Delay and Disruption
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KEYWORDS: |
Delay, fairness, global claims, critical path analysis, surviving claims, arbitration. |
In any complex project with many activities the assessment of the effect of an event or particularly a group of events will be a matter of judgment.
Global claims will usually fail because of the failure to remove from the group of events those for which the other party has no responsibility. In the Inner House of the Scots case of Laing Management (Scotland) Ltd v John Doyle Construction Ltd [2004] BLR 295 it was recognised that even if the global claim failed, there may be sufficient evidence in the proceedings of a surviving claim for the Tribunal to establish a causal connection between an individual loss and an individual event.
Such an approach may be unfair if the individual event and loss was not the basis of the claim pursued and therefore not the subject of specific submissions and evidence. It was recognised in Doyle that in order to allow such an approach the events relied upon should be set out comprehensively although there was no need to do more than set out the general proposition that a causal link existed. It was not necessary that the assertion of causation should be over-elaborate and covering every possibility.
The fairness of an arbitrator’s decision to award an extension of time for a surviving claim for an individual event when the case was presented as a global claim arose in London Underground Limited v Citylink Telecommunications Ltd [2007] EWHC 1749 (TCC) in relation to a project known as the Connect Project.
The Connect Project is a Private Finance Initiative project which, over a period of some 20 years, involves the replacement of the entire communication systems throughout London's underground rail network together with the continued operation of that new system. It is one of the most complex renewal projects ever undertaken on the London Underground network.
The dispute proceeded first to adjudication and then to arbitration. CTL claimed an overall extension of time based on a large number of alleged breaches of contract by LUL which were alleged to have caused delay. It was a global claim.
The Adjudicator rejected CTL’s claim as a global claim because he did not consider that CTL had made good the claim in all but the most trivial respects.
The Arbitrator also rejected CTL’s global claim but he then followed the process in relation to surviving claims contemplated by Doyle and granted CTL an extension of time of 48 weeks for an individual event.
Both LUL and CTL challenged the Arbitrator's Award.
LUL challenged the Arbitrator's findings on CTL's entitlement to extension of time. LUL submitted that the Arbitrator correctly dealt with the global claim by rejecting CTL's evidence on causation of delay. LUL submitted that the Arbitrator had proceeded to determine a claim based on a case which was not pleaded nor addressed in evidence nor argued by the parties and that common fairness required that LUL should be given notice of the case and an opportunity to deal with it.
Mr Justice Ramsey in deciding the case considered in some detail the course taken by the arbitrator and the way in which the arbitration proceedings developed. Ramsey J was required to decide the proper approach to global claims and he accepted the approach in Doyle significantly because the decision was not challenged in the proceedings. Accordingly he usefully reviewed the underlying decision in Doyle.
There had been submissions during the arbitration on the applicability of Doyle. CTL tried to convince the Arbitrator to take a broad view of the evidence and submissions in coming to a conclusion on the appropriate extension of time. LUL tried to persuade the Arbitrator that he should not do so.
CTL's case on causation was based largely on inferences drawn from factual and expert evidence and various exercises to establish the necessary causation. The Arbitrator rejected those approaches. In the Award the Arbitrator came to the conclusion that in relation to delay the Connect Project was not best suited to analysis by the Critical Path Method and there was therefore no satisfactory means of measuring delay by reference to critical path analysis.
Ramsey J recognised that the essence of a global claim was that, whilst the breaches and the relief claimed were specified, the question of causation linking the breaches and the relief claimed was based substantially on inference, usually derived from factual and expert evidence. Crucially the yardstick under this contract for the assessment of extension of time was fairness and reasonableness. Ramsey J held that the question of what was fair and reasonable in the circumstances indicated that the remedy was not tied to a particular analysis nor was the arbitrator bound to follow the contentions of the parties. The assessment was one which necessarily had a subjective element and was based on an assessment of the circumstances.
Ramsey J held that whilst analysis of critical delay by one of a number of well-known methods was often relied on and could assist in arriving at a conclusion of what was fair and reasonable, that analysis did not determine the answer to the question. It was at most an area of expert evidence which might assist the arbitrator or the court in arriving at the answer of what is a fair and reasonable extension of time in the circumstances. Ramsey J accepted as well founded the Arbitrator’s finding that the Connect Project was not best suited to analysis by the Critical Path Method.
Having rejected critical path analysis, the Arbitrator adopted an approach where causation was a matter which, if at all, could only be established from the facts, drawing such inferences as were appropriate. Those facts were limited to the facts which were already in evidence in the proceedings.
The Arbitrator decided that it was possible to identify a causal link between a particular LUL breach of contract and 48 weeks of delay to progress on one particular Underground Line. The Arbitrator found that there was 61 weeks delay to the line, that the 13 week mitigation period was not challenged by LUL so that the resulting delay of 48 weeks was awarded as an extension of time.
LUL argued that the Arbitrator’s award should have ended at the finding on the global claim. LUL submitted that what the Arbitrator did, was to deal with a case which was neither pleaded nor argued and represented a departure from the procedure adopted.
Ramsey J observed that the surviving or remaining claim would emerge from the evidence which has been adduced to establish or deal with the global claim. There would clearly be a need for analysis of the existing evidence to see if there is a sufficient basis for establishing causation.
Ramsey J observed that where the case had proceeded on the basis of a global claim, it would be at the stage when the tribunal had determined what events could be relied upon that it would be possible to carry out the analysis of any surviving claim. Necessarily, in such a case, as in many cases where there was partial success, neither party would have a specific opportunity to deal with a case based on the tribunal's particular findings. Tribunals frequently had to deal with cases where a claim or a defence had not wholly succeeded and it was necessary to determine what result flows from the partial success or failure.
Ramsey J held that provided that the result was based on primary facts which had been in issue in the proceedings, there was in principle no objection to a tribunal taking such a course. There were limits and it was be a matter of fact or degree in a particular case whether the findings made by the Arbitrator fell outside the limits and whether fairness required the Arbitrator to seek further submissions from the parties.
Ramsey J then proceeded to examine whether the Arbitrator's findings fell outside those limits. Ramsey J reviewed the voluminous material by way of pleadings, written submissions and transcripts of oral submissions and evidence placed before the Arbitrator. He held that this was not a case where something could be said to have gone wrong with the process or to have led to unfairness. He held that the Arbitrator's finding were based on the case pleaded, argued and dealt with in evidence, taking account of the failure of the global claim. Ramsey J considered that there nothing in this case which required the Arbitrator to seek further submissions from the parties.
Accordingly this ground of LUL's challenge failed. Ramsey J was satisfied that a case based on the individual event and individual delay the basis of the Arbitrator’s award was fully comprehended within the Claim pleaded, argued and dealt within evidence.
The decision in LUL v CTL is not a green light for global claims but rather the reverse. In this case the global claim was rejected by both the Adjudicator and Arbitrator.
The decision is important in setting the guidelines for dealing with claims which survive the failure of the global claim. A claimant cannot assume the Tribunal will make its case if the global claim fails. The Tribunal is required to consider the evidence available and if it considers that the surviving claim is implicit in the case and that it may need to be considered, it must decide whether or not to seek further submissions.
It is suggested that in most cases the Tribunal should not proceed immediately to deciding the surviving claim but will give the parties the opportunity to make further submissions.