A recent case highlighting the importance of a claimant taking the right steps to protect its position before the limitation period expires.

The claimant issued proceedings in the court just before the expiry of the relevant limitation period but the defendant successfully applied to stay those proceedings, as there was a valid arbitration agreement in the underlying contract. 

Given that the claimant’s proceedings had been stayed, the claimant sought to refer the matter to arbitration and have an arbitrator appointed by an appointing body.  The defendant challenged the jurisdiction of the arbitrator on the basis that the claimant had not served the Notice of Arbitration in accordance with the contract.    

The claimant sought to rely on a letter it had written to the defendant several years earlier as sufficient notice to commence arbitral proceedings.  The letter asked whether the defendant intended to rely on the arbitration agreement in the underlying contract or would agree to litigation in the courts and enclosed draft particulars of claim.  There was no substantive response to this request other than without prejudice discussions.

The court held that the letter was not sufficient notice as it did not make it clear that the dispute was being referred to arbitration or that the claimant was requesting the defendant to commence the process of agreement of an arbitrator.  Rather than starting the arbitration process, the letter was merely seeking to establish whether the defendant would insist on arbitration.

The result was that the claimant’s attempt to appoint an arbitrator was invalid, the court proceedings had been stayed, and the relevant limitation period had expired.  Therefore, the claimant was left without a remedy.

The lessons from this are clear:

• If your contract contains an arbitration agreement but you want to have the dispute resolved by the courts, obtain the other party’s agreement to this before issuing court proceedings.
• If you can not obtain the approval of the other party to the court resolving the dispute, make sure you commence arbitral proceedings in accordance with the requirements of the contract before the limitation period expires.
• Don’t leave it to the last minute to issue proceedings, whether that is in arbitration or in the courts.

Taylor Woodrow Construction v RMD Kwikform Ltd [2008] EWHC 825 (TCC)

For more information on these issues please contact

Owen Williams

or your usual Lewis Silkin contact