Case Digest: TCC enforces adjudicator's decision notwithstanding that relevant construction contract included exclusive jurisdiction clause in favour of foreign court

Motacus Constructions Limited v Paolo Castelli SPA [2021] EWHC 356 (TCC) concerned an application for summary judgment to enforce an adjudicator’s decision, which raised an apparently novel question as to whether the inclusion of an exclusive jurisdiction clause in favour of a foreign court in a construction contract for works in England precluded the English court from entertaining adjudication enforcement proceedings.

In determining this issue, the court considered the application of the Hague Convention on Choice of Court Agreements concluded on 30 June 2005 (the “Hague Convention”), which, following Brexit, has become the relevant regime for determining such jurisdictional issues.

Factual background

Paolo Castelli SPA (“PC”) entered into a supply and installation agreement (the “Agreement”) with Motacus Constructions Limited (“Motacus”) for the latter to supply and install walling, ceilings and flooring as well as related painting in connection with PC’s fitting out works on One Bishopsgate Plaza Hotel in London. Although the works were in England, the Agreement was stated to be governed by the laws of Italy and included an exclusive jurisdiction clause in favour of the Courts of Paris, France.

A dispute arose between the parties concerning sums due under the Agreement and Motacus issued a notice of adjudication. Since the Agreement did not comply with the requirements of the Housing Grants, Construction and Regeneration Act 1996 (the “1996 Act”), the adjudication took place under the provisions of the Scheme for Construction Contracts. As a result of the adjudication, Motacus was awarded £454,678.63 with VAT and interest. However, PC failed to make payment.

Motacus issued an adjudication enforcement claim and was granted permission to submit an application for summary judgment. PC then challenged the application on the basis that the English court did not have jurisdiction to determine the application since it had been brought in breach of the exclusive jurisdiction clause in the Agreement.

TCC’s decision

The TCC’s decision turned on a consideration of the following provisions of the Hague Convention, which were relied upon by Motacus:

• Article 6(c), which sets out an exception for a court other than that of the chosen court from suspending or dismissing proceedings to which an exclusive choice of court agreement applies where “giving effect to the agreement would lead to manifest injustice or would be manifestly contrary to the public policy of the State of the court seised”.
• Article 7, which provides (among other things) that “interim measures of protection” are not governed by the Hague Convention and a court of a contracting state is not precluded from granting such measures.

In relation to Article 6(c), the judge held that a high threshold was required for the exception to be engaged. He did not consider the threshold to be exceeded in this case, and there was no good reason why the parties should not be held to the bargain they freely made when agreeing to an exclusive jurisdiction clause in favour of a foreign court.^[1]

As to Article 7, however, the judge found that the categories of “interim measures of protection” were not closed, and extended to an adjudicator’s decision as it was intended to protect the position of the successful party on an interim basis pending the final resolution of the dispute.

Accordingly, summary judgment to enforce the adjudicator’s award was granted in favour of Motacus.

Analysis

Whilst the central issue in this case might not commonly arise in practice, this judgment is likely to be of interest to practitioners and parties who are, or frequently contract with, international entities whose standard terms include an exclusive jurisdiction clause in favour of a non-English court, for example, as a matter of internal contracting policy.

This is particularly the case given that, as mentioned in the judgment, there are no previous authorities that directly address this jurisdictional issue.  Further, the judgment confirms the legal basis on which the English court can assume jurisdiction in respect of adjudication enforcement proceedings under the Hague Convention which, following the UK’s departure from the EU, now applies to the determination of such jurisdictional matters.

This judgment is also another example of the TCC’s general stance to safeguard the readily enforceable nature of an adjudicator’s decision by maintaining the very limited set of grounds on which enforcement can be refused by the English court.

Finally, the judgment reinforces the fact that the requirements of the 1996 Act (including the right to refer a dispute to adjudication at any time) are applicable to all construction contracts in the UK regardless of the applicable law of the contract (see s.104(7) of the 1996 Act). The decision makes it clear that it is not possible to use an exclusive jurisdiction clause as a way of “contracting-out” of the requirements of the 1996 Act.

[1]       A suggestion was made by the judge that future cases may be decided differently where (unlike in this case) there was evidence that enforcement could not proceed effectively in a foreign court so as to give rise to a tension between the speedy mechanism for settling construction disputes by adjudication.