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Entering into arbitration agreements after completion of a project

Citation: States of Guernsey v Jacobs UK Ltd [2011] EWHC 918 (TCC)

Keywords: Arbitration Agreements, offer and acceptance

The Facts

The States of Guernsey (C) initiated Part 8 Proceedings to determine whether or not there were binding arbitration agreements entered into between them and Jacobs (D).  C sought guidance as to whether the agreed forum is arbitration or the Courts. D was initially going to be appointed by C’s Architect, but then C specified how the professional services were to be procured and imprecisely engaged D directly. There was much correspondence, by which D referred to ACE form of agreement as this was initially put forward by the Architect, which does not contain an arbitration clause and it was to be governed by the laws of England whose courts would have “non-exclusive jurisdiction.” C received some internal advice some time later specifying that the Guernsey Courts should have jurisdiction.  A consultant acting for C submitted a form of appointment and that Guernsey Arbitration should apply. Much correspondence continued over the next 4 years when eventually C responded by making amendments to the original ACE form of agreement (“offer”).  After substantial completion of the project, D replied setting out a chronology of contractual events and that they would sign the agreement as long as an invoice for Additional Services was agreed (“counter-offer”). C requested D to concur in the appointment of a sole arbitrator to clarify the position.  Another two years followed whereby D was stating that there was no binding arbitration agreement between the parties.

Held (Akenhead J)

It was requested by D, at an early stage in negotiations, for a form of contract that did not have an arbitration agreement within it.  D then made its contractual position clear by referring to ACE standard conditions that did not contain an arbitration clause, which C then sought to amend by inserting an arbitration clause.

At the stage of offer, counter-offer and acceptance, it is open to a party to withhold acceptance on any ground, even if that ground is objectively a relatively minor ground.  C’s letter with amendments amounted to an offer which was rejected by a conditional counter-offer. A conditional counter-offer was made by D sometime later as D made it clear that, Additional Services would be provided at an additional sum.  D stated that it would only sign the agreement on condition that other issues were dealt with, even if they were minor.  Therefore, as D had not signed the agreement and the counter offer was not accepted, there was no binding agreement which provided for disputes to be referred to arbitration and C’s claim failed.