they were not to form part of or to be used in any way in connection with his award. The document revealed that the arbitrator had mistakenly attributed the evidence of the owners' expert to the charterers' expert and vice versa and that, instead of making an award in favour of the owners, he should have made an award in favour of the charterers. When the matter was brought to the attention of the arbitrator, he wrote to the parties admitting the error. In proceedings by the charterers to have the award remitted to the arbitrator for reconsideration, Sir John Donaldson M.R. explained why the practice of giving "restricted" reasons grew up in the following passage in his judgment (at p. 629):

"I think that it is important to remember why the practice of giving 'claused' or 'restricted' reasons grew up. They are sometimes described as 'confidential' reasons, but this is a misnomer since the only restriction is on using them 'in connection with' the award. The reason for adopting this course was simple. Under the law as it existed before the Arbitration Act, 1979 came into force, it was possible to set aside an award on the ground that it disclosed an error of fact or law 'on its face' but it...