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Enforceability of ADR Clauses

In Children’s Ark Partnerships Limited v Kajima Construction Europe (UK) Limited and another [2022] EWHC 1595 (TCC), 22 June 2022 the Technology and Construction Court  found that an ADR clause in a construction contract imposed a condition precedent to the commencement of litigation but the contract did not provide sufficient detail on that ADR process and, as such, the clause was rendered unenforceable.

The contact in question was for redevelopment works at a hospital.  The contract contained a dispute resolution clause which required the parties to refer disputes to a liaison committee for resolution and only to go to court if that was unsuccessful. The defendant, who was the contractor, challenged the issue of a claim form on the basis that the relevant procedure had not been followed.

The court held that, despite not actually using the words “condition precedent”, the dispute resolution clause was in fact a condition precedent to the right to commence proceedings.  However, the court determined that the clause was not sufficiently clear or certain as to what was required and, as such found that the clause was not enforceable. Issue of the claim form was therefore valid.

The lesson to be learnt from this case … if parties which to engage in ADR steps or processes prior to the commencement of formal action being possible, such clauses should be as detailed as possible and clear as to scope and meaning, leaving little room for a challenge on the enforceability of the clause.

Posted on 13 September, 2022 by Ortolan

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