The Court of Appeal has given judgment in Cadent Gas Limited v Cityfibre Limited [2026] EWCA Civ 46. This appeal was a form of test case between Cadent Gas Limited (“Cadent”) (a major gas distribution company) and Cityfibre Limited (“Cityfibre”) (an internet and telecommunications provider) to determine the correct forum for the resolution of disputes under the New Roads and Street Works Act 1991 (the “1991 Act”).
Richard Liddell KC and Alex Forzani successfully acted for Cadent before the High Court (in challenging the jurisdiction of the arbitrator under section 67 of the 1996 Act) and also in the Court of Appeal. They were instructed by Mark Mulgrave and Matthew Duncan of DWF Law LLP.
Cityfibre claimed that Cadent had damaged its property when carrying out works in December 2022. It sought to recover the costs of making good that damage from Cadent under section 82(1)(b) of the 1991 Act. Although the underlying claim by Cityfibre was of a comparatively low-value, the case raised a point of wider public importance given the prevalence of such claims.
The 1991 Act
The appeal concerned the interpretation of three sections of Part III of the 1991 Act: section 82(1)(b), section 96(1) and (3) and section 99. Part III contains a statutory code which sets out rights and liabilities of parties undertaking work on highways, roads and streets across England and Wales (so-called “enabling provisions”).
Section 82(1)(b) is such an enabling provision. It states that a statutory undertaker “shall compensate – (a) the street authority or any other relevant authority in respect of any damage or loss suffered by the authority in their capacity as such, and (b) any other person having apparatus in the street in respect of expense reasonably incurred in making good damage to that apparatus …”.
Section 96(1) provides that “Any provision of this Part [III] enabling an authority, body or person to recover the costs or expenses of taking any action shall be taken to include the relevant administrative expenses of that authority, body or person including an appropriate sum in respect of general staff costs and overheads …”.
Section 96(3) concerns dispute resolution:
“Where under any provision of this Part a person is entitled in certain circumstances to recover costs or expenses incurred by him in executing works or taking other steps, any dispute as to the existence of those circumstances or as to the amount recoverable shall be determined by arbitration. This applies whether the provision is expressed as conferring a right to recover, or as imposing a liability to reimburse or indemnify or to bear the cost, but does not apply in relation to a provision expressed as providing for the charging of a fee or conferring a right to compensation or in relation to section 78 (contributions to cost of making good long-term damage to the street)”.
Section 99 states that any matter which under Part III is to be settled by arbitration shall be referred to a single arbitrator appointed by agreement between the parties concerned or, in default of agreement, by the President of the Institution of Civil Engineers (“ICE”).
The Award and the Judgment Below
Cityfibre referred the dispute between the parties to an arbitrator appointed by ICE. Cadent resisted the arbitrator’s jurisdiction to determine the issue contending that, due to the language in section 96(3), a dispute under section 82(1)(b) could not be referred to arbitration but should instead be litigated. The arbitrator disagreed with Cadent’s position and found for Cityfibre on the issue jurisdiction and the question of liability (the “Award”).
Cadent challenged the arbitrator’s jurisdiction under section 67 of the Arbitration Act 1996. That challenge was heard by HHJ Hodge KC (sitting as a Judge of the High Court) (the “Judge”). He interpreted the statutory scheme imposed by section 96(3) as comprising two parts – the first applying to all claims under Part III of the 1991 Act and mandating that they be resolved by arbitration and the second (from the words “but does not apply …”) as a carve-out from that general rule.
The Judge also accepted that sub-sections (a) and (b) of section 82(1) were “expressed as … conferring a right to compensation”, which meant that they benefitted from the carve-out to the general rule requiring mandatory arbitration imposed by the first limb of section 96(3). He noted, in particular, that the draftsperson had used the phrase “expressed as” to qualify those provisions of Part III to which the carve-out applied. The Judge gave Cityfibre permission to appeal.
The Appeal
Cityfibre appealed the Judge’s decision to the Court of Appeal. Its submissions on appeal were essentially as follows:
- Parliament enacted Part III of the 1991 Act with a clear intention and purpose – namely that claims brought to recover costs and expenses should be determined by arbitration (within the first limb of section 96(3)).
- The present claim under section 82(1)(b) was one for the recovery of costs and expenses. This was a more limited right than the ‘right to compensation’ with which the carve-out was concerned. The question of where a provision fell was to be determined by asking, as a matter of substance, whether it conferred a right to compensation or an entitlement to costs and expenses.
Cadent’s position was that the Court of Appeal should uphold the Judge’s reasoning as:
- The purpose of the carve-out was to qualify the default arbitration regime under Part III to make clear that claims expressed as providing for a right to compensation would be subject to litigation. Accordingly, Parliament did not intend each and every claim for costs and expenses to be arbitrated.
- The language in section 82(1)(a) and (b) was also clear – the word “compensate” conditioned both limbs of this clause. As a result, both provisions were expressed as conferring a right to compensation so as to benefit from the carve-out. Such claims therefore fell to be litigated.
The Court of Appeal agreed with the approach contended for by Cadent and upheld the decision of the Judge. In particular, it emphasised that:
- The wording of section 96(3) was conditioned by reference to the way that the relevant enabling provision was expressed. The relevant question, therefore, was whether section 82(1)(b) could be said to be expressed as conferring a right to compensation.
- Both section 82(1)(a) and (b) were conditioned by the word “compensate”. In these circumstances, it would not be sensible for one limb of section 82(1) to require arbitration and the other not. Parliament’s intention must have been that both sub-sections (a) and (b) were excluded from statutory arbitration.
- Cityfibre’s argument that a dispute could not fall within both parts of section 96(3) was also incorrect. The structure and language of the clause showed that it operated by reference to the mode of expression of the enabling provision under which the right or liability was asserted and the natural reading of the clause was that the second half (the carve-out) qualified the first half.
- The policy considerations advanced by Cityfibre (as to why arbitration would be preferable to litigation to resolve such disputes) were inconclusive at best. There was limited assistance to be drawn from a suggestion that there was a legislative preference for mandatory arbitration in circumstances where the language of the provision was clear.
- An earlier authority relied upon by Cityfibre, Yorkshire Electricity Distribution Plc v Telewest Ltd [2006] EWCA Civ 1418, did not assist its position. The Court of Appeal’s comments in that case were obiter and, in any event, it had not been attempting to set down general principles which applied to all claims under section 82(1). Further, if Cityfibre was correct that section 82(1)(b) claims should be determined by compulsory arbitration then the Court of Appeal’s decision in Yorkshire Electricity (rendered by litigation) would have been per incuriam.
