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Opinion - Puzzles for
Arbitrators
Here is Puzzle 14 in a series of puzzles for arbitrators and aspiring arbitrators developed by Peter Horne. It deals with a situation that is often found in disputes, where the terms of the contract are unclear. Answers or comments would be most welcome from everybody, but especially those more senior members who have had experience of dealing with such difficult contractual matters.
The Sham Building Group (SBG) sought tenders from sub-contractors in respect of various work on the Colossal Housing Estate. Honest Joe Electrical Ltd (HJE) tendered for electrical installation in the houses. Following negotiation with SBG regarding the tender sum, HJE started work on site. There was no signed contract or letter of intent but there is no argument about the terms, which include an arbitration clause. All negotiations with SBG had been by letter, signed by Mr I Rookham.
HJE carried out work for several months, applying for payment, to SBG, at monthly intervals. Payment was made by cheque, in the amount applied for and without any other correspondence, from Sly Builders Ltd. Various variations were agreed with Mr Rookham, confirmed on SBG headed paper.
Following completion of its work, HJE submitted a final account, to SBG, including variations and other loss/expense arising out of various matters for which there were provisions in the contract. SBG responded that the agreed tender sum had been fixed and that HJE was not entitled to any additional payment. HJE served an arbitration notice, SBG did not respond and HJE applied to the body named in the contract to nominate an arbitrator. You are nominated and accept the appointment. You invite the parties to a preliminary meeting. All correspondence in respect of the arbitration (including the notice) is from Honest Joe Electrical Ltd to The Sham Building Group, who have not responded.
At this point, SBG say that you have no jurisdiction, your appointment is invalid, SBG has no legal personality and cannot be sued, if there was any contract then it was with Sly Builders Ltd. HJE are unrepresented.
What do you think is the probable solution (please do not say that you would seek legal advice)?
Would there be any difference if the dispute (between HJE and SBG) had been referred to adjudication (which will only apply to a contract in or evidenced in writing) and you are the adjudicator?
Peter Horne