Babcock Marine (Clyde) Ltd V HS Barrier Coatings Ltd
Friday, 28 June, 2019
 EWHC 1659 (TCC)
Allocation of jurisdiction; Applicable law; Arbitration agreements; Choice of law; Disputing the court’s jurisdiction; Forum non conveniens; Jurisdiction clauses; Maritime arbitration; Place of performance; Relief from sanctions; Scotland
Babcock (Claimant) and HS Barrier Coatings “HSBC” (Defendant) disputed the appropriate forum to enforce a £613,338.09 adjudication decision (plus adjudicator’s fees) against HSBC. The case rested on whether England or Scotland had jurisdiction as the most appropriate forum to enforce the arbitration decision. Both parties relied on the Civil Jurisdiction and Judgements Act 1982 rules which provides for the allocation of civil jurisdiction within the UK.
Babcock engaged HSBC to carry out ship lift docking cradle re-preservation work in Clyde. The Contract was based on the NEC 3 Engineering and Construction Short Contract (June 2005), subject to Scottish law and contained an arbitration clause providing for arbitration in accordance with the Arbitration (Scotland) Act 2010, as well as an adjudication clause providing for adjudication in accordance with the 1996 Act.
The Contract was subsequently varied in December 2016. The variation agreement contained a choice of court clause stating that the Scottish courts had jurisdiction over “any dispute which may arise between the parties concerning this agreement.” Following termination by Babcock in 2018, The Parties commenced adjudication in Scotland. Babcock sought to enforce the adjudication decision in English courts on the basis that the HSBC is domiciled in England.
HSBC’s position was that the Scottish courts were the appropriate forum and the English courts did not have jurisdiction, on the basis of the choice of court clause, alternatively based on the place of performance, alternatively on the basis that the Scottish courts were the most appropriate forum.
Babcock argued not only that the choice of court clause in the Variation conflicted with arbitration agreement in the Contract, but that the jurisdiction clause in the Variation was in any event limited to disputes arising out of the Variation only. Relying on Rule 1 of the Civil Jurisdiction and Judgements Act 1982 which states that the court of the Defendant’s domicile have jurisdiction, Babcock claimed the court could not interfere with the decision to sue HSBC in its place of domicile.
The Court found that the Variation contained a valid choice of law clause that disputes would be determined by Scottish Courts and was not limited to disputes falling directly under the Variation. While recognising Babcock had the right to sue HSBC in its place of domicile, the court found Scottish courts to be “clearly or distinctly more appropriate”. The court attached weight to the choice of Scottish law and arbitration rules for the Contract and found the Scottish court’s familiarity with its own rules and caselaw made it best placed to hear HSBC’s challenge to the adjudicator’s decision. As a result, the Court stayed HSBC’s application to stay the enforcement proceedings.
Following this decision, parties should note that fact that the adjudication is governed by UK-wide statute does not mean a decision can be enforced anywhere in the UK. In ascertaining the jurisdiction, consideration should be paid to the terms of the construction contract and subsequent agreements to ensure proceedings are raised in the correct and most appropriate jurisdiction.