GMC Utilities Group Ltd v Sumitomo Electric Industries Ltd

The Defendant, SEI, was the main contractor in relation to the construction of an undersea electricity interconnector between Pembrokeshire, Wales and Wexford, Ireland. Under a sub-contract dated 8 August 2022, SEI contracted the installation and associated civil works package for the onshore direct cable work to the Claimant, GMC.

GMC commenced its works in September 2022. Under the sub-contract, practical completion of GMC’s physical works (which has been referred to as “PC”) was meant to take place on 14 June 2024. PC in fact took place on 4 July 2024. Take-Over of GMC’s works was originally certified as having taken place on 27 November 2024, although pursuant to an adjudication between the parties commenced by SEI, the Taking-Over Certificate has been opened up and revised such that Take-Over took place on 31 July 2024.

On 28 October 2024, SEI made a demand under a performance bond dated 24 October 2022 contending that GMC did not fulfil its obligations under the sub-contract due to a failure to meet the Taking-Over Date with the result that delay damages applied. The demand was made of Credendo-Guarantees & Speciality Risks International Guarantees Department (“the Issuer”).

That call on the performance bond prompted discussions between the parties. Those discussions were directed to avoiding payment of the performance bond and instead having GMC pay the sum demanded into an escrow account pending final agreement between the parties.

During those discussions on 8 November 2024 Michelmores, GMC’s then solicitors, wrote a letter to Watson Farley & Williams LLP, solicitors to SEI. The letter is central to the dispute between the parties and I set out the letter in full:

An Escrow Agreement was subsequently agreed between the parties on 19 December 2024 with The Law Debenture Trust Corporation plc as the Escrow Agent.

There are two claims before the Court. Central to those claims are the letter of 8 November 2024 and the Escrow Agreement. By a Part 8 claim issued on 9 October 2025 GMC seeks the following declarations at paragraphs 25.1 to 25.3:

SEI counterclaims in the same proceedings seeking the following declaration:

In separate and earlier Part 7 proceedings issued on 5 March 2025, GMC claims its alleged entitlement under the sub-contract, alternatively damages. The following declaratory relief is also sought:

There is a related application by SEI to strike out part of GMC’s reply evidence in the Part 8 proceedings. The application notice is dated 23 January 2026 and I can deal with this matter briefly.

GMC’s Reply and Defence to Counterclaim in the Part 8 proceedings comprised a witness statement from Steven Carey of Charles Russell Speechlys dated 24 November 2025. Paragraph 6.2 of that statement stated:

In his oral submissions Mr Wygas, who appears on behalf of GMC, conceded that the additional declaratory relief, if to be pursued, should be part of the Part 8 Particulars of Claim. That concession was properly made and is consistent with the decision of Pepperall J. in Martlet Homes Ltd v Mulalley & Co Ltd [2021] EWHC 296 (TCC). It follows that paragraph 6.2 of the witness statement of Steven Carey dated 24 November 2025 is struck out pursuant to CPR Rule 3.4(2)(a). No application was made to amend the Part 8 Particulars of Claim.

As set out above, GMC was a subcontractor to SEI. For the purposes of the issues before me, the following clauses of that sub-contract are material:

On GMC’s case, it is necessary to consider the earlier exchanges between the parties to understand the context to the letter of 8 November 2024 set out at paragraph 5 above.

It is only necessary to consider exchanges from the previous day when by email sent at 8:39pm on 7 November 2024, Michelmores LLP attached a letter to Watson Farley & Williams LLP making a counter-offer on behalf of GMC as part of the ongoing negotiations. The email stated:

That email was headed “Without prejudice save as to costs and subject to contract”. The letter attached was in the following terms:

The following day on 8 November 2024, by email sent at 12:37 and marked “Without prejudice save as to costs”, Watson Farley & Williams LLP responded:

Michelmores LLP replied later that day at 1:54PM in the following terms, again, headed “Without prejudice save as to costs”:

Watson Farley & Williams LLP responded in turn later that day at 15:16. At this stage, the response was not headed “Without prejudice save as to costs”, neither was it headed “Subject to Contract”. It stated:

The email exchanges set out above are those referred to in the first paragraph of the letter of 8 November 2024 set out at paragraph 5 above.

What divides the parties is whether the letter of 8 November 2024 comprises a binding agreement between the parties as submitted by Mr Selby KC and Mr Thompson on behalf of SEI, or whether there is no binding agreement because the letter of 8 November 2024 is properly construed as part of an exchange which is subject to contract. In making that submission, Mr Wygas, on behalf of GMC, notes that the Escrow Account, as the contract ultimately agreed, was not agreed until 19 December 2024.

When seeking to interpret the letter of 8 November 2024 the parties accept that the negotiations leading to the letter of 8 November 2024 are not admissible as an aid to interpretation of the terms alleged to have been agreed (see for example Chartbrook v Persimmon Homes Ltd [2009] 1 AC 1101). In support of his submission that there was no agreement on 8 November 2024 and that the letter was subject to contract Mr Wygas went through such documentation to demonstrate the length of time it took to conclude the Escrow Agreement and that during the negotiations there were disagreements on certain terms. I was not assisted by that exercise. It is clear from the documents to which I have already referred that the Escrow Agreement took some time to conclude. For present purposes, it is sufficient to note that in exchanges on 6 November 2024 headed “Without prejudice save as to costs and subject to contract”, Michelmores LLP wrote to Watson Farley & Williams seeking SEI’s agreement to an Escrow Agreement being arranged with Law Debenture. By response sent the same day, Watson Farley & Williams accepted the proposal. A draft Escrow Agreement under Law Debenture was provided by Michelmores LLP “subject to contract” on 8 November 2024.

As noted at paragraph 6 above, the terms of the Escrow Agreement were agreed on 19 December 2024 with The Law Debenture Trust Corporation plc as the Escrow Agent. So far as material to this judgment, the Escrow Agreement contained the following terms:

On 20 December 2024, the day following agreement of the Escrow Agreement, SEI wrote to the Issuer cc GMC, sent by e-mail marked “URGENT”, stating:

This wording is consistent with that required by paragraph 4 of the letter of 8 November 2024.

As set out above, GMC submits that the letter of 8 November 2024 did not comprise an agreement between the parties but was merely a step in negotiations being undertaken “subject to contract”. Reliance is placed on the correspondence referred to in the first paragraph of the letter which, as set out above, commenced expressly “subject to contract”. As such, GMC submits that there is no agreement to pay the Escrow Sum to SEI on 7 March 2025 in the circumstances set out at numbered paragraph 6 of the letter of 8 November 2024.

GMC also submits that numbered paragraph 1 of the letter of 8 November 2024 is an agreement to agree and unenforceable. Paragraph 1 comprises an undertaking by Michelmores LLP to SEI, on behalf of GMC, to pay the Escrow Sum into an agreed escrow account. As already noted, GMC relies on the time it took to conclude the Escrow Agreement.

In contrast, SEI submits that numbered paragraphs 1 to 6 contain the core terms of an agreement reached between the parties, for consideration, under which GMC agreed to pay monies into escrow in return for SEI’s agreement not to seek payment from the Issuer of the monies called under the performance bond.

The meaning and effect of negotiations subject to contract was considered by the Supreme Court in RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG(UK Production) [2010] UKSC 14. In delivering the judgment of the court, Lord Clarke stated:

Mr Wygas relies on Generator Developments Limited v LIDL UK GmbH [2018] EWHC Civ 396. In that case Lewison LJ. (with whom Longmore LJ. and Rose J. agreed) considered whether, on the facts of the case, there was an agreement or understanding that if Lidl acquired property, the subject matter of the proceedings, Generator would obtain some interest in it. In giving reasons why Generator’s claim could not succeed, it was stated:

Mr Wygas also relies on the later decision of the Court of Appeal in Joanne Properties Limited v (1) Moneything Capital Limited, (2) Moneything (Security Trustee Limited [2020] EWCA Civ 1541. As set out in the judgment of Lewison LJ., with whom Rose and Stuart Smith LJJ. agreed, the issue in the appeal was whether the parties had entered into a binding contract of compromise. Before noting what the Supreme Court said at paragraphs 47 and 56 of RTS,Lewison LJ. reviewed earlier authorities:

The principles set out in the authorities to which I have been referred were not seriously in issue. It is clear that negotiations started “subject to contract” can conclude without that condition both by express agreement or by implication that the condition was no more to be applied or by waiving the same. For the purposes of this judgment, I do not consider the extent of any difference in this context between the requirements for waiver and those leading to a necessary implication that parties were no longer proceeding “subject to contract”. In all cases what must be borne in mind, as emphasised in RTS, is that the court will not lightly hold that such a waiver exists or implication can be made.

Applying the principles set out above to the facts of this case I am unable to accept GMC’s submission that no agreement was reached between the parties until the conclusion of the Escrow Agreement on 19 December 2024. It is clear from the opening paragraph of the letter of 8 November 2024, confirming acceptance of GMC’s offer, that GMC considered a concluded agreement had been reached in the correspondence to which reference is made and was no longer proceeding “subject to contract”. Either expressly or by implication this removes any prior “subject to contract” condition. Consistent with such a conclusion, the letter contains no such heading. Indeed such a heading appears on none of the correspondence passing between the parties after SEI purports to accept the 7 November counter-offer in its e-mail of 12:37 on 8 November 2024. Further the letter of 8 November 2024 no longer contains the reservation of rights which was stated at the conclusion of the letter of 7 November 2024. This is also consistent with the parties having reached agreement as to how they would regulate their relationship with regard to the monies demanded under the performance bond.

Having noted the headings to the correspondence referred to in the first paragraph of the letter of 8 November 2024 I make clear that this is in no way determinative on its own if they form part of a negotiation which commenced “subject to contract”. Subsequent exchanges are not required to bear that heading. Indeed it is unclear why the confirmation email of 8 November 2024 timed at 12:37 was marked “without prejudice save as to costs.” It may be a reflection that the terms of the timing of the undertaking were yet to be agreed and that SEI believed it would have some protection on costs in having made clear that the balance of the terms were accepted. It may be a reflection of the e-mail to which it responded being headed “Without prejudice save as to costs and subject to contract”. Whatever the reason, the position on the undertaking having been clarified later that day, SEI’s acceptance of the same contained no reservation, neither was it headed “subject to contract”.

The background context to this agreement was an anticipated imminent payment by the Issuer. That urgency is reflected in numbered paragraph 3 of the letter of 8 November 2024 which, upon Michelmores LLP providing an undertaking to pay the Escrow Sum into an agreed escrow, requires SEI to immediately write to the Issuer to confirm that the parties are looking to reach a compromise and the payment is not to be made.

Consistent with the existence of such a requirement, by e-mail marked “URGENT” and sent on 8 November 2024 to the Issuer, cc GMC, SEI referred to the demand and advised the Issuer that SEI and GMC: “are looking to reach a compromise and the payment under the Performance Bond is not to be made until further instruction”. That wording reflects the wording in numbered paragraph 3 of the letter of the 8 November 2024.It will be noted that the trigger for the letter to the Issuer is not the establishment of the Escrow Account but an undertaking to pay the Escrow Sum into an agreed escrow account. Similarly, as noted above, the letter to the Issuer on 20 December 2024 was consistent with the requirements of numbered paragraph 4.

It is also noteworthy that in none of the exchanges after 8 November 2024 was it suggested that the conclusion of the Escrow Agreement was a pre-condition to a binding agreement on the terms of the letter of 8 November 2024. The correspondence concerning the Escrow Account was a separate chain of negotiations.

Whilst not at the forefront of the submissions made by Mr Wygas, I am similarly unable to accept that paragraph 1 of the letter of 8 November 2024 is unenforceable, being an agreement to agree. Numbered paragraph 1 is an undertaking to pay a sum into an agreed Escrow Account on terms set out in the letter itself. I see no difficulty with this. There was no reason to believe the Escrow Account would not be agreed and, as set out above, agreement was reached on 19 December 2024.

Mr Wygas draws attention to numbered paragraphs 2 and 4 of the letter of 8 November 2024 which he notes, correctly, require the existence of an Escrow Account. I do not see that the absence of an agreed Escrow Account as at 8 November 2024 assists GMC in demonstrating that there was no concluded contract in the form of the letter of that date. Indeed, numbered paragraph 2 recognises that the obligation is one yet to be performed as apparent from the word “within one business day of the establishment of the Escrow Account”.

It follows that SEI’s alternative case that an agreement was concluded by part-performance in the letter being written to the Issuer pursuant to numbered paragraph 3 does not strictly arise. SEI gave good consideration for the agreement in agreeing to compromise, on terms, its right to call for payment by the Issuer of the Performance Bond. Had that not been the case, then the part performance would have been relevant as concluding the agreement.

In considering the period subsequent to the letter of 8 November 2024, Mr Selby referred to a letter from Pinsent Masons, then acting for GMC, to Watson Farley & Williams LLP. Paragraph 2 of that letter, dated 10 February 2025, stated:

It was submitted that those acting for GMC considered that to be an agreement in the terms of the letter of 8 November 2024 (it being common ground before me that the reference to the letter of 7 November 2024 should be to 8 November 2024). Again, I am not assisted by the views expressed. The observation appears more of a “jury point” than one which is directly relevant as to the question of whether a concluded contract has been reached. I also note that two days later, on 12 February 2025, Pinsent Masons, having apparently received further instructions, stated:

This reflects the position submitted before me to which I now turn.

Whilst Pinsent Masons’ letter of 12 February 2025 does not identify the basis by which the letter dated 7 [sic] November 2024 was superseded, GMC relies on condition 14.2 of the Standard Conditions of the Escrow Agreement. As set out above, this provides: Neither Party shall rely on, nor shall have any remedy in respect of any agreement by any other Party or any other person or party, except as expressly set out in the Agreementand in respect of which its sole remedy shall be for breach of contract. Any such promise, assurance, agreement, statement, warranty, undertaking or representation, including any advertising or description contained in any catalogue or brochure, is hereby excluded and withdrawn.

I do not read condition 14.2 as extending to the agreement in the letter of 8 November 2024 in the manner submitted. As part of the Standard Conditions, condition 14.2 relates to the operation of the Escrow Account. This is consistent with condition 2.3 which provides that the Agreement, as defined, shall constitute the whole agreement between GMC and SEI as the Transaction Parties and the Escrow Agent.

The Escrow Agreement expressly recognises the possibility of Supplemental Agreements, being any other agreements between one or both of the Transaction Parties which relate to the underlying reason for entering into the Agreement. This would include the agreement in the letter of 8 November 2024. However, condition 5.2 is an express acknowledgement and agreement by the Parties that the Escrow Agent is not bound by any Supplemental Agreement nor shall the Escrow Agent be treated as having actual constructive or implied knowledge of any of the terms of any Supplemental Agreement. This provision is wholly consistent with the preceding condition 5.1 that the responsibilities of the Escrow Agent under the Agreement are administrative only and are to be treated as separate and distinct from any obligations agreed in the letter of 8 November 2024.

It should also be noted that clause 10 of the Escrow Agreement provides that the parties shall submit to the exclusive jurisdiction of the courts of England and Wales. This suggests that the provisions of clause 4.1.2 of the same agreement, referring to an order of a duly appointed adjudicator, court or competent arbitral tribunal, recognises the continuing effect of the letter of 8 November 2024 and further supports the construction of the Escrow Agreement as having a more limited scope than submitted by GMC.

If, contrary to that interpretation, there is a conflict between condition 14.2 of the Standard Conditions and the Escrow Agreement then, pursuant to condition 2.4 of the Standard Conditions, the Escrow Agreement takes precedence. In that regard, Recital (B) to the Escrow Agreement expressly provides that the appointment of the Escrow Agent is further to the Supplemental Agreements. This is consistent with the Escrow Agreement providing the terms of the security to be provided to further what has been agreed in the Supplemental Agreement of 8 November 2024.

Condition 19.5 of the Standard Conditions set out above reflects this interpretation providing an express agreement between the Parties that the arrangements set out in the Standard Conditions are designed solely to provide a mechanism for the deposit in escrow of, and the release from escrow of, the Escrow Monies in the manner contemplated by the Agreement.

In large part this has already been addressed, however, a specific issue arises as to the effect of clause 4.1 of the Escrow Agreement. As set out above, this provides for circumstances in which the Escrow Agent shall transfer some or all of the Escrow Monies. It is in terms different to those set out at numbered paragraph 6 of the letter of 8 November 2024 and the issue of interpretation which arises is whether the parties should be taken to have agreed that the provisions of paragraph 6 are superseded by the terms subsequently agreed on 19 December 2024.

I can deal with this shortly. Whilst numbered paragraph 6 and clause 4.1 are in different terms, they are not incompatible. Clause 4.1 of the Escrow Agreement anticipates monies being paid out either, under clause 4.1.1 by agreement between GMC and SEI or, in the absence of agreement, under clause 4.1.2 by an order of a duly appointed adjudicator, court or competent arbitral tribunal containing a declaration as to the Transaction Parties’ respective entitlement to the Escrow Monies in the Escrow Account.

Numbered paragraph 6 provides for transfer on agreement between the parties. It also provides for release pursuant to a decision by a duly appointed adjudicator, an order of a court or competent arbitral tribunal on the issue of GMC’s claims for extensions of time, and SEI’s claim for delay damages.

On the basis, as I find, that the letter of 8 November 2024 is a concluded agreement between the parties and falls within the definition of a Supplemental Agreement for the purposes of the Escrow Agreement, the reference to the Transaction Parties’ respective entitlement as to the Escrow Monies at clause 4.1.2 can and should be read as referring to numbered paragraph 6 of the letter of 8 November 2024. By paragraph 6, that respective entitlement is the sum that is consequential on the resolution of the issue of GMC’s claims to extensions of time and SEI’s claims for delay damages.

Similarly, whilst clause 4.1 of the Escrow Agreement makes no reference to 7 March 2025 whether in the terms of paragraph 6 of the letter of 8 November 2024 or at all, that is unnecessary. In the event that there has been no agreement between the parties or decision by a duly appointed adjudicator or commencement of court or arbitral proceedings on the Claims by 7 March 2025 then this state of affairs should be something which is capable of agreement such that the Transaction Parties can instruct the Escrow Agent accordingly to pay the Escrow Sum to Sumitomo under clause 4.1.1. Should such agreement, reflected in a written instruction by both Parties, prove impossible, the dispute as to the state of affairs on 7 March 2025 would be determined by order of a duly appointed adjudicator, court or competent arbitral tribunal. Both these two events are anticipated by clauses 4.1.1 and 4.1.2 respectively. That resolution is to what the Part 8 proceedings before me are directed.

It also follows that, contrary to the submission made by Mr Wygas, I do not read numbered paragraph 6 as addressing release of the Escrow Sum by Michelmores LLP. Such a construction is unsupportable having regard to numbered paragraphs 1, 2 and 4 which anticipate and provide for the Escrow Sum being paid by Michelmores into the Escrow Account.

It also follows that I reject a construction of clause 4.1.2 of the Escrow Agreement as requiring determination of the Parties’ respective claims in their totality. The entitlement relates to the Claims as defined in paragraph 6 of the letter of 8 November 2024.

Finally I turn to the provisions of clause 7 of the Escrow Agreement which, as set out above, address termination. The effect of clause 7.2 is that, absent agreement between the Parties, the Escrow Agreement shall automatically continue in full force on a rolling basis on the expiration of two years from the Commencement Date of 19 December 2024. The potential for the Escrow Account to continue in perpetuity is not of particular assistance on the issue of interpretation. Whilst it is right to observe that the letter of 8 November 2024 anticipates the Escrow Sum being paid out on 7 March 2025, that is only in certain specified circumstances. Absent those circumstances, the Escrow Sum remains in the Escrow Account, and so provision needs to be made for that account to continue. That is the purpose of clause 7 of the Escrow Agreement.

I have already rejected GMC’s submission that, if the letter of 8 November 2024 is a binding agreement between the Parties, paragraph 6 governs release of the Escrow Sum by Michelmores LLP. I therefore turn to consider whether paragraph 6 has been complied with and if so, what are the consequences.

GMC relies on the Part 7 proceedings issued on 5 March 2025 as precluding the payment of the Escrow Sum to SEI. As set out above, those proceedings sought declaratory relief as to the entitlement of SEI to levy liquidated damages. Given the definition of Claims in numbered paragraph 6 comprises GMC’s claims for extensions of time and SEI’s claims for delay damages, it is clear that GMC has issued court proceedings on the Claims by Friday, 7 March 2025.

At paragraphs 77.1 to 77.4 of its skeleton argument, SEI submits that GMC had no genuine intention of pursuing those proceedings and as such, there was no compliance with numbered paragraph 6 as properly construed, alternatively that the proceedings were an abuse. At the outset of his oral submissions, Mr Selby made clear that this part of SEI’s case was not pursued. Again, that was a sensible stance, the result of which there is no need to look in particular detail at the Part 7 proceedings. I would nevertheless observe that the Particulars of Claim served by GMC extend to 77 pages and 409 paragraphs, advancing claims for variations and extension of time. The claim for extension of time is to the Time for Completion such that there is no liability for liquidated damages (paragraphs 403 and 404 refer).

SEI submits that GMC has not satisfied the requirements of numbered paragraph 6 on the basis that the reference to “commencement of court or arbitral proceedings on the Claims” meant such proceedings as were applicable to the Claims. On the basis that disputes under the sub-contract are subject to the arbitration agreement at clause 20.12, SEI submits that those were the proceedings which should have been issued.

I am unable to accept that submission. The parties were at liberty to agree any criteria to prevent payment of the Escrow Sum to SEI. They need not even have required the issue of proceedings, arbitral or otherwise. It follows that whilst the commencement of court proceedings on the Claims may be liable to be stayed to arbitration, that is no answer to GMC satisfying one of the criteria agreed by the parties. In any event, a stay does not have the effect of making such proceedings void ab initio.The proceedings were validly commenced, they continued but would be stayed to arbitration on an appropriate application. It is not suggested that, absent any stay, the Court would not have jurisdiction to determine the Claims. The Court clearly has that jurisdiction.

There is nothing in numbered paragraph 6 which requires arbitration proceedings to be commenced to the exclusion of court proceedings. I do not consider the reference to court proceedings was to allow for the future possibility of the parties agreeing to Court as the proper forum for the Claims, as submitted by SEI. Indeed, there would be no need for such agreement. If, when court proceedings are issued, SEI wished to have the matter resolved in Court, it could simply allow the proceedings to proceed without making an application under section 9 of the Arbitration Act 1996. Similarly consistent with the anticipation that numbered paragraph 6 may be satisfied other than simply by arbitration proceedings, clause 4.1.2 of the Escrow Agreement anticipates release of the Escrow Monies on receipt of an order from a duly appointed adjudicator, a court or competent arbitral tribunal.

For these reasons I conclude that, in issuing its Part 7 proceedings, on 5 March 2025 GMC has complied with the provisions of numbered paragraph 6 of the letter of 8 November 2024 with the effect that the Escrow Sum does not become payable to SEI under the provisions of that paragraph.

Given my decision that paragraph 6 has been complied with by GMC, the question of estoppel does not strictly arise for determination. I address it for the sake of completeness.

In his first witness statement, Steven Carey states that out of an abundance of caution, GMC commenced a Part 7 claim on 5 March 2025. That abundance of caution referred to issuing proceedings before 7 March 2025 notwithstanding GMC’s position that the deadline of 7 March 2025 was not incorporated into the Escrow Agreement.

Mr Carey goes on in his evidence as follows:

It is that evidence on which GMC seeks to establish an estoppel by representation.

There are a number of difficulties with this estoppel claim. It is unclear whether the abundance of caution and reliance is that of GMC or Charles Russell Speechlys as the firm having conduct on behalf of GMC. Whilst the letters were written directly to GMC, on the understanding that Pinsent Masons was no longer acting on GMC’s behalf, it must be assumed that the Part 7 proceedings were issued on the advice of Charles Russell Speechlys. It is Mr Carey’s name which appears in the Statement of Truth on the Claim Form.

Considering the first letter in time of 19 February 2025, paragraph 10 of that letter commences:

This is a clear indication that Watson Farley & Williams considered that any dispute would ultimately need to be resolved by arbitration rather than court proceedings. This immediately follows the paragraph relied on which, in my judgment, does no more than recite the terms of paragraph 6 of the letter of 8 November 2024, as it purports to do.

Given that the letter of 5 March 2025 refers back to the letter of 19 February 2025, the position as to any representation remains unaltered.

The written submissions served by the parties did not address the issue of estoppel in any detail. Subsequent to the oral hearing, the parties agreed that the relevant test for estoppel by representation is that set out in Chitty on Contracts 36th Ed. between paragraphs 7-05 and 7-15. By reference to that agreed statement of law, I find the claim for estoppel fails for a number of reasons. Firstly, the representation alleged is not sufficiently clear and unqualified if, contrary to my reading of the letters relied on, the representation alleged is made at all. Paragraph 10 of the letter of 19 February 2025, taken at its lowest, robs paragraph 9 of any claim to be a clear and unqualified representation as alleged by GMC. Secondly, if the representation alleged has been made, I do not consider it was intended to be relied upon. That intention, assessed objectively, does not follow from a fair consideration of both letters and, in particular, paragraph 10 of the letter of 19 February 2025 to which letter the subsequent letter of 5 March 2025 also refers.

I make clear that I am rejecting the claim for estoppel without making any finding as to reliance by Mr Carey or GMC. As indicated at the outset of argument, I had difficulty in seeing how such a finding could be made in these Part 8 proceedings and having considered his position, Mr Selby made clear that he would wish to cross-examine Mr Carey as to his evidence on reliance should the issue arise for determination.

For these reasons, I would have rejected GMC’s case on estoppel by representation.

I mention these proceedings to make clear the extent to which they are relevant to the matters before me.

On 25 June 2025, SEI issued adjudication proceedings. The dispute referred related to SEI’s entitlement to delay damages from GMC. As such, these proceedings clearly post-dated the date of 7 March 2025 referred to at paragraph 6 of the letter of 8 November 2024.

Robert Evans, as Adjudicator, provided his Decision on 17 October 2025, corrected on 22 October 2025. As set out between paragraphs 71 and 74 of the Decision, SEI had chosen not to refer what was described as “Pre-PC Delay” to adjudication. That is the period between the time for completion stated in the sub-contract of 15 June 2024 and the actual physical completion achieved and certified by SEI on 4 July 2024, 52 days after the planned date of 13 May 2024. It is this period of 52 days which is used in the calculation of delay for the purposes of delay damages.

As set out at paragraph 418(i) of his Decision, Mr Evans decided that SEI had no entitlement to delay damages as claimed. Further, the Taking-Over Certificate was opened up and revised with the Taking-Over Date adjusted to 31 July 2024.

The precise meaning and effect of this Decision was in issue before me because, on GMC’s case, the rejection of SEI’s delay case reduced the maximum sum that could have been payable to SEI under the operation of paragraph 6 of the letter of 8 November 2024.

I understand that a further adjudication is progressing between the parties with a decision expected sometime in April 2026. I do not have the details of that adjudication, but understand from counsel that one of the issues is the meaning and extent of Mr Evans’ Decision of October 2025. Neither Party asks this Court on the present applications to determine disputed issues of extensions of time and liquidated damages.

As a result of the strikeout of paragraph 6.2 of the statement of Steven Carey, GMC does not seek a determination of the sum due and payment out from the Escrow Account. SEI sought the Escrow Sum on the basis that, by 7 March 2025, GMC had not satisfied the conditions in paragraph 6 of the letter of 8 November 2024 with the result that the Escrow Sum became payable to SEI. I have found against SEI on that point.

In those circumstances, I do not address whether SEI’s decision not to put the totality of its Delay Claim before the Adjudicator affects the sum that might otherwise be payable to SEI under the provisions of the agreement of 8 November 2024.

I turn, finally, to the stay application.

Section 9 of the Arbitration Act 1996 provides:

SEI seeks to stay the Part 7 proceedings to arbitration. It is not in issue that the sub-contract between the parties contains an arbitration clause, at clause 20.12. Two questions arise for determination. Firstly, whether the Part 7 proceedings fall within the definition of a Dispute and if so, whether on a proper construction of the agreements between the parties, the arbitration clause has been overtaken by the Escrow Agreement and in particular the exclusive jurisdiction provision at clause 10.1.

In Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40, Lord Hoffmann set out the proper interpretation of arbitration agreements, in particular, between paragraphs 11 and 13:

This approach was repeated in Sebastian Holdings Inc v Deutsche Bank AG [2010] EWCA Civ 998 where the Court of Appeal considered the proper construction of jurisdiction clauses in a series of agreements between a bank and its customer, most of which provided for the jurisdiction of the English courts with one providing for the jurisdiction of the courts of New York. In his judgment (with which Pitchford and Mummery LJJ. agreed), Thomas LJ. set out the applicable principles as follows:

Having considered in detail a number of authorities on this issue, Thomas LJ concluded at paragraph 49:

The authorities on this issue were again reviewed in Surrey County Council v Suez Recycling and recovery Surrey Limited [2021] EWHC 2015 (TCC) where Alexander Nissen QC, sitting as a Judge of the High Court, also referred to the Decision of Coulson J., as he then was, in Costain Ltd v Tarmac Holdings [2017] EWHC 319, noting that the “one-stop” jurisdiction, whilst a useful starting point, was not decisive.

I do not propose to add to the foregoing analysis. I will adopt the suggested careful and commercially minded construction of the agreements noting that a one-stop jurisdiction is not decisive.

Applying that approach, it is clear that the majority of the declaratory relief sought by GMC falls within the scope of the arbitration clause. The only question is whether that arbitration clause is wide enough to cover the declaratory relief at paragraph 409.3 that GMC is entitled to EUR3,351,158.20 held in escrow, and SEI is not entitled to any of the funds held in escrow. I consider this is a dispute arising between the parties in connection with the sub-contract. In consequence, the totality of the Part 7 proceedings fall within the scope of the arbitration agreement at clause 20.12.1. Further, such a construction is consistent with the starting assumption that the parties are likely to have intended any dispute arising out of the relationship into which they have entered to be decided by the same tribunal. I reject the submission that the exclusive jurisdiction clause at clause 10.1 in the Escrow Agreement supersedes the arbitration clause in the sub-contract. For the reasons set out above, it does not purport to do so. The Escrow Agreement is directed to the administration of the Escrow Sum. Further, as already observed, clauses 4.1.2 and 4.2.2 anticipate that some disputes between SEI and GMC may be resolved by arbitration.

I similarly reject GMC’s characterisation of the Escrow Agreement as a settlement agreement of the nature described by Popplewell J. in Monde Petroleum S.A. v Westernzagros Ltd [2015] EWHC 67 (Comm) at paragraph 38. As submitted by Mr Selby, the Escrow Agreement is more in the nature of a security agreement. It settles nothing.

It follows that I reject GMC’s submission that the effect of clauses 4.1.2 and 10.1 of the Escrow Agreement and condition 20.1 of the Standard Conditions is to provide for the exclusive jurisdiction of the courts of England and Wales in relation to such a dispute. Having expressly agreed arbitration in the sub-contract, it is improbable that the dispute resolution clauses in the Escrow Agreement, however expressed, were intended to capture disputes more naturally seen as arising under that sub-contract.

GMC submits in support of its construction that if GMC was not able to bring its Part 7 claim then it would rob the reference to “court” in clause 4.1.2 of the Escrow Agreement of all meaning which simply cannot be right. I disagree. Clause 4.1.2 anticipates reference to adjudication, court or competent arbitral tribunal. As such, the same point could be made in relation to removing the ability to arbitrate, perhaps more so given that this is the parties’ originally agreed method of dispute resolution. Further, given, as I have decided, the letter of 8 November 2024 comprises an enforceable agreement between the parties, that letter similarly refers at numbered paragraph 6 to a decision of a duly appointed adjudicator or an order of a court or competent arbitral tribunal. At the date of that agreement, there was no concluded Escrow Agreement.

It follows from my analysis that the Part 7 proceedings are within the scope of an enforceable arbitration clause in the sub-contract between the parties and the grant of a stay is mandatory.

For the reasons set out above:

It follows that I similarly reject the declaratory relief sought by SEI at paragraph 34 of the Part 8 Defence and Counterclaim that, because the Claimant had not, by 7 March 2025, either (a) reached agreement with the Defendant on the “Claims” (as defined in the agreement reached on 8 November 2024), or (b) obtained a decision by a duly appointed adjudicator on the Claims, or (c) commence arbitral proceedings on the Claims, the Defendant was entitled to payment of the Escrow Sum out of the Escrow Account.

GMC, having satisfied the requirements of paragraph 6 of the letter of 8 November 2024 by issuing Part 7 proceedings on 5 March 2025, the Escrow Sum remains in the Escrow Account on the applications before me.

Those Part 7 proceedings are stayed to arbitration in accordance with the provisions of the sub-contract between SEI and GMC.

I believe this addresses all the issues which were argued before the Court at the oral hearing on 18 and 19 March 2026. The parties should seek to reach an agreed order for approval reflecting this judgment. In the event of disagreement, I anticipate the same could be resolved on paper. I would ask the proposed order be provided with the directed provision of suggested typing corrections and other obvious errors. At the same time, the parties should indicate the extent of any disagreements between them as to consequential orders, and I will give directions for their resolution.