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Monday, 1 March 2021

Motacus Constructions Ltd v Paolo Castelli SpA

[2021] EWHC 356 (TCC)

This was an unusual application for summary enforcement of an adjudication decision in the sum of £450k. PC SpA said that the court did not have jurisdiction to determine the application because it had been brought in breach of a clause in the  contract which conferred exclusive jurisdiction on the courts of Paris, France. Did this clause prevent the TCC in England from hearing a claim for a breach of the term implied by paragraph 23 of the Scheme that the decision of an adjudicator binds the parties until the final determination of the dispute? 

The works in question were carried out at a London hotel. The governing law of the contract was the law of Italy. Although PC SpA reserved its position during the adjudication, it did not provide any evidence of  Italian or French law or procedure. HHJ Hodge QC noted that absent such evidence, the presumption was that the foreign law was the same as English law.

Motacus said that it would be “manifestly” contrary to the public policy enshrined in the HGCRA not to enforce the decision. Further, the enforcement of an adjudicator’s decision was the enforcement of an interim decision. It therefore fell outside the scope of the 2005 Hague Convention and so PC SpA could not rely on its provisions. What was before the court was not the underlying dispute but whether an interim procedure and remedy had been followed and granted. If the court enforced the decision, the parties were still free to litigate that underlying dispute in the courts of Paris. 

PC SpA submitted that the court did not have jurisdiction to determine the request for summary judgment, which had been brought in breach of the exclusive jurisdiction clause agreed between the parties as set out at clause 19 of the construction contract. The relevant question for the court was whether the enforcement of the alleged breach of the term implied by para 28 of the Scheme should take place in England (or Wales) or in France. The answer to this question was that the parties had agreed in clause 19 of the contract that all disputes arising out of their contract must be settled by the courts of Paris, France. 

The Judge agreed that the reality of the application here was that the court was being invited to grant an interim, rather than a final and conclusive, remedy. The position was consistent with the position under construction contracts containing arbitration clauses – see MBE Electrical Contractors Ltd v Honeywell Control Systems Ltd [2010] EWHC 2244 (TCC). Where a contract contains an arbitration clause, the “pay now, argue later” policy of the HGCRA requires the enforcement by the courts of the interim adjudicator’s award before the final determination by the chosen forum. The whole purpose of the HGCRA is to ensure that the adjudicator’s decision is binding until it is successfully challenged by arbitration or in court. In the ordinary case, the sum awarded by an adjudicator must be paid; and the paying party cannot seek to avoid payment by staying the enforcement proceedings for arbitration. A similar approach applied here, in the face of a foreign exclusive jurisdiction clause. 

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