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England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Motacus Constructions Ltd v Paolo Castelli SpA  EWHC 356 (TCC) (22 February 2021)
Cite as:  WLR(D) 159,  EWHC 356 (TCC)
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BUSINESS AND PROPERTY COURTS
TECHNOLOGY AND CONSTRUCTION COURT
Construction Contract Adjudication - Enforcement - Summary Judgment - Whether jurisdiction of English court ousted by foreign exclusive jurisdiction clause - Housing Grants, Construction and Regeneration Act 1996, ss. 104, 108, 114 - 2005 Hague Convention, arts.6 (c), 7
1 Bridge Street West
Manchester M60 9DJ
B e f o r e :
Sitting as a Judge of the High Court
| Motacus Constructions Limited
|Paolo Castelli SPA
Mr Mischa Balen (instructed by Bird & Bird LLP) for the Defendant
Hearing date: Monday 15 February 2021
Crown Copyright ©
The following cases are referred to in the judgment:
Re Agrokor DD  EWHC 2791 (Ch)
Babcock Marine (Clyde) Limited v HS Barrier Coatings Ltd  EWHC 1659 (TCC),  BLR 495
BN Rendering Ltd v Everwarm Ltd  CSOH 45
Channel Tunnel Group Ltd v Balfour Beatty Construction Limited  AC 334
Comsite Projects Ltd v Andritz AG  EWHC 958 (TCC), (2004) 20 Const LJ 24
Donohue v Armco Inc  UKHL 64,  1 All ER 749
The Eleftharia  P 94
Fiona Trust v Privalov  UKHL 40,  Bus LR 1719
Re Henderson's Estate, Nouvion v Freeman (1889) 15 App Cas 1
Macob Civil Engineering Ltd v Morrison Construction Ltd (1999) 64 Con LR 1
MBE Electrical Contractors Ltd v Honeywell Control Systems Ltd  EWHC 2244 (TCC),  BLR 561
Spiliada Maritime Corporation v Consulex Ltd ('The Spiliada')  AC 460
Re Stocznia Gdynia SA v Bud-Bank Leasing SP. ZO. O  BCC 255
National Navigation Co v Endesa Generacion SA ('The Wadi Sudr')  EWCA Civ 1397,  1 Lloyd's Rep 193
No additional cases were cited to the court or referred to in the skeleton arguments.
JUDGE HODGE QC:
I: Introduction and overview
"19. GOVERNING LAW & DISPUTE RESOLUTION
This Agreement shall be governed by and construed in accordance with the laws of Italy.
All disputes between the parties as to the validity, execution, performance, interpretation or termination of this Agreement will be submitted to the exclusive jurisdiction of the Courts of Paris, France, in accordance with the aforementioned laws."
"The contract shall provide [in writing] that the decision of the adjudicator is binding until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement. The parties may agree to accept the decision of the adjudicator as finally determining the dispute."
"If the contract does not comply with the requirements of subsections (1) to (4), the adjudication provisions of the Scheme for Construction Contracts apply."
"Where any provisions of the Scheme for Construction Contracts apply by virtue of this Part in default of contractual provision agreed by the parties, they have effect as implied terms of the contract concerned."
Paragraph 23 of the Scheme provides:
"The decision of the adjudicator shall be binding on the parties, and they shall comply with it until the dispute is finally determined by legal proceedings, by arbitration (if the contract provides for arbitration or the parties otherwise agree to arbitration) or by agreement between the parties."
"No matters have been raised in the submissions relating to threshold jurisdiction."
III: Exclusive Jurisdiction clauses
" shall suspend or dismiss proceedings to which an exclusive choice of court agreement applies unless
(a) the agreement is null and void under the law of the State of the chosen court;
(b) a party lacked the capacity to conclude the agreement under the law of the State of the court seised;
(c) giving effect to the agreement would lead to a manifest injustice or would be manifestly contrary to the public policy of the State of the court seised;
(d) for exceptional reasons beyond the control of the parties, the agreement cannot reasonably be performed; or
(e) the chosen court has decided not to hear the case."
"Interim measures of protection are not governed by [the Hague] Convention. [That] Convention neither requires nor precludes the grant, refusal or termination of interim measures of protection by a court of a Contracting State and does not affect whether or not a party may request or a court should grant, refuse or terminate such measures."
"Article 7 states that interim measures of protection are not governed by the Convention. It neither requires nor precludes the grant, refusal or termination of such measures by a court of a Contracting State, nor does it affect the right of a party to request such measures. This refers primarily to interim (temporary) measures to protect the position of one of the parties, pending judgment by the chosen court, though it could also cover measures granted after judgment that are intended to facilitate its enforcement. An order freezing the defendant's assets is an obvious example. Another example is an interim injunction preventing the defendant from doing something that is alleged to be an infringement of the plaintiff's rights. A third example would be an order for the production of evidence for use in proceedings before the chosen court. All these measures are intended to support the choice of court agreement by making it more effective. They thus help to achieve the objective of the Convention. Nevertheless, they remain outside its scope."
Para. 161 makes it clear that:
"A court that grants an interim measure of protection does so under its own law. The Convention does not require the measure to be granted but it does not preclude the court from granting it "
Para. 163 states that:
"If, after the chosen court has given judgment, proceedings are brought to recognise and enforce that judgment in a Contracting State in which interim measures were granted, the requested State would be required under Article 8 to rescind the interim measures (if they were still in force) to the extent that they were inconsistent with the obligations of the requested State under the Convention "
IV: The claimant's submissions
" to introduce a speedy mechanism for settling disputes in construction contracts on a provisional interim basis and requiring the decisions of adjudicators to be enforced pending the final determination of disputes by arbitration, litigation or agreement Parliament has not abolished arbitration and litigation of construction disputes. It has merely introduced an intervening provisional stage in the dispute resolution process. Crucially, it has made it clear that decisions of adjudicators are binding and are to be complied with until the dispute is finally resolved."
" an interesting issue may arise where there is a tension between the statutory right to adjudicate a dispute under the 1996 Act and a conflicting regime imposed by choice of law or jurisdiction provisions agreed by the parties. However, that does not arise in this case. It is not suggested by HSBC that the dispute resolution provisions mandate arbitration or litigation in another jurisdiction so as to disapply the 1996 Act and preclude Babcock from seeking to enforce the Second Adjudication Decision. It is common ground that the 1996 Act is applicable and Babcock is entitled to seek to enforce the adjudication decision in the UK. The issue is whether Babcock should bring those adjudication enforcement proceedings in England or in Scotland."
That tension did not apply in Babcock Marine and so the judge did not need to resolve it. It does apply in this case; and Ms Jones submits that it should be resolved in the claimant's favour, for the reasons set out above. In the circumstances, Ms Jones submits that Babcock Marine does not touch upon the points that fall for decision in the present case and so provides little assistance on the resolution of the point at issue here.
" that adjudication is a sui generis system of dispute resolution which is in many respects unique. The primary aim of adjudication is the swift temporary resolution of the question of the dispute pending the final determination of the issues between them. In adjudication the need to have the right answer is subordinate to the need to have a swift answer and the courts have laid down special procedures to achieve that result "
V: The defendant's submissions
" refers to basic norms or principles of that State; it does not permit the court seised to hear the case simply because the chosen court might violate, in some technical way, a mandatory rule of the State of the court seised. As in the case of manifest injustice, the standard is intended to be high: the provision does not permit a court to disregard a choice of court agreement simply because it would not be binding under domestic law."
Similarly, in the context of the recognition of foreign judgments, Dicey, Morris & Collins discusses the meaning of "manifestly contrary to public policy" at para. 14-225, where they conclude:
" The public policy exception is to operate only in exceptional circumstances Before it may find recognition contrary to public policy, the court addressed must conclude that recognition would conflict, to an unacceptable degree, with the legal order in the State of recognition because it would infringe a fundamental principle, or would involve a manifest breach of a rule of law which is regarded as fundamental within that legal order."
"The inclusion of the word 'manifestly' must mean something more than mere contrariness or incompatibility. So it should be harder to demonstrate that something is manifestly contrary to public policy than that it is simply contrary to it. What is not clear is how much harder Where there is any doubt or any confusion as to whether it is contrary to or incompatible with public policy, there cannot be anything 'manifestly' contrary to public policy."
In Re Stocznia Gdynia SA v Bud-Bank Leasing SP. ZO. O  BCC 255 (cited in Re Agrokor DD) Mr Registrar Baister said (at ):
"The fact that foreign proceedings may differ from those of this country, as they invariably do, even in relation to creditors' rights in respect of priorities, would not of itself be a reason to refuse relief ".
In National Navigation Co v Endesa Generacion SA ('The Wadi Sudr')  EWCA Civ 1397,  1 Lloyd's Rep 193 (where the issue was whether a Spanish court decision should be recognised in England under the Brussels I Judgments Regulation) it was argued that the public policy of enforcing arbitration clauses was so strong that it came within the art. 34(1) exception of Brussels I (permitting the refusal to recognise a decision made by a foreign court on the ground the decision was "manifestly contrary to public policy in the Member State in which recognition is sought"). That argument was rejected by Waller LJ at  and by Moore-Bick LJ at  -  (with Carnwath LJ agreeing with both judgments).
" the general rule is clear: where parties have bound themselves by an exclusive jurisdiction clause effect should ordinarily be given to that obligation in the absence of strong reasons for departing from it".
"The purpose of interim measures of protection is not to encroach on the procedural powers of the arbitrators but to reinforce them, and to render more effective the decision at which the arbitrators will ultimately arrive on the substance of the dispute. Provided that this and no more is what such measures aim to do, there is nothing in them contrary to the spirit of international arbitration."
That was not what the claimants were seeking to do in the present case. Rather, they were acting in direct breach of clause 19 of the contract.
"There is nothing in the 1996 Act that prevents parties to construction contracts, which relate to the carrying out of construction operations in England, Wales or Scotland, from agreeing foreign jurisdiction clauses. If the requirements of section 108 of the 1996 Act are not satisfied, section 114(4) provides that the statutory scheme, including provision for adjudication enforcement, is implied. Those implied terms must be interpreted in accordance with the proper law of the contract on the same basis as any other terms of the contract."
"If, after the chosen court has given judgment, proceedings are brought to recognise and enforce that judgment in a Contracting State in which interim measures were granted, the requested State would be required under Article 8 to rescind the interim measures (if they were still in force) to the extent that they were inconsistent with the obligations of the requested State under the Convention. For example, if a court other than that chosen grants an asset-freezing order to protect a right claimed by the plaintiff but the chosen court rules that the plaintiff has no such right, the court that granted the asset-freezing order must lift it where the judgment of the chosen court is subject to recognition under the Convention and the court that granted the asset-freezing order is requested to recognise it."
Ms Jones submitted that the interactions between interim measures and final judgments is more consistent with an interim measure of protection being given a broader meaning than that for which Mr Balen contends.
VI: Decision: Article 6 (c)
VII: Decision: Article 7