Principal Contractors Ltd v Carter (Approved)

Factual and Procedural Background

The applicant, Company A, engaged the respondent in a contract for construction works on the respondent's home. A dispute arose concerning interim certificates and the final account, which was referred to arbitration under a clause in the contract incorporating certain professional terms. An arbitrator was appointed in 2016 and the parties agreed terms of appointment, including payment of the arbitrator's fees and costs. The parties settled the substantive dispute in early 2019 by a written Settlement Agreement, which included provisions addressing the payment and potential taxation (now adjudication) of arbitration costs, including those of the arbitrator.

The arbitrator made an award on 7 June 2019 concerning the costs, fees, and expenses of the arbitration, directing the respondent to pay these costs. The arbitrator withheld the award until her costs were paid in full. Following extensive correspondence between the parties' solicitors and the arbitrator regarding the costs and requests for detailed breakdowns, the applicant paid the arbitrator's costs to secure release of the award, which was provided to the parties in August 2019.

The respondent disputed the amount of the arbitrator's costs and asserted a right to have those costs adjudicated by a Legal Costs Adjudicator under section 21(4) of the Arbitration Act 2010. However, the respondent did not make a valid request to the arbitrator for such adjudication within the statutory 21 working-day period following the arbitrator's determination of costs. The applicant subsequently applied to the High Court in June 2023 for leave to enforce the award, seeking judgment for €40,224.10 plus interest and costs. The respondent resisted enforcement on grounds including alleged refusal by the arbitrator to refer costs for adjudication.

Legal Issues Presented

1. Whether the arbitration award made on 7 June 2019 is valid and enforceable against the respondent under section 23 of the Arbitration Act 2010.
2. Whether the respondent made a valid request under section 21(4) of the Arbitration Act 2010 for the arbitrator's costs to be referred for adjudication by a Legal Costs Adjudicator within the prescribed time limit.
3. Whether the arbitrator refused a valid request to refer her costs for adjudication.
4. The appropriate date from which interest should run on the amount awarded.
5. The entitlement to costs of the enforcement proceedings.

Arguments of the Parties

Applicant's Arguments

• The award is valid and has not been set aside under Article 34 of the UNCITRAL Model Law, making it binding and enforceable.
• The respondent did not make a valid request under section 21(4) for adjudication of the arbitrator's costs within the statutory time limit.
• The arbitrator did not refuse any valid request to refer costs for adjudication.
• The applicant paid the arbitrator’s costs to obtain release of the award and is entitled to recover that amount from the respondent.
• Interest should run at the statutory rate from the date the enforcement proceedings were commenced due to the applicant's delay in seeking enforcement.

Respondent's Arguments

• The respondent contended that he had sought to refer the arbitrator's costs to taxation (adjudication) under section 21 of the Arbitration Act 2010.
• The respondent alleged the arbitrator refused to accede to that request.
• The respondent argued that payment of the arbitrator's costs by the applicant without adjudication was contrary to the Settlement Agreement and deprived him of his right to have the costs independently adjudicated.
• The respondent maintained that he was entitled to query the arbitrator's costs and to have them referred for adjudication.
• The respondent relied on various correspondence as constituting valid requests for adjudication.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by affirming the validity of the arbitration award, noting it had not been set aside under Article 34 of the UNCITRAL Model Law, which provides the exclusive recourse against arbitral awards. The respondent's failure to apply to set aside the award within the prescribed three-month period was decisive. The court emphasized that Article 34 applications are limited in scope and not an appeal on merits.

Next, the court examined the respondent's claim that a valid request was made under section 21(4) of the Arbitration Act 2010 for the arbitrator's costs to be referred for adjudication by a Legal Costs Adjudicator. The court analyzed multiple letters and correspondence relied upon by the respondent and concluded none constituted a valid request under the statutory requirements. Key reasons included the timing of the requests (some were made before the arbitrator had determined costs), lack of specificity, and failure to make a request within the 21 working-day time limit following receipt of the arbitrator's detailed cost breakdown.

The court rejected the contention that the arbitrator refused any valid request. It found the arbitrator had properly exercised her right to assess (or "tax") her own costs under the terms of appointment and the Act, and would have complied with any valid request for adjudication had one been made.

Regarding interest, the court exercised its discretion to award interest at the statutory rate on the principal sum from the date the enforcement proceedings were initiated, due to the applicant's substantial delay in commencing enforcement.

Finally, the court addressed costs of the enforcement proceedings, noting the respondent had made open offers to settle which were not accepted, but considered this irrelevant to the orders proposed. The court provisionally awarded costs to the applicant, subject to any submissions from the respondent.

Holding and Implications

The court held that the applicant is entitled to:

• Leave to enforce the arbitration award dated 7 June 2019 pursuant to section 23(1) of the Arbitration Act 2010.
• Judgment entered in the sum of €40,224.10 in favor of the applicant.
• Interest on that sum at the statutory rate from 2 June 2023, the date enforcement proceedings were commenced.

The court further held that the respondent had no valid defence to enforcement, having failed to set aside the award or make a valid request for adjudication of costs within the statutory period. There was no refusal by the arbitrator to refer costs for adjudication. The decision enforces the finality of arbitration awards and clarifies procedural requirements under the Arbitration Act 2010 regarding cost adjudication requests. No new precedent was set beyond applying established principles of arbitration law and statutory interpretation.