Peterborough City Council v Enterprise Managed Services Ltd

This is an application by the Defendant (“EMS”) for an order to stay the action brought in this court by the Claimant (“the Council”) in respect of a dispute arising out of the contract dated 7 July 2011 made between the Council and EMS by which EMS agreed to design, supply, install, test and commission a 1.5 MW solar energy plant on the roof of a building owned by the Council.

It was a term of the contract that EMS was to provide plant generating at least 55 kW by 31 July 2011 in order that the Council could benefit from the higher tariff payable under the Government’s feed-in tariff scheme in respect of the whole installation once completed. If EMS failed to achieve that target, it is said that the contract provided that it should pay liquidated damages of just over £1.3 million (known as the “Price Reduction”) to the Council.

The application is made on the ground that the contract requires any dispute to be referred to adjudication by a Dispute Adjudication Board (“DAB”), in this case consisting of a sole adjudicator, as a precondition of any action in the courts. The principal issue on this application is whether or not the contract does in fact require this. If it does, then the question arises as to whether or not the court should order the Council’s action to be stayed.

The works were completed in late 2011 and it is alleged by the Council that the plant failed to achieve the required output, 55 kW, by the stipulated date so that the Council became entitled to the Price Reduction. The contract provided that in that event the Council was entitled to recover that sum as a debt.

Since the Council had taken the position that EMS failed to achieve the stipulated power output by the target date, by a notice dated 4 April 2013 it refused to approve EMS’s payment application No. 3. EMS’s application was for £658,935. The Council assesses the value of EMS’s executed work as £646,683, so this difference between the figures is not significant. Accordingly, the real issue between the parties is whether or not the Council is entitled to the claimed Price Reduction, although it also claims other sums in addition.

On 6 January 2014 the Council sent EMS a pre-action protocol letter of claim, to which EMS responded by a letter dated 21 February 2014. In that letter EMS’s solicitors took the point that the Council should have referred the dispute to the DAB, as the contract required, rather than threaten litigation. However, they went on to suggest that, given the ongoing relationship between the parties, it would be appropriate to make an attempt at that stage to resolve the dispute at that stage by mediation.

This suggestion was adopted and there was a mediation in May 2014. However, no settlement was achieved. On 21 July 2014 EMS gave notice under the contract of its intention to refer the dispute to adjudication.

On 11 August 2014 the Council issued and thereafter served its claim form and Particulars of Claim. On 13 August 2014 its solicitors wrote disputing that it was obliged to refer the dispute to the DAB. On 26 August 2014 EMS applied to the RICS (the nominating body named in the contract) for the appointment of an adjudicator. Mr John Wright, a partner in Goodman Derrick, was duly appointed.

On 27 August 2014 EMS issued this application. It was represented at the hearing by Miss Anneliese Day QC, instructed by Dentons, and the Council was represented by Ms. Fiona Sinclair QC, instructed by Pinsent Masons. Both counsel made careful, cogent and persuasive submissions for which I am very grateful.

The contract was made on the FIDIC General Conditions of Contract for EPC/Turnkey Projects. This is one of a suite of three standard forms of contract (known as “Books”) issued by FIDIC in 1999. The other two are Conditions of Contract for Construction and Conditions of Contract for Plant and Design-Build.

Clause 1.1 of the Conditions defines the DAB as:

“The person or three persons so named in the Contract, or other person(s) appointed under Sub-Clause 20.2 [Appointment of the Dispute Adjudication Board] or Sub-Clause 20.3 [Failure to Agree Dispute Adjudication Board]”

The FIDIC Contracts Guide, published in 2000, makes it clear that each Book describes a dispute resolution procedure which may be applicable to most contracts for which the Book was intended to be used. But it then goes on to say that the most appropriate Book may not be the Book which contains the dispute resolution procedure which is to be preferred. As one might expect, therefore, the parties have the choice of choosing a dispute resolution procedure other than that in the Book which otherwise appears most appropriate to their particular project. The Conditions of Contract for Construction provide for a “full-term” standing DAB, where the member or members are appointed before the start of the works. The other two Books provide for the ad hoc appointment of a DAB following the issue by one of the parties of a notice of intention to refer a dispute to adjudication.

Although Ms.  Sinclair did not accept this, in my view it is clear that this suite of contracts provides for two mutually exclusive types of DAB: a standing DAB named in the contract, or an ad hoc DAB appointed following a dispute. I cannot see how the contractual provisions can be interpreted or operated so as to permit two types of DAB to be in existence at the same time, or even to be alternatives.

The crucial clauses in the present dispute are sub-clauses 20.2 to 20.8, the relevant parts of which I will have to set out below at some length:

“20.2

Appointment of the Dispute Adjudication Board

20.2.1

Disputes shall be adjudicated by a DAB in accordance with Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision]. The Parties shall jointly appoint a DAB by the date 28 days after a Party gives notice to the other Party of its intention to refer a dispute to a DAB in accordance with Sub-Clause 20.4.

20.2.2

The DAB shall comprise, as stated in the Particular Conditions, either one or three suitably qualified persons (“the members”). If the number is not so stated and the Parties do not agree otherwise, the DAB shall comprise three persons.

20.2.3

If the DAB is to comprise three persons, each Party shall nominate one member for the approval of the other Party. The Parties shall consult both these members and shall agree upon the third member, who shall be appointed to act as chairman.

20.2.4

…

20.2.5

The agreement between the Parties and either the sole member (“adjudicator”) or each of the three members shall incorporate by reference the General Conditions of Dispute Adjudication Agreement contained in the Appendix to these General Conditions, with such amendments as are agreed between them.

20.2.6

The terms of the remuneration of either the sole member or each of the three members, shall be mutually agreed upon by the Parties when agreeing the terms of appointment. Each Party shall be responsible for paying one-half of this remuneration.

20.2.7

If at any time the Parties so agree, they may appoint a suitably qualified person or persons to replace any one or more members of the DAB. Unless the Parties agree otherwise, the appointment will come into effect if a member declines to act or is unable to act as a result of death, disability, resignation or termination of appointment. The replacement shall be appointed in the same manner as the replaced person was required to have been nominated or agreed upon, as described in this Sub-Clause.

20.2.8

The appointment of any member may be terminated by mutual agreement of both Parties, but not by the Employer or the Contractor acting alone. Unless otherwise agreed by both Parties, the appointment of the DAB (including each member) shall expire when the DAB has given its decision on the dispute referred to it under sub-clause 20.4, [Obtaining Dispute Adjudication Board Decision], unless other disputes have been referred to the DAB by that time under sub-clause 20.4, in which event the relevant date shall be when the DAB has also given decisions on those disputes.

20.3

Failure to Agree Dispute Adjudication Board

20.3.1

If any of the following conditions apply, namely:

(a)

the Parties fail to agree upon the appointment of the sole member of the DAB by the date stated in the first paragraph of Sub-Clause 20.2,

...

20.3.2

then the appointing entity or official named in the Particular Conditions shall, upon the request of either or both of the Parties and after due consultation with both Parties, appoint this member of the DAB. This appointment shall be final and conclusive. Each Party shall be responsible for paying one-half of the remuneration of the appointing entity or official.

20.4

Obtaining Dispute Adjudication Board’s Decision

20.4.1

If a dispute (of any kind whatsoever) arises between the Parties in connection with, or arising out of, the Contract or the execution of the Works, including any dispute as to any certificate, determination, instruction, opinion or valuation of the Employer, then after a DAB has been appointed pursuant to Sub-Clauses 20.2 [Appointment of the Dispute Adjudication Board] and 20.3 [Failure to Agree Dispute Adjudication Board], either Party may refer the dispute in writing to the DAB for its decision, with a copy to the other Party. Such reference shall state that it is given under this Sub-Clause.

20.4.2

...

20.4.3

Both Parties shall promptly make available to the DAB all information, access to the Site, and appropriate facilities, as the DAB may require for the purposes of making a decision on such dispute. The DAB shall be deemed to be not acting as arbitrator(s).

20.4.4

Within 84 days after receiving such reference, or the advance payment referred to in Clause 6 of the Appendix - General Conditions of Dispute Adjudication Agreement, whichever date is later, or within such other period as may be proposed by the DAB and approved by both Parties, the DAB shall give its decision, which shall be reasoned and shall state that it is given under this Sub-Clause. However, if neither of the parties has paid in full the invoices submitted by each member pursuant to clause 6 of the Appendix, the DAB shall not be obliged to give its decision until such invoices have been paid in full. The decision shall be binding on both Parties, who shall promptly give effect to it unless and until it shall be revised in an amicable settlement or legal proceedings as described below or by other agreement between the Parties. Unless the Contract has already been abandoned, repudiated or terminated, the Contractor shall continue to proceed with the Works in accordance with the Contract.

20.4.5

If either Party is dissatisfied with the DAB’s decision, then either Party may, within 28 days after receiving the decision, give notice to the other Party of its dissatisfaction. If the DAB fails to give its decision within the period of 84 days (or is otherwise approved) after receiving such reference or such payment, then either Party may, within 21 days after this period has expired, give notice to the other Party of its dissatisfaction.

20.4.6

In either event, this notice of dissatisfaction shall state that it is given under this Sub-Clause, and shall set out the matter in dispute and the reason(s) for dissatisfaction.

20.4.7

If the DAB has given its decision as to a matter in dispute to both Parties, and no notice of dissatisfaction has been given by either Party within 28 days after it received the DAB’s decision, then the decision shall become final and binding upon both Parties.

20.5

Amicable Settlement

20.5.1

Both Parties shall endeavour to resolve any failures to agree matters or any disputes by direct negotiations between senior representatives of both parties.

20.5.2

When notice of dissatisfaction has been given under Sub-Clause 20.4 above, both Parties shall attempt to settle the dispute amicably before the commencement of court proceedings. However, unless both Parties agree otherwise, court proceedings may be commenced on or after the fifty-sixth day after the day on which notice of dissatisfaction was given, even if no attempt at amicable settlement has been made.

20.6

Final settlement

20.6.1

Unless settled amicably, any dispute in respect of which the DAB’s decision (if any) has not become final and binding shall be finally settled by the courts of England and Wales.

...

20.7

Failure to Comply with Dispute Adjudication Board’s Decision

20.7.1

In the event that:

(a)

neither Party has given notice of dissatisfaction within the period stated in Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision],

(b)

the DAB’s related decision (if any) has become final and binding, and

(c)

a Party fails to comply with this decision,

20.7.2

then the other Party may, without prejudice to any other rights it may have, refer the failure itself to the courts of England and Wales under Sub-Clause 20.6 [Final Settlement], Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision] and Sub-Clause 20.5 [Amicable Settlement] shall not apply to this reference.

20.8

Expiry of Dispute Adjudication Board’s Appointment

20.8.1

If a dispute arises between the Parties in connection with, or arising out of, the Contract or the execution of the Works and there is no DAB in place, whether by reason of the expiry of the DAB’s appointment or otherwise:

(a)

Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision] and Sub-Clause 20.5 [Amicable Settlement] shall not apply, and

(b)

the dispute may be referred directly to the courts of England and Wales under Sub-Clause 20.6 [Final Settlement].”

In addition, the following clauses were referred to in the parties submissions:

“1.2.6

general words shall not be given a restrictive interpretation by reason of their being preceded or followed by words indicating a particular class of acts, matters or things and references to “including” shall be deemed to mean “including, without limitation”, unless the context expressly requires; and

1.4.1

This Contract and any dispute or claims arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and only the English Courts have jurisdiction to hear and determine any disputes or claims arising under or in connection with this Contract (including non-contractual disputes or claims) save for the purposes of enforcement of proceedings where any order, award or judgment of such Courts may be enforced against the Parties in any other jurisdiction.”

The contract also provided that marginal words and other headings were not to be taken into consideration in the interpretation of the Conditions.

Miss Day relied strongly on the opening words of sub-clause 20.2.1, submitting that the sub-clause contained a mandatory requirement to refer disputes arising under the contract in the first place to adjudication in accordance with sub-clause 20.4. Accordingly, she submitted that the Council’s issue of proceedings following EMS’s notice of intention to refer a dispute to adjudication without either invoking or cooperating in the adjudication procedure was a breach of contract.

Miss Day submitted also that if the Council’s interpretation of sub-clause 20.8.1 were correct, sub-clauses 20.2 to 20.7 would be rendered redundant. She said that such an interpretation cannot have been the intention of the parties.

Miss Day relied also on a comment in the FIDIC Contracts Guide, which said:

“... the first paragraph of Sub-Clause 20.2 requires a DAB to be appointed within 28 days after a Party gives notice of intention to refer a dispute to a DAB, and Sub- Clause 20.3 should resolve any failure to agree the membership of the DAB. The parties should thus comply with Sub-Clauses 20.2 and 20.3 before invoking Sub- Clause 20.8. If one party prevents a DAB becoming ‘in place’, it would be a breach of contract ...”

Miss Day submitted also that clause 20.8 was to deal with circumstances in which a DAB’s appointment has expired or, for some other reason, the parties have agreed to terminate the DAB’s appointment, or there has been a breach of contract by one party so as to entitle the other party to refer the matter straight to court.

Ms. Sinclair submitted that sub-clause 20.8 was in effect an opt-out that enabled a party who did not wish to have the dispute resolved by adjudication to refer the dispute directly to the court. She relied strongly on the concluding words of the first sentence (“or otherwise”) and submitted that this covered any situation where a DAB was not “in place” either after a dispute had arisen or at the time when the party wishing not to adjudicate had commenced litigation.

Ms. Sinclair pointed out that since the parties could not be under a mandatory obligation to achieve the appointment of an adjudicator - perhaps because in good faith they could not agree on the identity of a suitable adjudicator - the word “shall”, where it appeared in clause 20.2.1, must necessarily be directive or aspirational, rather than mandatory.

She submitted also that for a DAB to be “in place” there must be a DAB that is empowered to resolve a dispute. She pointed out, correctly in my view, that the source of the DAB’s authority was the Dispute Adjudication Agreement. She then submitted that since the wording of this agreement stated expressly that it was not to be effective until both its terms had been agreed by the contracting parties and the adjudicator and the agreement had been signed by each of them, it could not be “in place” until this had been done. In my view it is clear that, in the absence of any agreement to the contrary, the Dispute Adjudication Agreement is to be in the form set out in the Appendix to the Conditions (because that document is incorporated by reference into the Dispute Adjudication Agreement).

Ms. Sinclair submitted that, both as a matter of language and the express provision in clause 1.2.6, the phrase “or otherwise” was wide enough to include a state of affairs where the Dispute Adjudication Agreement had not been concluded.

In relation to the provisions of sub-clause 20.4 to sub-clause 20.7 as a whole, Ms.  Sinclair submitted also that they were unenforceable for lack of certainty. She identified what has been described as “the gap” in those sub-clauses, which arises when the DAB has made a decision and one party has given a notice of dissatisfaction - with the result that the DAB’s decision, whilst binding, is not final. The problem then is that if the unsuccessful party refuses to comply with the decision of the DAB, as it is required to do by sub-clause 20.4.4, the only remedy (it is said) available to the other party is to refer the dispute occasioned by the refusal to comply to yet another adjudication. This can have the effect, Ms.  Sinclair submitted, that the party in default can embark on a course of persistent non-compliance with DAB decisions and thereby deprive the other of any effective remedy.

Ms. Sinclair points out that this problem has been recognised by FIDIC and I was referred to erudite articles by Prof Niall Bunni and Taner Dedezade, a barrister employed by Corbett and Co, which set out the difficulties that it presented.

In my judgment, there is a short answer to this. Whilst the point may be arguable in the context of the standard FIDIC Books which include an arbitration clause, it loses its force where the arbitration clause has been removed - as in the present case. The articles to which Ms.  Sinclair referred were concerned with the limitations on the powers of arbitrators in this situation (in particular, whether or not they could order specific performance), the type of award (interim, partial or final) that is or may be appropriate if the DAB’s decision is to be enforced and the whole question of the delay that would be involved in resorting to arbitration.

However, these problems disappear when the contract provides that the forum for final resolution of any dispute is litigation, and not arbitration. I can see no reason why the court could not intervene at the instance of one of the parties by ordering specific performance of the obligation to comply with a decision of the DAB. Alternatively, if it were to be argued that the proper or only remedy for this was by way of a further adjudication, the court could enable the aggrieved party to secure justice by refusing a stay of any court proceedings that it commenced. I therefore reject Ms.  Sinclair’s submission that the relevant provisions in this contract are unenforceable.

As to Ms. Sinclair’s argument that there can be no DAB “in place” if a Dispute Adjudication Agreement has not been concluded so as to be effective, whether because the parties have been unable to agree the adjudicator’s fees or that it has not been signed by the parties and the adjudicator, I think that Ms. Sinclair was disposed to accept that, in the absence of any agreement between the parties, the effect of incorporating the Appendix to the Conditions as the terms of the Dispute Adjudication Agreement was that all the relevant terms of that agreement would be in place save for agreement of the adjudicator’s fees. In my view, there would be an implied term of that agreement - reflecting the common intention of the parties to it - that the adjudicator would be entitled to his or her reasonable fees and expenses.

Both counsel referred me to a judgment of Hildyard J in Tang v Grant Thornton [2013] 1 All ER (Comm) 1226, in which he had to consider the enforceability of a dispute resolution clause. At paragraphs 56-58 he said this:

“[56] This recitation of authority illustrates the tensions, in the context of provisions for conciliation or mediation of disputes prior to arbitration or court proceedings, between the desire to give effect to what the parties agreed and the difficulty in giving what they have agreed objective and legally controllable substance.

[57] Agreements to agree and agreements to negotiate in good faith, without more, must be taken to be unenforceable: good faith is too open-ended a concept or criterion to provide a sufficient definition of what such an agreement must as a minimum involve and when it can objectively be determined to be properly concluded. That appears to be so even if the provision for agreement is one of many provisions in an otherwise binding legal contract, with an exception where the provision in question can be construed as a commitment to agree a fair and reasonable price.

[58] However, especially when the relevant provision is but one part of a concluded an otherwise legally enforceable contract, the court will strain to find a construction which gives it effect. For that purpose it may imply criteria or supply machinery sufficient to enable the court to determine both what process is to be followed and when and how, without the necessity for further agreement, the process is to be treated as successful, exhausted or properly terminated. The court will especially readily imply criteria or machinery in the context of a stipulation for agreement of a fair and reasonable price.”

I agree with these observations. In this case I consider that the only missing ingredient, the rate of the adjudicator’s daily fee, is one that can readily be assessed by the court in default of agreement. Courts such as this one are well equipped to assess what is a reasonable level of fee for an adjudicator in this type of situation. In this case the adjudicator put his proposals to the parties in respect of his fees and neither party challenged them. I doubt if the court would have much difficulty in concluding that the figures that he proposed were reasonable (although I am not expressly deciding this).

As I have already mentioned, Ms. Sinclair also relied on the requirement for the Dispute Adjudication Agreement to be signed by all the parties before it became effective. I see nothing in this. If a party without good reason refused to sign the agreement, I cannot see why it could not be compelled to do so by an order for specific performance at the suit of one or more of the other parties. I therefore reject Ms.  Sinclair’s submissions that the contract is unenforceable.

Reverting to sub-clause 20.8, my conclusions are clear. First, the words “if a dispute arises ... and there is no DAB in place” apply to a situation where there is no DAB in place at the time when the dispute arises. If it were otherwise, as Miss Day pointed out, the provisions of sub-clauses 20.2 and 20.3 could never have any application because, by definition, under those sub-clauses there has to be a dispute in existence before the process of appointing a DAB can begin. Thus in every case where sub-clause 20.2 or 20.3 applies there will be in existence a dispute but no DAB. Thus, since under sub-clause 20.8 sub-clause 20.4 is disapplied, on Ms.  Sinclair’s approach to the construction of sub-clause 20.8 there can never be a reference of a dispute to adjudication in any contract which provides that the DAB is to be appointed in accordance with the provisions of sub-clause 20.2 or sub-clause 20.3.

It seems to me that sub-clause 20.8, which is in the same form in all three of the FIDIC Books, probably applies only in cases where the contract provides for a standing DAB, rather than the procedure of appointing an ad hoc DAB after a dispute has arisen. Ironically, Ms.  Sinclair said that the position was precisely the opposite: in her skeleton argument she submitted that the parties could prevent clause 20.8 from operating at all by appointing a standing DAB. I have to confess that I did not understand this point, but it shows that Ms. Sinclair was not suggesting that the fact that, depending upon the dispute resolution procedure chosen, sub-clause 20.8 might not have any application was fatal to what I would otherwise consider to be the correct construction of the conditions.

In addition, I do not accept Ms.  Sinclair’s submissions about what is meant by the phrase “no DAB in place”. The right to refer a dispute to adjudication arises under sub-clause 20.4.1 as soon as a DAB has been appointed, whether under sub-clause 20.2 or 20.3. It is quite clear from the words “final and conclusive” in sub-clause 20.3 that the process of appointment is complete once the nominating body has “appointed” the adjudicator. That must mean the identification of a particular person as the adjudicator because the appointing body cannot make the Dispute Adjudication Agreement for the parties. In my judgment, therefore, a DAB is “in place” once its member or members have been duly appointed in this way because from that moment onwards a dispute can be referred to it. Not even Humpty Dumpty would suggest that a dispute could be referred to a DAB that was not in place.

For all these reasons, therefore, I reject the Council’s submissions that sub-clause 20.8 gives it a unilateral right to opt out of the adjudication process, save in a case where at the outset the parties have agreed to appoint a standing DAB and that, by the time when the dispute arose, that DAB had ceased to be in place, for whatever reason. Further, I also reject the Council’s submissions that the adjudication provisions in the contract are unenforceable.

Accordingly, I accept EMS’s case that the contract requires that the determination of the current dispute is to be by way of adjudication and amicable settlement under sub-clauses 20.4 and 20.5 and, only failing that, by litigation.

Both parties accept that the court has an inherent jurisdiction, which involves an exercise of judicial discretion, to order a stay of the claim brought by the Council. The question is whether this is an appropriate case in which the court should exercise that discretion in favour of EMS.

Ms. Sinclair submitted that any decision by the DAB would almost inevitably provoke a notice of dissatisfaction from one or other party. Accordingly, to embark on the fairly lengthy (and therefore expensive) adjudication procedure under the contract would be a wholly or at least largely unproductive exercise. She submitted that the dispute raises complex questions of construction and application of legislation, mandatory codes and standard industry practice and will require extensive disclosure. She submitted also that the “rough and ready” process of adjudication is entirely inapt to resolve this dispute.

As to this last point, Ms.  Sinclair may well be correct, but that is nothing new: the complexity of a potential dispute about when the required power output was achieved was foreseeable from the outset, yet nevertheless the parties chose to incorporate the adjudication machinery in the FIDIC form of contract. If Ms. Sinclair is right to describe this type of adjudication as a “rough and ready” procedure, then both parties agreed to have it.

Nevertheless, I have some sympathy with Ms. Sinclair’s submissions. This is not a case where either party has invested any time or money on the preparation for or conduct of an adjudication, and so it can be fairly said that it is better to have one, if more expensive and extensive, dispute resolution procedure than to take the real risk that this will be required in any event in addition to an adjudication. If no other factors were in play, I would be tempted to accede to Ms. Sinclair’s submissions because the rival scenarios are quite finely balanced and, if anything, are perhaps tipped in the Council’s favour.

However, there is another factor in play. As the authorities clearly show, there is a presumption in favour of leaving the parties to resolve their dispute in the manner provided for by their contract: see DGT Steel and Cladding v Cubitt Building [2007] BLR 371, and the cases referred to at paragraphs 5 to 11 of the judgment.

Whilst Miss Day acknowledged that the dispute was clearly difficult because the parties had not managed to settle it at the mediation, she submitted that it cannot be assumed that the parties would adopt the same positions in the light of a reasoned decision from an adjudicator. Alternatively, she submitted that, even if the adjudicator’s decision were not accepted by one or other party, it might nevertheless provide a starting point from which the parties could settle the dispute. She submitted that it cannot and should not be assumed that an adjudication would serve no purpose.

Although, as I have already indicated, on purely practical grounds the pragmatist in me would tend to favour the contentions of Ms. Sinclair (if all other things were equal), I consider that the various factors are too finally balanced for me to conclude that, overall, the Council has made out a sufficiently compelling case to displace the presumption in favour of adopting the method of dispute resolution chosen by the parties in their contract.

For these reasons, I conclude that the Council has not made out a sufficient case for resisting a stay. Accordingly, the action must be stayed and the parties left to resolve their dispute in accordance with the contractual machinery in the light of the matters discussed in this judgment.