Babcock (Claimant) and HS Barrier Coatings “HSBC” (Defendant) disputed the appropriate forum to enforce a £613,338.09 arbitration decision (plus adjudicator’s fees) against HSBC. The case rested on whether England or Scotland had jurisdiction as the most appropriate forum to enforce the arbitration decision. Both parties relied on the Civil Jurisdiction and Judgements Act 1982 rules which provides for the allocation of civil jurisdiction within the UK.  

Babcock engaged “HSBC” to carry out ship lift docking cradle re-preservation work in Clyde. The Contract was based on the NEC 3 Engineering and Construction Short Contract (June 2005), subject to Scottish law and contained an arbitration clause based on the Scottish arbitration statute. The Contract was subsequently varied in December 2016. Following termination by Babcock in 2018, The Parties commenced adjudication in Scotland. Babcock sought to enforce the adjudication decision in English courts on the basis that the HSBC is domiciled in England. HSBC’s position was that the Scottish courts were the appropriate forum and the English courts did not have jurisdiction. However, HSBC’s application challenging the English court’s jurisdiction was one day late. The court nevertheless found wholly in favour of HSBC granting its application for relief from sanctions and an extension of time to serve its application contesting the English court’s jurisdiction. 

Babcock argued not only that the choice of court clause in the Variation conflicted with arbitration agreement in the Contract, but that the jurisdiction clause in the Variation was in any event limited to disputes arising out of the Variation only. Relying on Rule 1 of the Civil Jurisdiction and Judgements Act 1982 which states that the court of the Defendant’s domicile have jurisdiction, Babcock claimed the court could not interfere with the decision to sue HSBC in its place of domicile. 

HSBC’s argument was based on three points. First, that the Variation incorporated the choice of court clause into the Contract and that decision should be respected. Secondly, the Scottish courts had special jurisdiction as the place of performance was in Scotland. Finally, that the Scottish courts were the most appropriate forum.   

The court found it was appropriate to grant relief for late application as this was due to solicitor error. Granting would not prejudice the Claimant nor impact the litigation, but refusal would disproportionately affect the Defendant. It continued that the Variation contained a valid choice of law clause that disputes would be determined by Scottish Courts and was not limited to disputes falling directly under the Variation. While recognising Babcock had the right to sue HSBC in its place of domicile, the court found Scottish courts to be “clearly or distinctly more appropriate”. The court referenced the Parties’ choice of Scottish Law and Scottish courts, that the project is in Scotland and that the place of performance is also in Scotland. The court paid significance to the choice of Scottish law and arbitration rules for the Contract and found the Scottish court’s familiarity with its own rules and caselaw made it best placed to hear HSBC’s challenge to the adjudicator’s decision. As a result, the Court stayed HSBC’s application to stay the enforcement proceedings. 

Comment

Following this decision, parties should note that fact that the adjudication is governed by UK-wide statute does not mean a decision can be enforced anywhere in the UK. In ascertaining the jurisdiction, consideration should be paid to the terms of the construction contract and subsequent agreements to ensure proceedings are raised in the correct and most appropriate jurisdiction.