Bond v Mackay & Ors

[2018] EWHC 2475 (TCC)

Here Bond brought an application under section 67 of the 1996 Arbitration Act for a decision that an order by an arbitrator be varied so that the scope of the arbitration included whether or not the Third Defendant was in breach of a deed pursuant to clause 2(i). The issue essentially turned on the nature of the dispute between the parties. There was no specific reference to the clause in question in the arbitration referral, but that did not matter according to Bond because the dispute was about an entitlement to compensation and that included rights under clause 2(i).

The question of what makes up part of the dispute is equally relevant to adjudication. Back in Issue 22, we reported on the adjudication case of Edmund Nuttall Ltd v R G Carter Ltd, where HHJ Richard Seymour QC had said: 

“what constitutes a dispute between the parties is not only a claim which has been rejected, if that is what the dispute is about, but the whole package of arguments advanced and facts relied upon by each side.”

Mr Jonathan Acton Davis QC took the view that in the circumstances of this case, the Court was required to:

“take a broad view of the factual matrix as shown...in the correspondence leading up to the appointment of the Arbitrator and his acceptance of the appointment. This is not a case where there were Terms of Reference as required in a number of the Rules which govern international arbitrations.” 

The Third Defendant argued that given there was no reference to a dispute under clause 2 of the Deed in any of the correspondence, it must therefore follow that any dispute under clause 2(i) could not have been referred to arbitration. Further, no reference had been made in the Statement of Case to clause 2(i). Therefore, there could not have been any dispute under clause 2(i) when matters had been referred to arbitration. Bond said the court must look at the “big picture”. The dispute concerned the liability to pay compensation: that is a claim for compensation under all the relevant clauses of the contract, including clause 2(i). 

The Judge agreed; taking a broad view of the factual matrix, the dispute under clause 2(i) did fall within the substantive jurisdiction of the Arbitrator. Whilst the Statement of Case only specifically referred to two other clauses, it was plain from the document that this must include a claim for compensation:

“If the claim is part of the matrix, as it was, the scope of the Reference to Arbitration cannot be reduced by the pleadings.”

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