The parties had entered into a contract incorporating the ICE conditions, 5th Edition, and the engineer had made a decision in relation to a dispute pursuant to clause 66 of those conditions.
One of the issues to be decided was whether there was a dispute for the purposes of clause 66 of the ICE Conditions.
Reviewing the arbitration and adjudication judicial authorities, the judge set out seven propositions:
- The word dispute should be given its normal meaning;
- Despite the number of cases, there are no hard-edged legal rules as to what is and what is not a dispute. The accumulating judicial decisions have merely produced helpful guidance;
- The mere fact that one party notifies the other of a claim does not automatically and immediately give rise to dispute. A dispute does not arise until it emerges that the claim is not admitted;
- There are many circumstances from which it may emerge that a claim is not admitted. There may be an express rejection, there may be discussions from which objectively it can be said that the claim is not admitted, or a party may prevaricate thus giving rise to the suggestion that it has not admitted the claim. Silence may well also give rise to the same inference;
- The period of time for which a party may remain silent depends upon the facts of the case and the contract. Where the gist of the claim is well known, a short period may suffice. Where the claim is notified to an agent of a respondent who has an independent duty to consider the claim, a longer period of time may be required;
- If a party imposes a deadline for responding to the claim, the deadline does not have the automatic effect of curtailing what otherwise would be a reasonable time for responding. However, it is something for a court to consider; and
- If the claim as presented is so nebulous and ill-defined that a party cannot sensibly respond to it, neither silence, nor even an express non-admission is likely to give rise to a dispute for the purposes of arbitration or adjudication.
Here, following a meeting on 20 September, where certain defects were discussed, a letter was sent on 2 October setting out the nature of the defects. The fact that no immediate response was required did not prevent this letter being a claim. In fact by this date, Amec had decided to notify its insurers.
A further letter was sent on 6 December, this time not only imposing a deadline for a response of 11 December, but in addition seeking an admission of liability. By this time, the general positions for all parties had been well canvassed such that in the view of the judge it was inconceivable that such admission would be made.
Therefore, perhaps surprisingly at first blush, the letter of 6 December requiring a response by 11 December, did in fact set a reasonable deadline. The deadline was imposed for a good reason, namely that the limitation period was about to end. The fact that the deadline would not cause Amec any difficulty was clear. It was self-evident that Amec would not be prepared to admit liability for massively expensive defects on a viaduct.
Amec went on to argue that an engineer making a decision under clause 66 is required to abide by the principles of natural justice. The judge disagreed. He felt there was a great difference between an engineer's decision under clause 66 and an adjudicator's decision under the Construction Act. The duty on the engineer was slightly different, namely to act independently and honestly and here he had. Interestingly on this point, the judge gave leave to appeal.
*Full case details
Amec Civil Engineering Ltd vs The Secretary of State for Transport, 11 October 2004, TCC, The Honourable Mr Justice Jackson,  EWHC 2339 (TCC)
Contact Fenwick Elliott on 020 7421 1986 or NGould@fenwickelliott.co.uk
This is one of the first decisions of the Honourable Mr Justice Jackson, the new head of the Technology and Construction Court. Amec brought proceedings to challenge the jurisdiction of an arbitrator. There are now many judgments dealing with the crystallisation of a dispute for the purposes of adjudication. This judgment deals with the issue, but in respect of arbitration. The timing of the formation of a dispute is often not as crucial in arbitration as it can be in adjudication, but here the limitation period was about to expire, so the dispute needed to have crystallised so that it could be referred to arbitration before the expiry of the limitation period. The secretary of state just managed to succeed, and the decision will be of interest to those that find themselves in a similar position.