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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Barnmore Demolition and Civil Engineering Ltd v Alandale Logistics Ltd & Ors [2010] IEHC 544 (11 November 2010)
URL: http://www.bailii.org/ie/cases/IEHC/2010/H544.html
Cite as: [2010] IEHC 544
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Judgment Title: Barnmore Demolition and Civil Engineering Limited v Alandale Logistics Ltd & Ors Neutral Citation: [2010] IEHC 544 High Court Record Number: 2010 5910 P Date of Delivery: 11/11/2010 Court: High Court Composition of Court: Judgment by: Feeney J. Status of Judgment: Approved |
Neutral Citation: [2010] IEHC 544 THE HIGH COURT COMMERCIAL [2010 No. 5910P] BETWEEN BARNMORE DEMOLITION AND CIVIL ENGINEERING LIMITED PLAINTIFF AND
ALANDALE LOGISTICS LIMITED, PYNEST LIMITED, DUBLIN AIRPORT AUTHORITY PLC AND BARRY DONOHUE (AS LIQUIDATOR OF PYNEST) DEFENDANTS Judgment of Mr Justice Feeney delivered on the 11th day of November, 2010. 1. The first and second named defendants have sought an order pursuant to Article 8(1) of the Model Law and s. 6 of the Arbitration Act 2010 referring the plaintiff’s claim as against the first and second named defendants to arbitration and staying the proceedings as against those defendants. Those defendants assert that the plaintiff’s claim is subject to an arbitration agreement within the meaning of the Arbitration Act 2010. That application is resisted by the plaintiff. The plaintiff’s core ground of opposition is that there is no arbitration agreement between the plaintiff and either of the first or second named defendants. 2. Section 6 of the Arbitration Act 2010 adopts the Model Law and provides that subject to that Act the Model Law shall have the force of law in the State and shall apply to arbitrations under arbitration agreements. The text of the UNCITRAL Model Law on international commercial arbitration is set out in Schedule 1 to the Arbitration Act 2010. Article 8 deals with arbitration agreements and substantive claims before the Court. Article 8(1) provides:
(2) The arbitration agreement shall be in writing. (3) An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means ….. (6) The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract.”
4. The definition of an arbitration agreement set out in Article 7 requires that the arbitration agreement shall be in writing. However there is no requirement for it to be recorded in any particular form as long as it is in writing and Article 7(3) provides that an arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means. It is therefore unnecessary for a party seeking to establish the existence of an arbitration agreement to prove that a particular contract was executed or signed but rather what is required by statute is that the arbitration agreement be in writing. It is possible for the agreement to arbitrate to be concluded orally or by the conduct of the parties or by other means provided the content of the arbitration agreement is recorded in any form. There have been a number of decisions of the Irish courts which have identified agreements to arbitrate based on the business dealings between the parties, business realities and standard form contracts. 5. Article 16 of the Model Law provides for the competence of arbitral tribunals to rule on their own jurisdiction. It does so in the following terms 16(1):
6. The entitlement of both the Court and the arbitral tribunal to rule on the existence of an arbitration agreement has given rise to extensive discourse. In light of the fact that both a court and the arbitral tribunal have jurisdiction to consider and rule on the existence of an arbitration agreement the issue arises as to the standard of judicial review which should be applied by the Court in exercising its jurisdiction on this matter under the Model Law. This matter is summarised in the textbook by Gary B. Born entitled International Commercial Arbitration at Chapter 6, p. 881 where he deals with the issue of prima facie versus full judicial consideration of interlocutory jurisdictional challenges under the Model Law. He states:
7. In the United Kingdom the courts have determined that any argument as to the existence of the arbitration clause itself or as to the scope of the clause will, other than in exceptional circumstances, generally be dealt with by the court itself on the basis that even though the arbitrators have the necessary jurisdiction to decide the matter themselves, the existence or validity of a clause is a matter more appropriately dealt with by the court itself. This is identified as being in recognition of the fact that the existence or validity of an arbitration agreement constitutes a threshold to the application before the court. It is acknowledged that this issue raises an inherent tension between the jurisdiction of the court to determine whether an arbitration agreement exists or is valid and whether it extends to the dispute in question and the power of the arbitrators to determine their own jurisdiction under the Kompetenz-Kompetenz principle set out in what is s. 30 of the UK Act of 1996. (See Birse Construction Ltd. v. St. David Ltd. [1999] BLR 194 and [2000] BLR 57 (C.A.) and Al Naimi (t/a Buildmaster Construction Services) v. Islamic Press Agency Inc [1999] CLC 212 and [2000] CLC 647 (C.A.)). Whilst the English courts in resolving the threshold issues in relation to the validity and scope of arbitration clauses have adopted an approach that such issues are to be determined by the court and not by the arbitrators, that is not an approach universally adopted in other jurisdictions. Counsel for the plaintiff argues that the correct approach for this Court to follow, based upon the wording in Article 8(1), is that full judicial consideration should be given to the issue as to whether or not there is an arbitration agreement between the plaintiff and either or both of the first two defendants. Counsel for the first two defendants contend that the correct approach to follow is for the Court to consider whether or not on a prima facie basis it has been established that an arbitration agreement exists and if so an order under Article 8 should be granted. 8. Born in his textbook International Commercial Arbitration in dealing with the issue of prima facie versus full judicial consideration of interlocutory jurisdictional challenges under the Model Law concluded as follows (at Chapter 6, p. 885):
Despite these decisions a number of other courts in Model Law States have reached the opposite result, particularly in cases involving disputes over the scope of the arbitration agreement, holding that only prima facie interlocutory judicial review was appropriate in determining whether to refer a matter to arbitration.” 9. On the facts of this case, it is unnecessary for the court to make any determination as to whether a prima facie or a full judicial consideration should apply in relation to the issue as to whether or not there was an arbitration agreement in this case. That arises from the fact that the Court is satisfied, as hereinafter set out, that on either of those tests the defendants have failed to identify that the action is the subject of an arbitration agreement. Even if the Court was to apply the prima facie test to the existence of the arbitration agreement contended for by the first two defendants, the Court is satisfied that on that test the defendants have failed to establish that there was any arbitration agreement. 10. The first two defendants claim that there is an arbitration agreement which is binding on the plaintiff set out in writing and to be found in Clause 18 of a document entitled “Alandale Logistics Limited Bespoke Form of Subcontract 2006 Edition”. That document is an unexecuted draft contract and the documents and evidence available to the Court confirm that that contract was never agreed. The weight of the defendants’ case is that there was “an agreement in principle pending confirmation and acceptance for our respective companies”. No such confirmation was ever made by either side. Nor is there any evidence that the arbitration clause was isolated and formed the subject matter of a separate, distinct or severable agreement. The documents and evidence available to the Court establishes that the bespoke form of subcontract was sent to the plaintiff and that thereafter negotiations and discussions occurred leading to the stage where it was agreed that the plaintiff would enter into an agreement with the second named defendant then known as Alandale Logistics (Ireland) Ltd. but that the terms and provisions of such contract were never concluded. The evidence goes no further than identifying a process by which the plaintiff had indicated an agreement to agree. The fact that the bespoke form subcontract was never executed arose in circumstances where the terms to be included and contained within the contract were never finalised. The defendants contend that the fact that the contract was never executed or that all the terms were not agreed should not result in the arbitration clause in the draft agreement being unenforceable. However, for that to be the case the defendants would have to establish that the agreement to arbitrate as set out in writing in Clause 18 was a separate, independent or distinct agreement and there is no evidence to that effect. The clause dealing with arbitration within the bespoke form of subcontract remained no more than one of the many clauses within that agreement and that agreement was never concluded and that clause was never the subject of a separate or distinct agreement. The Court is also satisfied that the evidence establishes that there was no course of conduct or business dealings between the parties which would lead the Court to conclude that the parties expected or knew that an arbitration clause would govern their dealings. Nor was there a history of business dealings and contracts between the parties where arbitration agreements were habitually agreed and in place and, indeed, the evidence to the Court was that the only other dealing between the plaintiff and the defendants was between the plaintiff and the first named defendant where there was no arbitration agreement. Nor is it the case that the arbitration clause found at Clause 18 of the draft bespoke subcontract is a standard industry or profession wide clause but rather it is a unique clause and there was no agreement, understanding or evidence of any expectation in relation to that clause which would lead the Court to conclude that either the plaintiff or the first or second named defendants knew that their dealings were subject to an arbitration clause or agreement. The clause dealing with arbitration was one of a number of clauses contained in a draft agreement which was never concluded nor were the terms accepted. There was no separate agreement, understanding or dealings between the parties which would lead the Court to conclude that the basis upon which the plaintiff was carrying out work was subject to an arbitration agreement. 11. It is the case that when the courts come to consider the terms of an agreement to arbitrate that the Court should do so with due regard to business realities and not seek too much in aid by way of technicality, where it is clear on what basis the plaintiff went upon a site and commenced work. As stated by Peart J. in McCrory Scaffolding v. McInerney Construction Ltd. [2004] 3 I.R. 592 (at p. 601):
I am satisfied that the arbitration clause should be read into the dealings between the parties.” 12. The documents and evidence available to the Court identifies the following factual matters relevant to the issue of the arbitration agreement claimed by the first and second named defendants. 13. It is claimed by the first two defendants that the agreement to arbitrate is between the plaintiff and the second named defendant and that agreement is to be found in Clause 18 of the draft bespoke subcontract. That document was forwarded to the plaintiff in mid-April 2008. Prior to that date the plaintiff was unaware of the existence of the second named defendant which was known at that time as Alandale Logistics (Ireland) Ltd. That company had been incorporated on the 13th June, 2007 but prior to mid-April 2008 the existence of such company was not made known to the plaintiff. Prior to April 2008 the plaintiff had carried out work at Dublin Airport for the first named defendant. Prior to the incorporation of the second named defendant the plaintiff had submitted a tender to the first named defendant in January 2007 and had carried out and completed works as a sub-contractor for the first named defendant in respect of Pier C at Terminal 2 at Dublin Airport. The first named defendant was appointed as the main contractor to the third named defendant by appointment which occurred on the 19th September, 2007 and prior to the plaintiff being appointed sub-contractor for the works, the first named defendant had engaged the plaintiff to carry out other works at Dublin Airport which works were undertaken between October 2007 and February 2008 and in April 2008 it was agreed that the plaintiff would receive payment in the sum of €600,000 in respect of such works from the first named defendant. Those works were carried out by the plaintiff for the first named defendant in circumstances where there was no arbitration agreement in place between the parties. By the 18th April, 2008 the plaintiff had carried out extensive works for the first named defendant and on that date Kieran Farrell sent an e-mail to the plaintiff enclosing a document entitled “Alandale Logistics Ltd. Bespoke Form of Subcontract 2006 Edition”. That document is in the name of the first named defendant but gave the registered office of the second named defendant. The draft contained a substantial number of blanks and an entire lack of any financial detail or particulars relating to the proposed contract. It was drafted by reference to English law even though Clause 20 identified that the subcontract should be governed by and construed in accordance with the laws of the Republic of Ireland. It is clear that the telex of the 18th April, 2008 together with the enclosed draft subcontract raised the possibility of the plaintiff entering into contractual relations with the second named defendant, then known as Alandale Logistics (Ireland) Ltd. This is apparent from the replying telex of the 22nd April, 2008 sent by Brendan O’Halloran of the plaintiff to John McKeon wherein it was stated:
14. The defendants further contend that two e-mails subsequent to the 10th June, 2008 from the plaintiff company effectively acknowledged the contract as set out in the draft subcontract. Those e-mails are dated 26th June, 2008 and the 11th July, 2008 and both are from John McKeon of the plaintiff company to the second named defendant. In the first of those e-mails the plaintiff company states “Your own document clearly shows” and in the second of those e-mails the plaintiff company makes reference to the draft subcontract in the following terms:
15. The documents and evidence establish that what occurred on the 10th June, 2008 was that it was agreed that the plaintiff would enter into a contract with the second named defendant, that is the Irish company. A draft revised contract was to be forwarded and that never occurred. The agreement was an agreement in principle to enter into a contract and there was no acceptance of the terms of any specific contract nor was there the acceptance of any individual term or terms. The terms of the draft contract were never agreed nor was there any evidence of a separate, distinct or severable agreement whereby the parties agreed that their dealings would be subject to arbitration. The documents and evidence establish that there was never an agreement as to the terms of the subcontract nor was Clause 18 within the draft ever agreed or accepted by the plaintiff. The extent of the plaintiff’s commitment was that, in principle, subject to the plaintiff company’s confirmation, that it would enter into an agreement with the second named defendant. That agreement amounted to no more than an agreement to agree and clearly that agreement to agree was not intended to be enforceable. In the absence of an enforceable agreement and in the absence of any separate or independent agreement whereby the plaintiff and the first two defendants agreed that their dealings would be subject to arbitration, there is no arbitration agreement. Nor is there any history of dealing between the parties which could lead the Court to conclude that the parties expected or knew that an arbitration clause would govern their dealings nor do the facts demonstrate that having regard to business realities that it must have been clear to the plaintiff that the plaintiff was carrying out works which were subject to an arbitration agreement. Indeed, the very terms of the arbitration agreement upon which the defendants seek to rely are themselves unclear and uncertain which is a further manifestation of the fact that an agreement to arbitrate was never concluded nor were the terms of such agreement identified. 16. In considering and applying the test of whether the defendant applicants have on the basis of a prima facie review established that this action is the subject of an arbitration agreement, the Court has considered the approach adopted by this Court when dealing with similar but not identical type of review. The Supreme Court has on two occasions considered the legal approach to be followed when considering applications for directions and a dismissal of an action at the conclusion of the plaintiff’s evidence. In particular, the courts address the issue as to what approach the trial judge should take when considering such applications. Keane C.J. in O’Donovan v. The Southern Health Board [2001] 3 I.R. 385 stated (at p. 386) as follows:
17. In the light of above, the Court is satisfied that even on a prima facie basis the action which is brought by the plaintiff in this Court is not the subject of an arbitration agreement, there being no arbitration agreement between the plaintiff and either the first or second defendant. It follows that the order sought by the first two defendants pursuant to Order 8(1) of the Model Law and s. 6 of the Arbitration Act referring the plaintiff’s claim to arbitration should be refused
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