Legal Issues

The case Braes of Doune Wind Farm (Scotland) Limited v. Alfred McAlpine Business Services Limited relates to the decision of the arbitrator, Mr John Uff CBE QC and the enforceability of the clauses of the Engineering, Procurement and Construction (EPC) Contract between the Claimant, Braes of Doune Wind Farm (Scotland) Limited, the Defendant, Alfred McAlpine Business Services Limited, which provided for compensation for stoppage, and a second contractor, the Wind Turbine Contractor. The Defendant or the Contractor agreed to do the required work on 36 wind turbine generators (WTGs) located approximately 18 kilometers from Stirling in Scotland. The issues dealt in the case refer to the question of the nominated seat of the hearing and the authorized seat of arbitration. Arbitration was decided as the means of conflict settlement in case of any disagreement or quarrel between the parties.

The Claimant approached the Court of England for leave in opposition to the decision of the arbitrator, while the Defendant declared the Court of England had no right to consider the appeal as the designated place of arbitration was Scotland, and the Court of England and Wales had no right to consider the appeal application. However the Claimant counteracts by saying the English Courts were given exclusive jurisdiction by both parties to settle any quarrel stemming from the contract or any act that was against the Arbitration Act 1996. The Arbitration Rules, which are part of the Arbitration Act 1996, state that these rules will be relevant if arbitration is being held in England, Wales or Northern Ireland (CIMAR Rules 1.6b). These rules have clearly mentioned the powers of the arbitrator (CIMAR Rules 4.1, 4.2, 4.3) and by no means does it prohibit the legal rights of the court relating to the arbitration process (CIMAR Rules 1.7).  It was important for the EPC contract to have these rules laid down clearly so as to avoid any kind of ambiguity.

There are different laws that relate to an arbitration law of the contract that determine the parties rights, law agreed by both parties with respect to arbitration, designated seat of hearing and arbitration, orand law of arbitration itself. The rule applied here was Naviera Amazonica Peruana SA v Cia Internacional de Seguros del Peru HYPERLINK httpwww.lexisnexis.comaulegalsearchrunRemoteLink.doservicecitationlangcountryGBrisb21_T3649041361A0.024900372138448312linkInfoGB l LLOYDyear25198825page2511625vol25125sel225125sel125198825bctA t _top 1988 1 Lloyds Rep 116 which states the Law of England does not recognize the concept of a delocalized arbitration, every arbitration must have a seatwhich subjects its procedural rulesin case any party has not chosen the relevant lawactions will have to be set according to that countrys law where the process of arbitration is taking place(1 Lloyds Rep116,1988 p119) . In this case, the seat for the parties implied there must be a country that would control the arbitration. The Defendants representative argued that there was no ambiguity in this matter and the seat was Glasgow, Scotland.

However the court does have the right to consider any application by either of the parties as per the Arbitration Act 1996, Section 69. Reasons include the law of the country judicially controlling the arbitration England and Wales (courts) were given exclusive legal rights according to Clause 1.4.1 which suggests some sort of control, moreover even though arbitration was the sought method of dispute resolution, the parties under part b of Clause 1.4.1 agreed that the English Courts under jurisdiction could deal with disputes under their Law.

The case also states reference is considered to be a reference in case of arbitration as per the Arbitration Act 1996 (Act of Arbitration 1996, Clause 20.2.2). This confirms that the parties had agreed to a reference that had legal rights as according to the Act of Arbitration someone not having legal rights under arbitrational proceedings will not be termed as a reference. With respect to this it is clear the seat decided in case arbitration occurred was Glasgow, Scotland, however the law applied would that be of England and Wales, hence for the Scottish Courts it would be delocalized arbitration.

As for the application for leave to appeal is concerned, compensation due is rarely unenforceable, however under English Law if such compensation is under penalty it will not be enforceable (Dunlop Pneumatic Tyre Co. v New Garage and Motor Co, 1915 AC 79).

For this case the damage penalties were laid out in Clause 8.7 which mentioned penalties for delays with respect to the time taken to complete the contract starting from the issuance date and extension of time if delay caused due to another contractor on site. This had to be decided by the arbitrator who was well established and knowledgeable in the relevant field of construction. Previously a hearing had taken place on 5 December 2007 in Edinburgh about time extensions under the EPC Contract, the judgment of which doubted the arbitrators reliability. The Court can only grant leave against the arbitrators decision if the conditions mentioned in Section 69(3) of the Arbitration Act 1996 are met. The defendants representative argued that the subject raised through the claim was not a Question of Law as it was a question of the contracts formation however it is a question of law as both parties had legally made the law by entering into a contract.

The arbitrators decision is deemed to be right and convincing as the delays were caused by the Wind Turbine Contractor, and as there was no condition about partial achievement of the contract, the 36 WTGs had to be completed only after being connected with the Wind Turbine Contractors work which obviously was not complete and caused delays.

Given respect to the arbitrators experience and judgment, the Claimants appeal was discharged and the Defendant got the leave to implement the decision under Section 66(1).

Conclusion
This case illustrates a great example of arbitration and the different elements arbitration includes. A small error of not mentioning the exact seat of arbitration and the hearing of arbitration can cause huge misunderstandings and conflicts among the parties. It is therefore extremely important for the benefit of all parties under the contract to clearly mention the place of arbitration and the law that will be applied during hearing and any other information that is crucial to the contract. It is advisable that parties should specify a seat without any reference to other laws as that can cause unnecessary complexities.

Another important thing is to make sure the Act of Arbitration has been thoroughly read and understood. In this case also we saw the parties had not understood the clauses well and the distinction between the seat and hearing of arbitration was clearly mentioned in the Act of Arbitration 1996. The case therefore is a great example of how paying attention to minor details while formulating the contract can save the parties from complex situations and disputes.