Stay of proceedings for arbitration under NEC3 supply contract (Costain v Tarmac)

Article summary

Construction analysis: In an application for a stay under section 9(1) of the Arbitration Act 1996 (AA 1996), the court held that a dispute concerning defective goods was to be finally resolved by arbitration. The agreement incorporated both NEC3 Short Supply Contract conditions (which provided for adjudication followed by arbitration) and NEC3 Framework Agreement conditions (which provided for adjudication followed by litigation)—the court held that each governed a separate aspect of the parties’ relationship, and therefore the dispute resolution process to be applied depended on which set of conditions the particular dispute related to. Further, the court rejected an argument that the arbitration provision was inoperative on the grounds of abandonment, repudiation and/or estoppel (which involved looking at the NEC3 ‘mutual trust’ obligation), or had become null and void due to the adjudication decision being allegedly invalid.