Go ask Alice

A notice of arbitration was served, Except that it wasn’t. The notice was served according to the notice rules, except that it wasn’t. The notice was served before the three month deadline, except that it wasn’t.

Lafarge (Aggregates) Ltd had one of those framework contracts with Newham council in east London. Under the three-year deal, Lafarge repaired highways, byways and footpaths. That was enough time to fall out. The pair had a tiff about which work fell into which price band in the schedule of rates. Familiar stuff; contract drafters can’t think of everything.

An adjudicator was called in. He did his adjudicating and delivered his formal award.

As usual, it was binding until arbitrated. The ICE-style contract document told the pair that the adjudicator’s decision would change, Cinderella-like, from a pro-tem binding award to a forever binding award unless an arbitrator was called for within three months.

The three months expired on the 13 November, if dated from the adjudicator’s decision, or the 17 November if dated from when then decision was handed down. A notice of arbitration was issued by Newham, then received and signed for by Lafarge on 12 November, a Friday. The letter had no flaws. It was, said the contract, to be served by post, it was. It was requested and signed for on the 12th. So, it didn’t matter if the deadline were the 13th or the 17th, because it was served on the 12th. But serving a letter on 12 November, one day before the deadline, was too late. Early, but too late.

The contract carefully explained how to serve a notice and where. It then said in the small print that “any notice shall be deemed to be served two working days following service in accordance with this clause”. Do you see the trap? The notice dated Thursday 11 November arrived next day by registered post but was not served until it matured for two days. Friday 12th was only day one. Saturday the 13th was day two except that it was not if Saturday was not a “working day”. If it was not and it matured on Sunday the 14th or Monday the 15th, it was too late. You could not then arbitrate because the adjudicator’s award had become cast in stone.

The notice of arbitration was received and signed for by Lafarge on 12 November. But the 12th, one day before the deadline, was too late. Early, but too late

The arbitrator was appointed and Lafarge immediately told him it was all too late. Newham argued the opposite. So, a preliminary point had to be decided by the arbitrator: was the dispute decided by the adjudicator capable of coming to an arbitration in accordance with the three-month rule? The arbitrator decided he did have authority to carry on with the dispute. Lafarge didn’t like that decision. The Arbitration Act 1996 gives a party the right to take an arbitrator’s decision to the High Court.

The High Court partly agreed with the arbitrator. The judge agreed that the three months ran from the date of the adjudicator’s decision not the date it was received. That gave us 13 August to the end of 13 November. The notice arrived on the 12th. It was correct to let it sweat for two working days.

But the judge now parted company with the arbitrator. The civil engineer arbitrator decided that the Saturday was a “working day” and therefore the notice was in time because it had been delivered and sat there for two “working days”. The judge said that the arbitrator had been wrongly led by that argument. The judge didn’t accept that Saturday was a “working day”. Newham had argued that work on Saturday was ordinary. The contract contained a clause that explained that Saturday mornings were to be paid at a standard rate and Saturday afternoons at an enhanced one. Didn’t matter, said the judge. It was not the working day for the works that counted, it was the working day of both parties’ offices, and neither was open.

Now then, two things about these standard form contracts: first, they’re too clever by half. Second they’re a product of the very industry that they purport to serve. The judge’s analysis was intellectually sound, thorough, top drawer; it might even be right. But, the contractual bumf is all a million miles from digging holes, carting paving slabs, commerce. Damn it, the notice was on the desk, under the nose, in the boardroom: in fact, in truth, in real life. But the standard form contract introduced an artificial contractual rule that pretended the letter hadn’t arrived. That is the law of contract, and adjudicators and arbitrators and judges will follow the law of contract; it means following the words used in the bargain and what those words mean as words. The letter arrived on Friday except it didn’t arrive till Monday. It makes perfect sense in law.