J Jarvis & Sons Ltd v Blue Circle Dartford Estates Ltd

Factual and Procedural Background

This case concerns a dispute arising from a construction contract entered into on 24th November 1995 between Blue Circle (employer) and Jarvis (contractor) for the design and construction of a warehouse. Jarvis engaged Bullivant as subcontractor for piled foundations. Following practical completion in June 1996, defects emerged in the floor slab and foundations, notably cracking and inadequacy of certain piles. Ownership of the property changed hands from Blue Circle to Guardian, and then to GP Nominees Limited (GP), with rights under collateral warranties and the sale and purchase agreement being assigned accordingly.

GP intended to commence proceedings against the responsible parties for the defects but had not yet done so. Blue Circle commenced arbitration proceedings against Jarvis seeking damages for its liability to GP. Jarvis applied to the arbitrator for a stay or other procedural relief, which was refused. Jarvis then brought proceedings in the Technology and Construction Court seeking an injunction to restrain the arbitration on grounds that it was oppressive, vexatious, and unconscionable, and alternatively challenging the arbitrator’s Interim Award under the Arbitration Act 1996.

The litigation was expedited due to the impending arbitration hearing scheduled to commence on 10th May 2007. During the proceedings, Blue Circle Industries plc gave an undertaking to pay any damages awarded in arbitration to GP or hold them on trust, addressing the risk of double payment.

Legal Issues Presented

1. Whether the court should grant an injunction restraining the arbitration on grounds that it is oppressive, vexatious, unconscionable, or an abuse of process.
2. Whether the arbitrator’s refusal to stay or adjourn the arbitration or certain issues constituted a serious irregularity under section 68 of the Arbitration Act 1996.
3. Whether leave to appeal the arbitrator’s Interim Award under section 69 of the Arbitration Act 1996 should be granted.

Arguments of the Parties

Appellant's Arguments (Jarvis)

• The arbitration is oppressive because Jarvis risks paying the same damages twice: once to Blue Circle in arbitration and again to GP in court proceedings.
• The arbitration is vexatious or unconscionable because Blue Circle has no real interest to enforce or protect, and concurrent proceedings risk inconsistent findings, duplicated costs, and unnecessary litigation.
• Blue Circle is a dormant, assetless company, increasing the risk that damages awarded in arbitration would not be passed on to GP.
• The measure of damages claimed by Blue Circle (cost of remedial works) is incorrect; instead, damages should reflect diminution in value, which may be nil.
• The arbitrator erred in refusing to stay or adjourn the arbitration, constituting serious irregularity under section 68 of the Arbitration Act.
• The arbitrator’s Interim Award contains errors of law warranting leave to appeal under section 69 of the Arbitration Act.

Appellee's Arguments (Blue Circle)

• Blue Circle Industries plc’s undertaking to pay or hold damages in trust significantly reduces the risk of double payment, negating the oppressive ground.
• The existence or imminence of concurrent court proceedings is uncertain and does not make the arbitration vexatious or an abuse of process.
• Quantification and liability issues are properly matters for the arbitrator at the substantive hearing, not for the court at this interlocutory stage.
• The arbitrator’s refusal to stay or adjourn was a proper exercise of discretion and did not involve serious irregularity.
• The questions raised for appeal either do not amount to questions of law or are not obviously wrong decisions by the arbitrator.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by acknowledging the statutory framework under the Supreme Court Act 1981 and the Arbitration Act 1996, emphasizing the principles of party autonomy and minimal court intervention. It reviewed established case law confirming the court’s limited jurisdiction to grant injunctions restraining arbitration, especially post-1997, and the significant weight given to delay in seeking such relief.

Regarding the oppressive ground, the court considered the risk of double payment. It found that the undertaking given by Blue Circle Industries plc substantially mitigated this risk, reducing the possibility of Jarvis paying damages twice to a negligible level. Consequently, the arbitration could not be deemed oppressive on this basis.

On the vexatious ground, the court recognized the inevitability of concurrent proceedings under the Arbitration Act and rejected the argument that concurrent litigation and arbitration automatically render arbitration vexatious or unconscionable. The court also declined to interfere with the arbitrator’s discretion on quantification of damages and liability, which are substantive issues reserved for the arbitration hearing.

The court noted the absence of actual concurrent court proceedings despite GP’s repeated statements of intent over several years, and emphasized Jarvis’s delay in seeking interlocutory relief, which weighed heavily against granting an injunction.

Turning to the challenge of the Interim Award, the court found no serious irregularity under section 68 of the Arbitration Act. The arbitrator’s refusal to stay or adjourn was a procedural decision not to prejudge substantive issues, which is appropriate. The court also refused leave to appeal under section 69, finding that the questions of law raised were either not questions of law or not obviously wrong.

Holding and Implications

The court DISMISSED all of Jarvis’s claims for relief, including the application for an injunction to restrain the arbitration and the challenges to the arbitrator’s Interim Award under sections 68 and 69 of the Arbitration Act 1996.

The direct effect of this decision is that the arbitration proceedings were permitted to continue as scheduled, subject to the undertaking given by Blue Circle Industries plc. The judgment confirms the high threshold for court intervention in arbitration under the Arbitration Act 1996 and underscores the importance of party autonomy and procedural finality in arbitration. No new legal precedent was established beyond the application of existing principles to the facts of this case.