Discretionary Right to Adjudicate No Basis for Stay of Arbitration

Cubitt Bldg. & Interiors Ltd. v. Richardson Roofing (Ind.) Ltd., [2008] EWHC 1020 (Queen’s Bench Div., Tech. & Constr. Ct.)

Cubitt, the contractor on a construction project in London, engaged Richardson as sub-contractor.  Under the relevant sub-contract, both parties had a discretion to refer disputes to adjudication.  Richardson completed its works, Cubitt alleged delay and indicated that it intended to deduct liquidated damages from the amount payable to Richardson.  Richardson started arbitration proceedings against the Cubitt.  Cubitt sought a stay of the arbitration so that it could refer the dispute to adjudication.

In a reversal of the recent decision of the same court in DGT Steel & Cladding Ltd. v. Cubitt Bldg. & Interiors Ltd., [2007] EWHC 1854 (Queen’s Bench Div., Tech. & Constr. Ct.), the court found that a discretionary right to adjudicate disputes under the sub-contract did not give a party the right to stay either arbitration or litigation.  The DGT Steel decision had given rise to concerns that adjudication would be used as a delaying tactic where the right to adjudicate was no more than discretionary (as under the JCT 2005 suite of contracts). 

DGT Steel remains authority for the right to stay arbitration or litigation where adjudication is mandatory.  It will remain open to a tribunal or court to amend the timetable for resolution of the dispute if the parties have a discretionary right to refer disputes to adjudication.  An applicant is unlikely to find a sympathetic hearing if, as in this case, the request to adjudicate, following commencement of proceedings, comes some three or four years after the dispute arose.