Lafarge Redlands Aggregates Limited (Formerly Redland Aggregates Limited) v. Shephard Hill Civil Engineering Limited, (2000)
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Lafarge Redlands Aggregates Limited (Formerly Redland Aggregates Limited) v. Shephard Hill Civil Engineering Limited, (2000)
HOUSE OF LORDSLord Hope of Craighead Lord Cooke of Thorndon Lord Clyde Lord Hobhouse of Wood-borough Lord Millett OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENTIN THE CAUSELAFARGE REDLANDS AGGREGATES LIMITED (FORMERLY REDLAND AGGREGATES LIMITED)(RESPONDENTS)v.SHEPHARD HILL CIVIL ENGINEERING LIMITED(APPELLANTS)ON 27 JULY 2000LORD HOPE OF CRAIGHEADMy Lords,The framework within which work is carried out by participants in the construction industry is provided by the law of contract. They are assisted in their negotiations within this framework by the various standard forms of contract which are in current use. Among the matters provided for in these standard forms is a mechanism for the resolution of disputes between the parties to the contract. This invariably includes an arbitration clause which includes provision for the appointment of an arbitrator.Arbitration is a means of dispute resolution which is widely practised within the construction industry. But it too depends on the law of contract. The arbitrator provides his services to the parties under the contract which he enters into with them when he is appointed to act as their arbitrator, and it is the agreement between the parties to the arbitration clause that renders the arbitrator's award enforceable. This contractual framework causes no difficulty where the dispute is of concern only to the parties to the contract which contains the arbitration clause. But it is not well adapted to the position which is commonplace throughout the construction industry where work which the contractor has undertaken to carry out for the employer under the main contract is executed on the contractor's behalf by a sub-contractor. The only contract which binds the employer is his contract with the contractor under the main contract. The only contract which binds the sub-contractor is his contract with the contractor under the sub-contract. The doctrine of privity of contract inhibits the formation of any kind of implied contractual relationship between the employer and the sub-contractor. This arrangement usually works well enough while the works are in progress, as the main contract and any sub-contracts entered into by the contractor are designed to operate independently as regards the execution, completion and maintenance of the contract or sub-contract works and the payments due to the contractor and to the sub-contractor respectively. Its limitations are thrown into sharp focus where a dispute arises which is of concern to all three parties and arbitration is the preferred means of resolving it.BackgroundThe disputes which have arisen in the present case relate to the construction of the A133 Little Clacton and Weeley Heath Bypass. The main contract was entered into on 24 February 1993 between Essex County Council as employer and the appellant, Shephard Hill, as contractor. The works which were to be carried out under it consisted of the construction of approximately seven kilometres of carriageway together with associated side roads, bridges and culverts, drainage and accommodation works. It incorporated an amended form of the I.C.E. 5th Edition (June 1973) Standard form of Contract for Civil Engineering Works (Revised January 1979) (Reprinted January 1986) ("the I.C.E. Conditions"). The contract price was £7.7 million, to be measured and paid against a schedule of rates. By a contract dated 31 August 1993 the appellant entered into a sub-contract with the respondent, Lafarge Redland, for the work of supplying and laying the asphalt surfacing for the new carriageway. The sub-contract incorporated, with amendments, the F.C.E.C. Standard Form of Sub-Contract (September 1984 Edition) generally known as the Blue Form.The commen...See the full content of this document
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