A charter can go a long way to clarify the intent behind the creation of a contract when the parties start falling fall out and have to go to court or arbitration.
Adventurers Quay at Cardiff Bay sounds a nice spot. Birse Construction is building luxury apartments there. The developer is St David, the Welsh trading name for Beaufort Homes Development Group. The idea was that Birse and St David would have a standard form JCT80 building contract and bills of quantities and specification and lashings of bonhomie partnering. But they fell out and had to go to court.

Birse and St David got stuck on the question of whether an arbitrator in arbitration or a judge in court shall decided their differences of opinion. In short, St David said that if a Standard Form JCT80 applies, so too does the arbitration machinery in the form. Birse agreed with that analysis, but said it never entered into the JCT80 contract. So, before we even have an argument, the two companies had to go to court to argue about how and where they could argue.

Now then, the useful thing for all us onlookers is to take a peep at their partnering charter. You will remember of course that partnering is one of those fancy new fangled words that Latham, Egan and environment secretary John Prescott keep on about. Some say partnering is the glue that gets the folk working together closely; some say it's not glue at all, but the lubricant that gets the same folk working together smoothly.

Whether it is glue or lubricant or smoke or mirrors didn't matter to the building site at Adventurers Quay; the folk there drew up and signed the Cardiff Bay Charter. The charter declares:

  • Mission statement: "To produce an exceptional quality development within the agreed time frame, at least cost, enhancing our reputations though mutual co-operation and trust."

  • Quality: "To improve, design and construct an award-winning flagship development. To enhance the reputation of the team. To work towards zero defects."

  • Time: "To complete all aspects of the scheme within the agreed programme."

  • Commercial: "To maximise profit for all parties. To preserve the budget, minimise waste, promote buildability and economic design."

  • Relationships: "To promote an environment of trust, integrity, honesty and openness. To enrol subcontractors and supplies and specialists into the team ethos. To promote clear and effective communication."

    Perhaps the charter gives a context, a backdrop, a feel for the intentions of the parties against which the facts are set

  • Safety: "To work to the agreed safety plan. To work within the safety policy of the principle contractor."

  • General: "To build within legal and statutory obligations. To provide a bespoke service to purchasers. To complete the entire project by mutual support. To enhance the ethos of partnering. To build long term profitable relationships with all parties."

    They fell out, but the interesting question is what notice a court might take of a partnering charter. In this instance nothing of the charter was legally binding, but it was, said the judge, "clearly intended to provide the standards by which the parties were to conduct themselves and against which their conduct and attitudes were to be measured".

    Sure the parties have to comply with the contract, with the law; but if procedures under the contract had not been strictly complied with, yet the letter or spirit of the charter had, a court or arbitrator could reflect on that charter when making a decision.

    Perhaps the charter gives a context, a backdrop, a feel for the intentions of the parties against which the facts are set. The word "ethos" crops up; it goes to the characteristics or spirit or attitude intended by a community of people or system of working within a contract. It may be that the courts or arbitrators will see fit to give effect to that ethos since that is what the parties intended. Partnering is not legally binding but smoke and mirrors, together with lubricant and glue, can make a quite a difference.

    The judge decided that even though one party was still sitting on the incomplete contract documents, all the essential terms were agreed. So JCT 80 applied.

    The judgment also explains the circumstances when a court will exercise its right to decide whether an arbitration clause exists at all. Sometimes it will be appropriate to ask a putative arbitrator to decide.

    • Postscript

    Tony Bingham is a barrister and arbitrator specialising in construction.