The secretary of state for transport commenced arbitration against Amec in respect of defects to a bridge. Amec argued that the secretary of state’s notice of arbitration was invalid. About six months before the six-year limitation period was about to expire defects became apparent to the viaduct that had been constructed by Amec. Twelve days before the limitation period was about to expire the Highways Agency referred a dispute (as to whether the defect was caused by the roller bearings) to the engineer in accordance with clause 66. Seven days later the engineer gave a decision stating that Amec had installed bearings that were not in accordance with the contract. The following day the secretary of state gave notice of arbitration. These timescales were short, and Amec had not accepted nor denied liability. Amec argued that no dispute existed, and therefore no valid engineers decision had been given and as a result there was nothing to be referred to arbitration.
This was an appeal focusing specifically on the meaning of “dispute” pursuant to clause 66 of the ICE Conditions of Contract in the context of arbitration.
Reference
The Court of Appeal held that in considering whether there was a “dispute or difference” all of the circumstances including the impending end of the limitation period needed to be considered. Meetings had taken place many months before and it was apparent that Amec did not accept responsibility for the structural deficiencies. The engineer under clause 66 must act independently and honestly, but did not need to comply with the rules of natural justice. As a result his decision was not procedurally unfair and the arbitration notice was valid.
*Full case details
Amec Civil Engineering Limited vs Secretary of State for Transport, 17 March 2005, Court of Appeal, May LJ., Rix LJ, Hooper LJ. [2005] EWCA Civ 291.
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Postscript
The Court of Appeal was not willing to allow Amec to escape from answering a substantial claim, and so was willing to objectively conclude a dispute had already formed before the clause 66 process began. This was on the basis that Amec knew the allegations against them and a reasonable time had passed for Amec to consider its position. The fact that the limitation period was about to expire was also an important factor.
It was also very interesting to see that the Court of Appeal concluded that an engineer when arriving at a decision under clause 66 of the ICE Contract does not need to comply with the rules of natural justice. He or she must act independently and honestly, but does not need to invite representation from the parties. Nonetheless, it must certainly be sensible for any engineer in that position to listen to what the parties have to say before coming to a decision in the absence of a pressing limitation deadline.
