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Scottish Court of Session Decisions


You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> UBC Group Ltd v Atholl Developments (Sclacbuie) Ltd [2010] ScotCS CSOH_21 (02 March 2010)
URL: http://www.bailii.org/scot/cases/ScotCS/2010/2010CSOH21.html
Cite as: [2010] ScotCS CSOH_21, [2010] CSOH 21

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OUTER HOUSE, COURT OF SESSION

[2010] CSOH 21

    

OPINION OF LORD GLENNIE

in the cause

UBC GROUP LIMITED

Pursuers;

against

ATHOLL DEVELOPMENTS (SLACBUIE) LIMITED

Defenders:

ญญญญญญญญญญญญญญญญญ________________

Pursuers: Dean, Solicitor Advocate; Halliday Campbell WS

Defenders: D Logan; Fyfe Ireland LLP

2 March 2010


[1] On
12 February 2010, at a continued preliminary hearing in this matter in terms of Rule of Court 47.11, the pursuers moved the Court to sist the cause for arbitration pursuant to an arbitration clause in the contract between the parties. I refused that motion. I have been asked to provide a note of my reasons for so refusing.


[2] It was not in dispute that the issues raised in the action and in the counterclaim fell within the scope of the arbitration clause in the contract. In those circumstances, the Court will normally sist the cause at the behest of either party. In the present case, however, it was argued by the defenders that the pursuers had, by their conduct and in particular by their delay in taking the point, lost their right to insist on the action being sisted.


[3] Such an argument is normally considered as a species of waiver. It was held in Presslie v Cochran McGregor Group Ltd 1996 SC 289 that the question to be resolved in each case was whether the facts and circumstances gave rise to the inference that the party seeking to rely upon the arbitration clause had abandoned its right to do so by the time it sought to enforce it; and that the test to be applied was whether the actings (including the failure to act) of that party, objectively construed, were inconsistent with an intention to insist upon its contractual right to go to arbitration. That is the principle of general application which can be taken from that case. The case also, however, raised an issue of Scottish procedure. According to our traditional system of pleading, service of the summons and defences is followed by the making up of an Open Record and, thereafter, an automatic adjustment period. Parties to a dispute are entitled to alter their positions at any time until the Record is closed. Accordingly, although a plea to sist for arbitration should be taken in limine, the defenders, the parties seeking to rely upon the arbitration clause in that case, were held to have been entitled to reserve their right to take the plea while the Record was still open; and no inference that they had abandoned their right to arbitrate could be derived from the fact that they had failed to inform the pursuers that they were reserving it, nor from the fact that they had corresponded on the basis that no arbitration plea had been taken. That is a quite separate point from the principle of general application to which I have referred, dependent entirely on the peculiarities of our system of pleading.


[4] In a commercial cause such as the present there is no Open or Closed Record. Nor is there any automatic right of adjustment, though the Court will usually at the first preliminary hearing allow parties to adjust their pleadings on some or all of the issues in dispute. There is therefore no procedural moment up to which parties are free to change their case at will or simply not to commit themselves. In addition, it was made clear in Practice Note No.6 of 2004 that before a commercial action is commenced the issues in dispute should have been focused between the parties: see para.11. In a commercial cause, a party commencing proceedings should generally know in advance what his case is and the likely line to be taken by the defender. It is this discipline which enables parties to lodge in process a document, preferably agreed, setting out the issues which will require judicial determination in the course of the action: see para.12(4). There is therefore, in the ordinary case, no reason why a party seeking to sist the cause for arbitration should not know from the start that he intends to seek a sist. Nor is there any reason why he should not be expected to make his position clear. The position is, therefore, very different from that which obtains on the Ordinary Roll.


[5] It is, of course, not uncommon for a party seeking to arbitrate a dispute to commence an action in Court and then apply to sist it. In a case where the arbiter has no power to award interest, the institution of Court proceedings which are then sisted for arbitration enables the pursuer to recover interest by this route. Or a party may commence court proceedings simply to obtain security for his claim by diligence. In such cases the pursuer will be expected to make it clear that this is what he is doing. In the instant case there was no suggestion in the Summons that a sist was sought. At the first preliminary hearing, both parties lodged Notes of Issues in accordance with the Practice Note. The defences included a plea in law seeking to have the action sisted for arbitration but, in their Note of Issues, the defenders made it clear that they were not insisting on that plea and were content for it to be repelled. The Note of Issues lodged by the pursuers did not mention arbitration at all. Instead it identified the major issues between the parties which required to be resolved in the action. On the basis that the action was proceeding in court, the Court allowed the defenders to lodge a counterclaim and the pursuers to lodge answers thereto if so advised, and allowed the parties thereafter to adjust their respective pleadings. At the continued preliminary hearing of
12 February 2010, the pursuers sought to have their adjustments, which included for the first time the plea to sist for arbitration, received late.


[6] In La Pantofola D'Ora
SPA v Blane Leisure Limited 2000 SLT 105, Lord Hamilton refused a motion by the pursuers to sist in circumstances where that motion was not enrolled until after considerable procedure in the case. The facts of the case were very different and I need not set them out. Applying the decision in Presslie and other cases, he held that the question whether a party had waived his right to insist on arbitration depended on an objective assessment of that party's conduct in the whole circumstances of the case. In the circumstances of the present case as I have set them out, it seems to me that the pursuers' conduct was unequivocally that of a party intending to proceed by litigation rather than arbitration. The point does not bear much elaboration. If the pursuers were simply commencing proceedings so as to protect their position as regards interest, or to obtain security for their claim, or for some other reason, that could and should have been stated right from the beginning. Even if the Summons had not included a plea in law to that effect, the point could have been flagged up in the Note of Issues lodged on their behalf; or it could have been raised at the first preliminary hearing when the defenders for their part indicated that they were no longer insisting that the case go to arbitration. Instead of doing any of this, the pursuers, to my mind, made it clear that they were expecting the disputes between the parties to be resolved in Court.


[7] In La Pantofola D'Ora, Lord Hamilton discussed briefly the question of whether, for waiver to be "effective", there had to be some reliance on the waiver by the other party, or to put it another way, whether it had to be shown that the other party had conducted its affairs on the basis of the waiver. He indicated that he did not need to decide the point because he found that there had been reliance in that sense. I do not need to decide the point either. On the basis that the matter was to be dealt with in Court rather than in arbitration, the defenders applied for and were granted permission to lodge a counterclaim in the action. Pleadings were exchanged in the counterclaim. If reliance is necessary, that pursuit of the counterclaim in the action is quite sufficient.


[8] For those reasons, I refused the pursuers' motion to sist for arbitration.


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