Factual and Procedural Background
The Defendant, a statutory body established under relevant education legislation, entered into a Public Works Contract ("PWC") dated 6th October 2014 with the Plaintiff, a construction company, for carrying out construction works at a national school in The City. The Plaintiff claims that the Defendant owes it €206,245.72 (exclusive of VAT) for works performed under the contract and commenced summary proceedings in the High Court on 13th February 2018 seeking payment of this sum on the basis of an account stated and settled.
The Defendant contends that the PWC contains an arbitration agreement in clause 13.2 requiring that disputes arising "under" the contract be finally settled by arbitration. The Defendant applied for an order under Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration referring the dispute to arbitration. Alternatively, the Defendant sought a stay of proceedings to enable conciliation pursuant to a contractual provision.
The Plaintiff argues that its claim arises from a separate agreement, being the account stated and settled, which supersedes the PWC and its arbitration agreement. It also contends that the Defendant is estopped from relying on the arbitration agreement and that the agreement is inoperative under Article 8(1) of the Model Law.
The court was tasked with determining whether the dispute falls within the scope of the arbitration agreement and whether the Defendant is estopped from relying on it or if the agreement is inoperative.
Legal Issues Presented
- Whether the dispute between the parties arises "under" the Public Works Contract such that it falls within the arbitration agreement in clause 13.2.
- Whether the Defendant is estopped from relying on the arbitration agreement by virtue of an alleged agreement on the final account.
- Whether the arbitration agreement is "inoperative" within the meaning of Article 8(1) of the Model Law due to the alleged separate agreement between the parties.
Arguments of the Parties
Defendant's Arguments
- The arbitration agreement in clause 13.2 of the PWC requires all disputes arising under the contract to be finally settled by arbitration.
- The dispute over the Plaintiff's entitlement to payment falls within the scope of the arbitration agreement because it arises under the PWC.
- The Plaintiff's claim is disputed on multiple grounds including alleged defects, breaches of contract, and procedural non-compliance with the contract terms.
- The Defendant denies any clear, unequivocal promise not to rely on the arbitration agreement and rejects that the agreement is inoperative.
Plaintiff's Arguments
- The claim is founded on an account stated and settled, which is a separate agreement superseding the PWC and its arbitration clause.
- The dispute does not arise "under" the PWC but under this separate agreement, thus falling outside the arbitration agreement.
- The Defendant is estopped from relying on the arbitration agreement due to its alleged agreement to the final account.
- The arbitration agreement is inoperative because it has been superseded by the separate agreement reached at the meeting on 27th September 2016.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Fiona Trust & Holding Corporation and Ors v. Privalov and Ors [2007] UKHL 40 |
Broad and liberal construction of arbitration clauses; presumption of "one-stop" arbitration for all disputes arising under or out of a contract. |
The court applied the principles from Fiona Trust to interpret clause 13.2 broadly, concluding the dispute falls within the arbitration agreement. |
| Gulliver v. Brady & ors [2003] IESC 68 |
Arbitration clauses construed to cover disputes "in relation to" agreements; wide meaning of arbitration clauses. |
Referenced for the principle that disputes relating to agreements are captured by arbitration clauses. |
| BAM Building Limited v. UCD Property Development Company Limited [2016] IEHC 582 |
Article 8(1) of the Model Law mandates referral to arbitration if dispute is within arbitration agreement and agreement is not null or inoperative. |
Endorsed the mandatory nature of referral to arbitration under the Model Law when criteria are met. |
| Kellys of Fantane (Concrete) Limited (In Receivership) v. Bowen Construction Limited (In Receivership) and anor [2017] IEHC 357 |
Interpretation of arbitration clauses; distinguishing disputes for arbitration versus court. |
Used to illustrate that clear contractual language can exclude certain disputes from arbitration. |
| O'Meara v. Commissioners of Public Works in Ireland [2012] IEHC 317 |
Arbitration clauses interpreted broadly to include all disputes arising in connection with the contract. |
Applied to support broad interpretation of arbitration clauses including claims in contract and tort. |
| Mayo County Council v. Joe Reilly Plant Hire Limited [2015] IEHC 544 |
Issues of estoppel and accord and satisfaction are matters for the arbitrator, not jurisdictional questions. |
The court held that defenses such as estoppel do not negate arbitrator's jurisdiction. |
| Furey v. Lurgan-ville Construction Company Limited [2012] 4 I.R. 655 |
Estoppel against relying on arbitration agreement requires clear, unequivocal promise and reliance. |
Applied to assess the Plaintiff's estoppel claim and found no clear promise or representation. |
| Go Code Limited v. Capita Business Services Limited [2015] IEHC 673 |
Application of estoppel principles in context of arbitration agreement under the 2010 Act and Model Law. |
Supported the requirement for clear promise for estoppel and rejected estoppel on the facts. |
Court's Reasoning and Analysis
The court commenced by identifying the relevant statutory framework, notably Article 8(1) of the UNCITRAL Model Law as adopted in Irish law by the Arbitration Act 2010. Article 8(1) mandates that courts must refer parties to arbitration if the dispute falls within a valid arbitration agreement unless the agreement is null, void, inoperative, or incapable of being performed.
The court examined the arbitration agreement contained in clause 13.2 of the PWC, which requires disputes arising "under" the contract and referred to conciliation under clause 13.1 to be finally settled by arbitration. The court emphasized the need for a broad and liberal interpretation of arbitration clauses, in line with the House of Lords decision in Fiona Trust and subsequent Irish authorities, presuming parties intend all disputes arising from their contractual relationship to be arbitrated unless expressly excluded.
The court rejected the Plaintiff's argument that the claim, framed as arising from an account stated and settled, was outside the arbitration agreement. It held that the account stated and settled arose in the context of the PWC and was inextricably linked to it. The meeting at which the final account was allegedly agreed occurred due to the parties' contractual relationship under the PWC. Therefore, the dispute arises "under" the contract for purposes of the arbitration clause.
Regarding the Plaintiff's estoppel argument, the court applied the test from Furey and Go Code, requiring a clear and unequivocal promise not to rely on arbitration and reliance on that promise. The court found no evidence of any such promise or representation by the Defendant and no basis to conclude the Plaintiff commenced proceedings in reliance on any such promise. Consequently, estoppel did not apply.
The court also rejected the Plaintiff's contention that the arbitration agreement was inoperative due to being superseded by the alleged separate agreement. The court found that any such separate agreement did not remove disputes arising from it outside the scope of the arbitration clause, which was intended to cover all disputes arising under the PWC.
In sum, the court concluded that the dispute falls squarely within the arbitration agreement and that none of the Plaintiff's subsidiary arguments displace the presumption of arbitration.
Holding and Implications
The court held that the arbitration agreement contained in clause 13.2 of the Public Works Contract covers the dispute concerning the Plaintiff's claim for payment and that the Defendant is not estopped from relying on it, nor is the agreement inoperative.
The court ordered the parties to be referred to arbitration pursuant to Article 8(1) of the UNCITRAL Model Law and clause 13.2 of the contract.
The arbitrator appointed under clause 13.2 has jurisdiction to determine all disputes concerning the existence, enforceability, and terms of the alleged account stated and settled. The court declined to consider the Defendant's alternative request for a stay to enable conciliation under clause 13.1 as unnecessary following this ruling.
No new precedent was established beyond the application of existing principles endorsing broad construction of arbitration agreements and upholding the mandatory nature of referral under the Model Law.