Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> GREATER GLASGOW HEALTH BOARD AGAINST MULTIPLEX CONSTRUCTION EUROPE LTD AND OTHERS [2021] ScotCS CSOH_115 (05 November 2021)
URL: http://www.bailii.org/scot/cases/ScotCS/2021/2021_CSOH_115.html
Cite as: 2022 SLT 1385, 199 Con LR 209, [2021] CSOH 115, [2021] ScotCS CSOH_115, 2021 GWD 36-479

[New search] [Printable PDF version] [Help]

OUTER HOUSE, COURT OF SESSION

[2021] CSOH 115

CA21/21

OPINION OF LORD TYRE

In the cause

GREATER GLASGOW HEALTH BOARD

Pursuer

against

(FIRST) MULTIPLEX CONSTRUCTION EUROPE LIMITED; (SECOND) BPY HOLDINGS LP

and BPY HOLDINGS GP LIMITED (previously known as BROOKFIELD EUROPE GP

LIMITED); (THIRD) CURRIE & BROWN UK LIMITED; and (FOURTH) CAPITA

PROPERTY AND INFRASTRUCTURE LIMITED

Defenders

Pursuer: Dean of Faculty, Broome; MacRoberts LLP

First and Second Defenders: MacColl QC, A Mackenzie; Brodies LLP

Third Defenders: Rt Hon Lord Keen of Elie QC, Manson; Keoghs LLP

Fourth Defenders: Higgins QC, Massaro; Dentons UK and Middle East LLP

5 November 2021

Introduction

[1]

In this action the pursuer seeks payment by the first, third and fourth defenders

jointly and severally, and by the second defenders jointly and severally, of the sum

of £72,800,000 in respect of losses alleged to have been sustained as a consequence of defects

in the construction of the Queen Elizabeth University Hospital in Glasgow. The first

defender is the main contractor. The second defenders are guarantors of the first defender's

obligations and liabilities to the pursuer. The third defender is the lead consultant. The

fourth defender is the project supervisor.

[2]

The pursuer's contracts with the first and fourth defenders respectively provided for

any dispute arising under or in connection with the contract to be referred to and decided by

an adjudicator, and stated that no dispute was to be referred to the court unless it had fir st

been decided by the adjudicator. None of the issues with which this action is concerned has

been referred for adjudication. In these circumstances the first, second and fourth defenders

submit that the present action is incompetent and should be dismissed. The pursuer

contends that the action should be allowed to proceed or, in any event, sisted to allow any

adjudication to take place. The pursuer also seeks a declarator that the summons in this

action was a relevant claim for the purpose of the Prescription and Limitation (Scotland)

Act 1973. The third defender, whose contract did not provide for referral for adjudication,

presented a submission supportive of the pursuer in relation to the progress and

competency of the action, but not in relation to the declarator sought.

The pursuer's claim

[3]

The pursuer pleads that there are a number of issues arising from defects in the

hospital, including but not limited to the following:

Water system

Standard isolation rooms ventilation

Adult hospital ward 4B ventilation

RHC ward 2A ventilation

Plant and building services capacity

Toughened glazing

Doors

Heating system

Atrium roof

Internal fabric moisture ingress

Pneumatic transport system

In respect of each of these issues, the pursuer pleads that each of the first, third and fourth

defenders breached the terms of their contracts and their common law duties.

[4]

The summons was served shortly before expiry of the 5-year prescriptive period.

Although it contains some specification of the relevant contractual terms in relation to

each of the above issues, it provides no detail of the defects alleged to exist, nor any

particularisation of the basis of the claims made against each of the first, third and fourth

defenders respectively.

The contractual terms

[5]

The pursuer's contract with the first defender provided that the works were to be

performed in accordance with the NEC3 Engineering and Construction Contract, Option C.

The pursuer's contract with the fourth defender provided that the fourth defender's services

as project supervisor were to be performed in accordance with the NEC3 Professional

Services Contract, Option A. Each of these contracts included NEC clause W2 on dispute

resolution. So far as material, that clause states as follows:

"W2.1 (1) A dispute arising under or in connection with this contract is referred to

and decided by the Adjudicator. A Party may refer a dispute to the Adjudicator at

any time.

...

W2.3 (11) The Adjudicator's decision is binding on the Parties unless and until

revised by the tribunal and is enforceable as a matter of contractual obligation

between the Parties and not as an arbitral award. The Adjudicator's decision is final

and binding if neither party has notified the other within the times required by this

contract that he is dissatisfied with a matter decided by the Adjudicator and intends

to refer the matter to the tribunal.

W2.4 (1) A Party does not refer any dispute under or in connection with this contract

to the tribunal unless it has first been decided by the Adjudicator in accordance with

this contract.

(2) If, after the Adjudicator notifies his decision a Party is dissatisfied, that Party may

notify the other Party of the matter which he disputes and state that he intends to

refer it to the tribunal. The dispute may not be referred to the tribunal unless this

notification is given within four weeks of the notification of the Adjudicator's

decision.

(3) The tribunal settles the dispute referred to it..."

"The tribunal" is defined in each contract as the Scottish Courts.

[6]

In the fourth defender's contract, clause W2 was incorporated without amendment.

In the first defender's contract, certain bespoke amendments were made: in clause W2.1(1),

the following was added at the end: "The word `dispute' in this clause W2 includes any

difference under or in connection with this contract." In clause W2.3(11), the first sentence

was deleted and replaced by: "The decision of the Adjudicator is binding until the dispute

is finally determined by the tribunal or by agreement." Nothing turns on the wording of

those amendments, although in his argument senior counsel for the first defender placed

some weight on the fact that bespoke amendments had been made.

The issues

[7]

The following issues arise for determination:

(i)

Does the dispute in the present action fall outside the scope of clause W2?

(ii) If not, is the present action incompetent?

(iii) Should the action be sisted or dismissed?

(iv) Is the pursuer entitled to a declarator that the present action is a relevant claim

for prescription purposes?

Decision

(i)

Does the dispute in the present action fall outside the scope of clause W2?

[8]

On behalf of the pursuer it was submitted that on a proper construction of its

contracts with the first and fourth defenders, the dispute in the present action was not one

that the respective parties had intended would be referred for adjudication. The limitations

of adjudication were well known. Only one dispute could be referred for adjudication at a

time. There could not be a multiplicity of parties to an adjudication. It had been foreseeable

at the time of contracting that this project would give rise to multiple disputes arising at a

late stage, when the advantages of adjudication would be absent. There could in theory be

as many as 22 adjudications here, with no possibility of consideration of joint and several

liability and a risk of mutually inconsistent decisions. The parties should not be taken to

have agreed such an obviously inappropriate means of dispute resolution. The approach to

the limitations of adjudication adopted by Lord Malcolm in Whyte and Mackay Ltd v Blyth &

Blyth Consulting Engineers Ltd 2013 SLT 555 had been correct and should be followed. No

question of incompetency arose, and the action should be allowed to proceed without any

antecedent adjudication.

[9]

On this issue the third defender aligned itself with the position of the pursuer. Use

of the singular "dispute" in clause W2 was important. The dispute as framed for the court

could not be referred for adjudication: there were a multitude of "disputes", there were

three different contracts, and no adjudication which sought to embrace all of the issues

could be determined in the speedy and efficient way expected under the Scheme.

[10]

The first, second and fourth defenders submitted that the pursuer's (and third

defender's) arguments should be rejected. It was no bar to adjudication that a dispute arose

after the works had been completed: "at any time" meant what it said. Nor was a dispute

excluded from adjudication because it was complex. If resolution of the issues now raised

required multiple adjudications, that was what the parties had agreed. Each of the pursuer's

claims against the first or fourth defenders was a "dispute" to be adjudicated upon. If a

claim was satisfied against one party there would be no basis to recover from another. The

parties could have contracted for resolution of claims of joint and several liability but had

chosen not to do so.

[11]

It is common ground that the parties' intentions regarding the scope of clause W2

are to be ascertained at the time when the contracts were entered into. It is also common

ground that the now well-recognised principles of construction of commercial contracts fall

to be applied. In my opinion the application of those principles does not lead to the

conclusion that the parties did not intend that the dispute in the present action would fall

within the scope of clause W2.

[12]

In Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd [2020] Bus LR 1140,

the Supreme Court recently emphasised (at paragraphs 13-14) that adjudication is designed

to be a mainstream dispute resolution process in its own right, and not merely a mechanism

for solving cash flow problems. The court pointed out that adjudication can be and is used

to resolve disputes about final accounts after practical completion, and that experience has

shown that in most cases adjudication achieves a final resolution of the dispute because the

adjudicator's decision is not challenged. Reference was made to observations of Coulson LJ

in the same case in the Court of Appeal that adjudication was used, for example, for

determination of professional negligence claims. So far as can be discerned from the

summons in the present action, there is nothing inherent in the subject matter of the

pursuer's claims that would render any of them so obviously unsuitable for adjudication

that parties cannot be taken to have intended clause W2 to apply to them.

[13]

The pursuer's argument is founded rather upon the complexity of the claims made

in the present action: 11 categories of defects, for each of which three defenders (contractor,

lead consultant and project supervisor) are alleged to be jointly and severally responsible. I

am not, however, persuaded that clause W2 ought to be construed as impliedly excluding

complex disputes. If the parties to the respective contracts had wished to exclude complex

disputes, including disputes in which joint and several liability was asserted, they could

have done so. It was foreseeable at the time of contracting that in a project of this scale

disputes might arise, but the parties have not seen fit to make any special provision for

disputes of any particular complexity. Instead they have entered into contracts in terms

of which "any dispute" may be referred "at any time" for adjudication.

[14]

I am not prepared to accept, on the basis of the detail contained in the summons, that

it would be impossible for some or even all of the issues identified to be resolved by an

adjudication process. There may have to be multiple adjudications. It is of course generally

accepted that only a single dispute can be referred to an adjudicator at any one time, and it is

conceivable that difficulties may arise in identifying what is or is not a single dispute. That

is not an uncommon difficulty, as the case law demonstrates. It may also be that a particular

dispute is so complex that the adjudicator is unable to decide it within the time limit

imposed by section 108 of the Housing Grants, Construction and Regeneration Act 1996.

But as Judge John Toulmin QC observed in CIB Properties Ltd v Birse Construction Ltd

[2005] 1 WLR 2252 at paragraph 24:

"The Act confers a general right to refer a dispute or difference to adjudication

provided it can be adjudicated in accordance with a procedure complying with

section 108(2). This general right exists irrespective of the apparent complexity of the

dispute but it does not require an adjudicator to reach a decision if he is unable to do

so within the time limits imposed by section 108(2) of the Act."

I consider it would be premature, at a time when no reference for adjudication has yet been

made, to conclude that any referral would be bound to fail because no reference could be

competently framed, or because no adjudicator could reach a decision within the statutory

time limit.

[15]

Nor am I prepared to accept at this stage that 22 separate adjudications would

necessarily have to take place. I have already noted that the basis of the claim made against

each of the first, third and fourth defenders in relation to each of the issues is currently

inspecific. The process of reference for adjudication should serve to focus the basis of each

claim and may not result in all of the claims being pressed against all of these defenders.

Finally, I am not prepared to assume at this stage that none of the issues will be resolved in

relation to the first and fourth defenders by adjudication. That would run contrary to the

experience described in Bresco (above).

[16]

If, however, some or even all of the issues were to remain unresolved by the

adjudication process, whether because it proved to be impossible for an adjudicator to reach

a decision within the time limit, or because one or other party was dissatisfied with the

decision and gave timeous notice to that effect, then such matters would fall to be decided

by the court. That is what is envisaged by clause W2.4.

[17]

The pursuer placed considerable weight on the (obiter) observations of Lord Malcolm

in Whyte and Mackay Ltd v Blyth & Blyth Consulting Engineers Ltd (above). In that case a claim

for damages initiated several years after completion was referred for adjudication. When

the pursuer raised an action to enforce the adjudicator's decision, it was held that there had

been a significant omission in the adjudicator's reasoning, and his decision was reduced.

Lord Malcolm went on, however, to express the view that although ex facie competent,

proceeding to adjudication had been unnecessary and inappropriate, and that enforcement

of the award would have amounted to an interference with the defender's rights in terms

of Article 1 of the First Protocol to the European Convention on Human Rights. At

paragraph 47, he observed:

"...(T)he adjudicator was presented with a next to impossible task. Even a judge

would struggle to identify a procedure which would allow the complex issues of

fact and law arising between the parties to be determined in any semi-satisfactory

manner within six weeks. In the circumstances of the present case, the well known

problems, disadvantages and potential injustices of an adjudication are not counter

balanced, let alone outweighed, by any of the aims and purposes lying behind the

1996 Act. It is those public interest benefits which justify enforcement of an

adjudicator's award, even a substandard and obviously wrong award..., but they

are more or less wholly absent in the present case. It follows that it would be

disproportionate and wrong to enforce the award..."

These observations were cited with approval in Coulson on Construction Adjudication (4th ed,

2018) at paragraph 13.28, the learned author commenting that "Finally there is a case that

concludes that, sometimes, a claim will be too large and/or too complicated and/or raised

too long after completion to be suitable for adjudication".

[18]

The factual context of Lord Malcolm's observations in Whyte & Mackay was peculiar:

the adjudicator's award consisted of compensation for a loss, caused by defective

foundations, that would not emerge for 20 years. The focus was on the considerations to

which the court should have regard in deciding whether to refuse to enforce an adjudicator's

decision. Different considerations arise where, as in the present case, the court is asked to

form a view, before any referral for adjudication has been made, as to whether adjudication

of the pursuer's claims will be impossible or at least so impracticable that parties must have

intended that they would not fall within the scope of an adjudication clause in their contract.

In my view the observations do not support the existence of a general proposition that some

disputes must be held, in advance of any referral, to be (adopting the description in

Coulson) too large and/or too complicated and/or raised too long after completion to be

suitable for adjudication. A fortiori they do not compel clause W2 of NEC3 to be construed

as limiting the parties' agreement to refer disputes for adjudication to disputes not falling

within that description.

[19]

The pursuer's argument was presented as one of contractual interpretation and not

as one of exercise of court discretion. My attention was drawn to a Northern Irish decision,

Abbas v Rotary International Ltd [2012] NIQB 41, in which the court declined to stay court

proceedings which had been commenced despite the parties' contract containing a binding

agreement to adjudicate. The reasons for refusing a stay were that part of the claim did not

fall within the adjudication agreement, and that the claim had been outstanding for a long

period of time. This decision may be contrasted with Peterborough City Council v Enterprise

Managed Services Ltd [2014] 2 CLC 684, in which the judge (Edwards-Stuart J) expressed

sympathy for the claimant's submission that adjudication was likely to be a lengthy and

unproductive exercise, but nevertheless held that the "presumption in favour of adopting

the method of dispute resolution chosen by the parties in their contract" ought to prevail.

In the present case neither the pursuer nor the third defender contended that the court in

Scotland had a general discretion to override the terms of a mandatory adjudication

provision.

(ii)

Is the present action incompetent?

[20]

On behalf of the first, second and fourth defenders, it was submitted that the pursuer

was contractually barred from pursuing this dispute by way of court action, and moreover

was in breach of contract by serving the summons and lodging it for calling. Th e action was,

in the circumstances, incompetent. The requirement to refer any dispute for adjudication

was mandatory. It had been expressly agreed as opposed to being compelled by application

of the statutory Scheme. Cases concerning arbitration were distinguishable because of the

express terms of clause W2. The defect could not be cured by amendment. Each step in the

dispute resolution procedure under clause W2 was a condition precedent to the next, so

adjudication now could not cure the defect.

[21]

On behalf of the pursuer it was argued that contractual bar did not equate to

incompetency. The summons was not a fundamental nullity. Any entitlement of the

defenders to have the dispute referred for adjudication could be waived, which told against

incompetency. Questions of competency were not fixed as at the moment when an action

was raised; any incompetency at the time of raising would be cured now by sist and referral

for adjudication. The parties were highly likely to return to the court to pursue fin al

resolution of their disputes, and could make use in the meantime of the court proceedings,

for example to pursue document recovery.

[22]

In Fraserburgh Harbour Commissioners v McLaughlin & Harvey 2021 SLT 1009,

Lady Wolffe (at paragraph 31) characterised clause W2.4 as a contractual bar on resorting to

the "tribunal" of choice - in that case arbitration - without first having referred the dispute

for adjudication. I respectfully agree with that characterisation. The argument that

proceedings raised in breach of clause W2.4 were not only contractually barred but also

incompetent was not pursued in Fraserburgh.

[23]

Incompetency is a somewhat elusive concept. McLaren in Court of Session Practice at

page 388 described a plea to competency as "an objection to either the form of the summons

in general or in a particular set of circumstances, as distinguished from irrelevancy, which is

an objection to the condescendence." It covers a range of circumstances in which the action

as laid before the court cannot proceed, but it is not always the case that the defect that

prevents the action from proceeding is incurable. Some examples serve to make this clear.

[24]

In Bank of Scotland v W&G Fergusson (1898) 1F 96, an action was raised for payment of

a sum due under a bill of exchange, but the contents of the bill were not set out in full in the

summons (as opposed to the condescendence) as was then required by statute and rules of

court. Allowing the summons to be amended outwith the prescriptive period to cure the

defect, Lord President Robertson observed at page 101:

"...(T)he summons as it stands now is not in competent form. I use that phrase in

order to add that I think that a summons which is not in competent form may be

described, as it has been described already in the previous decisions, as incompetent.

But then, it is, I think, equally clear, and indeed was conceded, that that is a defect in

the summons which is susceptible of amendment and cure under the 29th section of

the Court of Session Act, 1868; and accordingly it is not one of those fatal defects

which impart nullity to the action, and the action is one which, when put into shape

under the statute, can proceed, and decree can be obtained in it."

A distinction is thus drawn between, on the one hand, a curable incompetency and, on

the other, incompetency which is incurable so that the action is fundamentally null.

[25]

This distinction was applied by Lord Eassie in Thomas Menzies (Builders) Ltd v

Anderson & Menzies 1998 SLT 794, where the incompetency arose because two associated

companies had sued the defenders for damages in a single action on different grounds.

The action was amended by deleting the claim of one of the companies, which then raised a

separate action outwith the prescriptive period. The defenders argued that the first action

("the 1993 action") had been incurably incompetent and therefore fundamentally null, so

that the second action was time barred. After noting that the incompetency of the first

action was not such as would have prevented it from proceeding if the defender had not

taken objection, Lord Eassie continued (at page 798):

"...The conclusions in the 1993 action taken individually did not seek a decree which

the Court of Session could not competently pronounce. It did not seek decree against

parties not subject to the court's territorial jurisdiction. There was no question of an

action proceeding on an illegal contract or the like. There was no formal defect in the

initiating summons. There was no real obstacle to the defenders' lodging a tender in

the 1993 action and that tender being accepted by one or other of the pursuers. In my

view, had the 1993 action been undefended, decree could competently have been

obtained in it as respects both of the conclusions for the pursuers. Accordingly, I

consider that it is not possible to characterise the 1993 action as being a fundamental

nullity."

[26]

By way of contrast, Lord McLaren referred in Bank of Scotland v W&G Fergusson (at

page 102) to defects that were so radical as to be incurable by amendment: "for example, if

no defenders were called, or if the summons contained no will". In Balfour v Baird 1959

SC 64, an employee who had successfully sued one of his former employers for damages

for contracting pneumoconiosis raised a second action against another of his employers in

respect of the same disability, explaining that damages had not been properly assessed in

the first action. The second action was dismissed and the defender's plea to competency

was upheld. Lord Justice-Clerk Thomson stated that the pursuer's damage had in law

ceased to exist and the obligation to the defender in the second action had been

extinguished. The recent decision of Lord Clark in Kidd v Lime Rock Management LLP

2021 SLT 35 (at paragraphs 41-42) is to the same effect.

[27]

From these authorities the following propositions may be distilled. Firstly,

incompetency is different from fundamental nullity. The label "incompetent" when

attached to a summons means that the action cannot proceed as matters stand, but does not

determine whether the defect is curable. Secondly, just as incompetency may arise for a

variety of reasons, so the means of curing the defect may vary. There is no single test such

as whether the defect can be cured by amendment of the summons. The obstacle may be

removable by other means. Thirdly, the fact that an action could proceed if a competency

point were not taken by the defender is an indicator that it is not a nullity for the purposes of

the interruption of the operation of prescription.

[28]

In my opinion the circumstances of the present case are indistinguishable from the

cases in which court proceedings were raised despite the agreement of parties to have their

disputes resolved by arbitration. The effect on the jurisdiction of the court of an agreement

to submit to arbitration is long established: jurisdiction is not wholly ousted although the

court is for the time being deprived of jurisdiction to inquire into and decide the merits of

the case. Should the arbitration prove abortive, the full jurisdiction of the court revives:

Hamlyn & Co v Talisker Distillery (1894) 21R (HL) 21, [1894] AC 202, Lord Watson at 25.

[29]

The application of that basic principle to the statutory provisions for arbitration in

relation to agricultural tenancies was considered by a court of seven judges in Brodie v

Ker 1952 SC 216. The defender's plea in law was that:

"the present dispute being one which falls to be referred to arbitration in terms of

section 74 of the Agricultural Holdings (Scotland) Act, 1949, et separatim in terms of

clause 14 of the General Articles of Let, the action should be dismissed."

Having referred to the observations of Lord Watson in Hamlyn & Co, the consulted judges

stated (at page 223):

"By parity of reasoning it appears to us that, whenever a Court is satisfied that the

parties are at issue on a question the decision of which is confided by Parliament to

some other tribunal, the powers of the Court to investigate and determine that

question cannot (at any rate in the meantime) be put into operation; the action will

normally be sisted to await the expiscation of the matter by that other tribunal, and,

this having been done, the Court will then resume its interrupted task--usually by

pronouncing an order to effectuate the decision of the other tribunal."

It may be noted that neither in Hamlyn & Co nor in Brodie v Ker was the matter treated as one

of competency. As it was put by the consulted judges in Brodie v Ker, the court simply could

not "in the meantime" exercise its power to investigate and determine the issue between the

parties.

[30]

In one respect the position in relation to an agreement to adjudicate may be said to

be a fortiori of the position in relation to arbitration. The court's power to interfere with the

decision of an arbitrator is extremely limited, whereas the decision of an adjudicator is final

and binding only unless and until the dispute is timeously objected to and then brought

before the court for a decision on the merits. There is, however, no material difference in the

situation that subsists while the reference is taking place: in relation to both arbitration and

adjudication the court's jurisdiction to investigate and determine the dispute is "in the

meantime" ousted.

[31]

The first and fourth defenders sought to distinguish the arbitration cases on the

ground that there were here express contractual provisions which not only required any

dispute to be referred for adjudication but also (in clause W2.4(1)) specifically prohibited the

reference of any dispute to the court unless it had first been decided by the adjudicat or in

accordance with the contract. In my view the prohibition adds nothing of substance to the

obligation in clause W2.1(1) to refer any dispute to the adjudicator. Although that clause

uses the present tense favoured by the drafters of the NEC contracts, it is in mandatory

terms ("Any dispute arising under or in connection with this contract is referred to and

decided by the Adjudicator" - my emphasis). The position is therefore analogous to

statutory provisions such as the one at issue in Brodie v Ker which require parties to a

contract to submit their disputes for determination by arbitration.

[32]

It is not, in my opinion, accurate to describe reference to and determination by

the adjudicator as a "condition precedent" of the bringing of a court action. Although

clause W2.4(1) operates as a contractual bar on referral of a dispute to the court unless it has

first been decided by the adjudicator, it is a bar that may be waived by the other party to the

contract and which does no more than prevent the court from entertaining the dispute so

long as the bar remains unwaived and the matter has yet to be decided by the adjudicator.

Gloag (Contract, 2

ed, at page 273) defines a condition precedent (or suspensive condition)

as a contractual term of such materiality that its non-fulfilment amounts to a discharge of the

contract and liberates the other party from its obligations. Caledonian Insurance Co v

Gilmour (1892) 20R (HL) 13 provides a useful illustration of a case where the decision of an

arbiter as to whether any sum, and if so how much, was due under an insurance policy was

a condition precedent to the insurer's obligation to make any payment under the policy,

and hence to the raising of a court action. Lord Herschell L-C explained the distinction thus

(at page 15):

"The question is not whether, where a contract creates an obligation to pay a sum of

money, it is a good answer to an action to recover it that disputes have arisen as to

the liability to pay the sum, and that the contract provides for the reference of such

differences to arbitration; but whether, where the only obligation created is to pay a

sum ascertained in a particular manner, where, in other words, such ascertainment is

made a condition precedent to the obligation to pay, the Courts can enforce an

obligation without reference to such ascertainment. If they could do so they would

not be enforcing the contract made by the parties, but one of a different nature."

The dispute in the present case falls within the first of Lord Herschell's categories, where

reference to arbitration (or adjudication) for a determination does not create the obligation

and is not therefore to be characterised as a condition precedent.

[33]

For these reasons I am not persuaded that any issue of competency arises in the

present case. The action is not incompetent, but by virtue of the terms of clause W2, and in

the absence of a waiver by the defenders of the contractual requirement to refer any dispute

to an adjudicator, it cannot be entertained by the court until the adjudication process has

concluded.

(iii)

Should the action be sisted or dismissed?

[34]

The pursuer submitted that if the action was not allowed to proceed it should be

sisted to await the outcome of adjudication, and not dismissed. That was the appropriate

and usual course in Scotland as well as in England. There was no material distinction

between arbitration clauses and the contractual provisions with which this action was

concerned. The first, second and fourth defenders submitted that the court should adopt

the same approach as in Fraserburgh Harbour Commissioners (above) and dismiss the action.

[35]

In my opinion the appropriate course is to sist the action to await the outcome of the

adjudication(s). I agree that that is the usual course and I see no reason to depar t from it.

Even if I had held that the contractual bar created by clause W2 was properly to be

characterised as a curable incompetency I would not have regarded dismissal as

appropriate. On any view the summons is not a nullity. No reference for adjudication has

yet been made by any party, and it is conceivable that all parties may yet decide that it

would be preferable to allow the court action to proceed. As was pointed out during the

hearing, the existence of the court proceedings may expedite the recovery of documents for

the purposes of an adjudication.

[36]

In Fraserburgh Harbour Commissioners, Lady Wolffe, having held that clause W2

operated as a contractual bar on the pursuer proceeding to litigate in court without having

referred the dispute to the adjudicator, dismissed the action. Since the hearing took place in

the present action, and shortly before my opinion was due to be issued, the court issued its

opinion ([2021] CSIH 58) in a reclaiming motion against Lady Wolffe's decision. The court

recalled Lady Wolffe's interlocutor and sisted the action pending the outcome of the ADR

processes. My reasons (above) for sisting the present action are in accordance with the

reasoning of the court.

(iv)

Should the court grant the declarator sought?

[37]

In the light of my decision that the present action is not incompetent, and that it

should be sisted and not dismissed, I understood it to be accepted by the pursuer that the

conclusion for declarator is unnecessary.

[38]

For the sake of completeness I should say that if for whatever reason I had decided

to dismiss this action, I would not have been minded to grant the declarator sought. I agree

with the submissions on behalf of all of the defenders that the question whether the

summons is a relevant claim for prescription purposes should not be determined in these

proceedings. If this action were to be dismissed, and a prescription issue arose in

subsequent proceedings, that, in my view, would be the appropriate place to determine

whether, in relation to that claim, the present summons had interrupted the running of

prescription. It was, moreover, pointed out on behalf of the fourth defender that that

defender has a plea and averments that the pursuer's right of action has prescribed, which

would necessitate inquiry and which would preclude the grant of any declarator at this

stage.

Disposal

[39]

I shall repel the pleas in law that the action is incompetent, being the first plea in law

for the first and second defenders and the first plea in law for the fourth defenders. I shall

repel the second plea in law for the first and second defenders and the second plea in law for

the fourth defenders to the extent that they seek dismissal of the action on the ground of

contractual bar. I shall leave all other pleas standing and sist the action to await the outcome

of adjudication. Questions of expenses are reserved.