‘TRIPARTITE ARBITRATIONS’ IN THE HOUSE OF LORDS

Lafarge Redland Aggregates Ltd v Shephard Hill Civil Engineering Ltd [2000] BLR 385

In Lafarge Redland Aggregates Ltd v Shephard Hill Civil Engineering Ltd [2000] BLR 385 the House of Lords held that clause 18(2) of the FCEC Standard Form of sub-contract created a form of tri-partite arbitration (the precise form is discussed in more detail below) between the employer, the main contractor and the sub-contractor in which the sub-contractor was entitled to participate. However, on the facts of the case it was held that the main contractor was not entitled to resist the claim of the sub-contractor that it was entitled to resort to arbitration under the terms of the sub-contract on the ground that the main contractor had not implemented the procedure under the main contract (which would have resulted in a ‘tri-partite arbitration’) within a reasonable time. Technically, the analysis of the procedure laid down by clause 18(2) was all obiter but, given that the issue was the subject of full argument, it is likely to be followed in subsequent cases.