Christiani & Nielson Ltd -v- Birmingham City Council (1994)

© Daniel Atkinson 1999

In Christiani & Nielsen Ltd -v- Birmingham City Council (1994) the contract was under an ICE form containing the arbitration agreement at Clause 66. The plaintiff applied by originating summons for a declaration that a letter dated 25 May 1994 was a valid notice to refer matters to arbitration and further an order under section 27 of the Arbitration Act 1950 extending the time to give notice to refer to arbitration under that contract.

The plaintiff purported to refer matters to arbitration in a letter dated 25 May 1994. The expiry date for service of a valid notice was on or about 1 June 1994. On 21 June 1994 the plaintiff having had no response to the notice, telephoned the respondents and was informed that they considered that the notice was not valid and that the arbitration was time-barred. Written confirmation of the defendant's objection to the validity of the notice was given by letter on 1 August 1994, received on 4 August 1994 by which time the originating summons had been issued. An admitted wholly conforming notice was served on 5 August 1994.

Clause 66 of the ICE Conditions of Contract 5 Edition provides at Clause 66(2) that the Engineer's Decision under Clause 66(1) is final and binding upon the parties unless and until the dispute or difference was referred to arbitration. Sub-clause 66(3)(b) stipulates the periods for giving notice and states that either party may refer the dispute or difference to the arbitration of a person to be agreed upon by the parties by giving notice to the other party. Clause 66(5)(a) incorporates an ICE Arbitration Procedure

It was not argued that the notice did not comply with Clause 66(3)(b). It was admitted that the notice did not comply with Rule 1.2 of the ICE Procedure which required that the notice should state the date when the matters listed were referred to the Engineer under Clause 66(1) and the date on which the Engineer gave his decision or failed to do so.

The deficiency in the mistake in referring to engineer's representative instead of the engineer was considered to be trivial and not such as to invalidate the notice, since the date it was submitted to the Engineer was stated correctly.

The central issue was therefore whether Rule 1.2 had to be complied with. In other words did the incorporation of the arbitration procedure by Clause 66(5) relate back to the notice or did it apply only to the conduct of the reference once the arbitration had commenced.

On a textual analysis his honour Judge Hicks QC held that the verbs "refer" in Clause 66(3)(b) related not to the conduct of the matter once referred but to the act of referring. However the noun "reference" in Clause 66(5)(a) referred to the arbitration procedure otherwise one would have expected wording such as "any reference to arbitration shall be made and conducted ...". In addition it was held that if the ICE Procedure were to apply to the act of referring then Clause 66(3) would have words such as "...being a notice complying with the Civil Engineer's arbitration procedure...". On this basis it was held that Rule 1.2 of the ICE Procedure did not have to be complied with.

Taking a commonsense approach, his honour Judge Hicks QC agreed that since the contract was a practical document to be put into effect by practical people, and not by lawyers searching through documentation afterwards, that the person administering the contract would expect to look at Clause 66(3) to find out what to do to initiate arbitration and start looking at the ICE Procedure once the arbitration was afoot.

It was held therefore that the notice of 25 May 1994 was valid notice since it complied with Clause 66(3)(b) and was not invalidated by the fact that it failed to include all matters required by Rule 1.2 of the ICE Procedure.