Case Digest: Cadent Gas Ltd v CityFibre Ltd [2025] EWHC 910 (Comm)

<center><span class="news-text_italic-underline">Judgment Date: 16 April 2025</center>

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Background

Pursuant to Section 67 of the <span class="news-text_italic-underline">Arbitration Act 1996</span>, a gas distribution company</span> (the “<span class="news-text_medium">Company</span>”) challenged an arbitrator's ruling that he had jurisdiction to determine a dispute referred to him under Part III, Section 96(3) of the <span class="news-text_italic-underline">New Roads and Street Works Act 1991</span> (the “<span class="news-text_medium">1991 Act</span>”).

The Company was a statutory undertaker which had a licence to carry out street works. When carrying out such works, it allegedly damaged network cables belonging to an internet provider (the “<span class="news-text_medium">Internet Provider</span>”). The Internet Provider sought to recover the cost of repairing the damage (amounting to some £7,000) under Section 82(1)(b) of the 1991 Act, which provided that an undertaker which damaged another's apparatus while performing street works should "compensate" the injured party for its reasonable expenses incurred in repairing the damage. It also sought to recover administrative expenses under s.96(1) of the 1991 Act.

To recover its expenses, the Internet Provider initiated arbitration proceedings under s.96(3) of the 1991 Act. That subsection mandated that disputes concerning a party's entitlement to recover remediation and administrative expenses under Part 3 of the 1991 Act were to be resolved through arbitration, unless the provision under which recovery was being pursued was "expressed ... as conferring a right to compensation" (the carve-out).

The arbitrator issued a partial award, ruling that he had jurisdiction to determine the dispute. The issue was whether s.82(1)(b) was "expressed ... as conferring a right to compensation" thereby falling within the scope of the carve-out and requiring the dispute to be resolved through litigation rather than by arbitration.

Held

• <span class="news-text_medium">Interpretation of Sections 82(1) and 96(3):</span> The Court found that section 96(3) of the 1991 Act generally mandates arbitration for disputes over costs related to street works. However, the carve-out under section 96(3) applies to provisions “expressed as conferring a right to compensation” such as sections 82(1)(a) and 82(1)(b). The language “an undertaker... shall compensate” in section 82(1) directly indicates an entitlement to compensation and thus these provisions fall within the carve-out and are excluded from the arbitration requirement. As a result, the arbitrator had no jurisdiction to hear the dispute and the relevant paragraphs of his partial award were set aside.
• <span class="news-text_medium">Bifurcation of Claims:</span> The Court also addressed the issue of whether the claim for administrative expenses under section 96(1) could be bifurcated, with the remediation costs under section 82(1)(b) being determined through litigation and the administrative expenses being resolved through arbitration. The Court concluded that the claim for administrative expenses under section 96(1) formed part of the substantive claim for compensation under section 82(1)(b). Consequently, the entire claim had to be resolved in a single forum, specifically the Court, rather than being split between arbitration and litigation.