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06 Apr 2021

Adjudicator’s decision enforced under the Construction Act and the Hague Choice of Court Convention 2005

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Despite exclusive jurisdiction clause in favour of France

In Motacus Constructions Limited v Paolo Castelli SPA,1 HHJ Hodge QC gave summary judgment to enforce an adjudicator’s decision pursuant to the Housing Grants, Construction and Regeneration Act 1996 (“Construction Act”), despite the construction subcontract providing for the exclusive jurisdiction of the Courts of Paris, France and being governed by Italian law. The underlying construction project was located in England and the adjudication arose between Motacus Constructions, an English sub-contractor and Paolo Castelli, an Italian contractor.

In a novel decision post-Brexit, the court considered the application of the Convention on Choice of Court Agreements 2005 (the “Hague Convention”), which is given effect domestically under the Private International Law (Implementation of Agreements) Act 2020 (“2020 Act”). The 2020 Act amended the Civil Jurisdiction and Judgments Act 1982 due to Brexit – with the effect that jurisdictional questions are no longer determined by Brussels Recast,2 but instead, where it applies, by the Hague Convention. The Hague Convention applies only to exclusive jurisdiction clauses entered into on or after the relevant jurisdiction has acceded to the convention.  For more information on changes to the law relating to private international law post-Brexit, please refer to Brexit and dispute resolution issues.3

Summary of case

The court’s decision raised a novel question on the operation of the Hague Convention: does an exclusive jurisdiction clause in favour of a foreign court preclude an English court from awarding summary judgment of an adjudicator’s decision made under the Construction Act? 

The court decided: no, it is not precluded from accepting jurisdiction and awarding summary judgment in those circumstances. It has jurisdiction to do so even though the parties may argue the substance of the dispute at another time, in this case, in the Courts of Paris, France.  The decision is therefore in line with the underlying principles of the Construction Act in terms of "pay now argue later" and enabling rapid access to justice through adjudication, but allowing the parties to litigate (or arbitrate) the underlying dispute (here in the courts of Paris). 

The court considered Articles 6(c) and 7 of the Hague Convention in making its finding. Both Articles give limited grounds for displacing the central premise of the convention that effect must be given to exclusive jurisdiction clauses:

  • Article 6(c) provides that a court of a contracting state (here the UK) other than that of the chosen court (here France) "… shall suspend or dismiss proceedings to which an exclusive choice of court agreement applies unless –
    (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;
  • Article 7 provides that: "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."

In this case, the court determined that the high threshold required to trigger Article 6(c), based on two alternative limbs of “manifest injustice” or manifest contrariness to public policy of the Court seised (here the English High Court), was not met in the circumstances. 

Instead, the court held that summary judgment of an adjudicator’s decision was an “interim measure” pursuant to Article 7 of the Hague Convention rather than a final remedy.  Pursuant to ss. 108(3), 108(5) and 114(4) of the Construction Act and para 23 of the Scheme for Construction Contracts, it was an implied term of the contract that the decision of the adjudicator was binding until final determination of the dispute.

The defendant was accordingly ordered to pay the amount awarded by the adjudicator of £454,678.65 together with any applicable VAT, interest up to the date of the adjudicator’s decision, further accrued interest at an ongoing rate and the claimant’s costs. 

Interplay between the Construction Act, English procedure for enforcing adjudications and the Hague Convention

The decision turned on the interpretation of the Construction Act’s purpose, providing a “quick, enforceable, interim decision4 to claimants. The Court accordingly opted for a purposive interpretation of the Construction Act. Giving effect to the purpose of the Construction Act in this way meant the Court interpreted summary judgment of an adjudicator’s decision as being an “interim measure” pursuant to s. 7 of the Hague Convention. In interpreting the convention, the court had regard to the Explanatory Report which refers to the purpose of such interim measures as being “to protect” the position of one of the parties. The Court also stated:

“…the categories of "interim protective measures" are not closed but are capable of expansion as national courts devise new interim remedies (or measures) to protect the interests of litigants pending the final, substantive resolution of their dispute. The concept extends to any decision that is not a final and conclusive decision on the substantive merits of the case…the concept of an interim protective measure extends to a decision of an adjudicator which, by the operation of the 1996 Act and the Scheme, is not final and binding on the parties. The function of the adjudicator's decision is to protect the position of the successful party on an interim basis pending the final resolution of the parties' dispute through the normal court processes (or by arbitration). Whilst summary judgment is clearly a final and conclusive remedy, I accept [claimant’s Counsel’s] submission that the reality of this summary judgment application is that the court is being invited to grant an interim, rather than a final and conclusive, remedy.”5

Neither party in this case adduced evidence of Italian law or the operation of the French courts.  As such, the presumption that the English court had to make was that the foreign law was the same as English law. It is also noteworthy that, in contrast to Brussels Recast, the Hague Convention does not provide for the law of the forum to apply to the jurisdiction clause. Had evidence of foreign law been adduced, it would have been that of Italian law on the operation of the French jurisdiction clause.

Conclusion and lessons

The decision is consistent with the underlying principles of the Construction Act and reinforces the enforceability of adjudicator's decisions regardless of the governing law and jurisdiction clauses in the relevant construction contract. 

It is a timely reminder to parties contracting for construction work undertaken in the UK to consider the most appropriate jurisdiction for the determination of disputes. If contracting with foreign companies, it is worth bearing in mind that the only jurisdictional treaty to which the UK is party is now the Hague Convention. Other contracting states for whom the Hague Convention is in force include all EU member states as well as Mexico, Montenegro and Singapore. Additionally, parties should be aware that, in line with s. 104(7) of the Construction Act, construction contracts subject to foreign law but relating to construction operations in the UK will be caught by adjudication under the Construction Act.

 

1 [2021] EWHC 356 (TCC)

2 Brussels Regulation Recast 1215/2012

3 Stephenson Harwood LLP: Richard Gwynne and Harriet Campbell.

4 The Court referred to Lord Ackner’s “influential contribution to the debate in the House of Lords on 22 April 1996, stressing the need for the adjudication process to produce a “quick, enforceable, interim decision”” and to Dyson J’s comments as to Parliament’s intention in creating a speeding mechanism for settling disputes on a provisional, interim basis and requiring the decisions of adjudicators to be enforced pending final determination, in Macob Civil Engineering Ltd v Morrison Construction Limited (1999) 64 Con LR 1: see [2021] EWHC 356 (TCC) at [24] and [56].

5 [2021] EWHC 356 (TCC), at [57].

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