The trustees argued that where a dispute had been referred to adjudication and that adjudication had resulted in a decision, the terms of clause 66 did not provide for the possibility of subsequent arbitration in respect of the dispute that had been referred to adjudication. They argued that when Lilley had triggered adjudication they had "stepped outside" of the provisions of clause 66. As a result, the contractual route to arbitration was no longer available to them.
Lord Mackay considered that this argument proceeded on the basis of a misunderstanding of the relationship between the terms of the contract and the implied terms pursuant to the Act. He referred to the frequently quoted words of Dyson J. in Macob Civil Engineering Limited vs Morrison Construction Limited (1999) BLR 93 stating that the purpose of the Act was to introduce a speedy mechanism for settling disputes on an interim basis. He considered that the Scheme envisaged that the decision of an adjudicator would be binding until the dispute was finally determined by litigation, arbitration or agreement. In conclusion, the dispute about matters referred to adjudication could competently be dealt with in accordance with the provisions of clause 66. Therefore, Lord Mackay granted the motion to stay the action in order to enable Lilley to refer the matter to arbitration in accordance with clause 66 (6) of the ICE Conditions.
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The parties had agreed that clause 66 did not comply with the Act. As a result adjudication was implied by virtue of the Scheme. Despite implied terms taking precedence over the written terms of clause 66, the arbitration provisions in clause 66 still survived such that the parties had to refer the matters in dispute in the adjudication to arbitration rather than the court.