Alstom entered into a contract with Railtrack under which there was a pain/gain share provision. Alstom subcontracted part of its works under the main contract to Jarvis. The works were completed and Alstom suffered losses in accordance with the “pain” provisions of the main contract.

Alstom claimed that Jarvis had agreed a pain/gain share provision under the subcontract and sought a declaration to that effect in order to pass some of the losses it had suffered on to Jarvis. Alstom further argued that if the court found that any element of the pain/gain share mechanism remained to be agreed the court had the power to determine what the amount of any pain to be borne or enjoyed by Jarvis should be.

Jarvis claimed that a mutually acceptable pain/gain sharing mechanism with Alstom had not been agreed. Jarvis also argued that in the absence of such agreement the court did not have the power to determine what should have been agreed between the parties.