Mootilal Ramhit & Sons Contracting Ltd v Education Facilities Company Ltd
| Jurisdiction | Trinidad & Tobago |
| Judge | Mr. Justice V. Kokaram |
| Judgment Date | 11 April 2018 |
| Neutral Citation | TT 2018 HC 257 |
| Court | High Court (Trinidad and Tobago) |
| Docket Number | Claim No. CV2017-02465 |
| Date | 11 April 2018 |
IN THE HIGH COURT OF JUSTICE
The Honourable Mr. Justice V. Kokaram
Claim No. CV2017-02465
and
Mr. Prakash Deonarine and Mr. Vijay Deonarine instructed by Ms. Krystal Kawal for the Claimant
Ms. Shobna Persad and Ms. Krystal Piper for the First Defendant
The Education Facilities Company Limited (EFCL) is seeking to stay these proceedings instituted by the Claimant, Mootilal Ramhit and Sons Contracting Limited, for the recovery of a total sum of Twenty four million two hundred and eight four thousand five hundred and twelve dollars and fifty two cents ($24,284,512.52) 1 due to it for the execution of works in our public school system. EFCL had engaged the services of the Claimant for design-build
services to upgrade the Arima Central Secondary School. The parties contract included the FIDIC yellow book 2 which makes provision for the arbitration of disputes. EFCL has not yet determined if that sum is to be paid to the Claimant. It has not yet filed a defence in this matter nor has it responded in substance to the Claimant's pre-action letter. Instead, it has applied to stay these proceedings pursuant to section 7 of the Arbitration Act Chapter 5:01 and the inherent jurisdiction of the Court on the ground that this dispute is one that should be arbitrated pursuant to clause 20 of the FIDIC yellow book. If it is not successful on that application EFCL seeks an extension of time to file its defenceThe two main issues that arise for determination on EFCL's application, by no means the only ones, are whether (1) there is no sufficient reason why the matter should not be referred to arbitration in accordance with the contract and (2) at the time when these proceedings commenced EFCL was and still remains ready and willing to do all things necessary for the proper conduct of the arbitration.
In my view, in spite of strong policy or public interest reasons to encourage parties to resolve their disputes by utilising the ADR mechanism which they had bargained for, there are sufficient reasons in this case why the matter should not be referred to arbitration. EFCL has not to date, for the reasons set out in this judgment, identified the nature of the dispute between the parties nor has it indicated its readiness to arbitrate this matter beyond making a bald statement in its application. Although in some cases this may be of no moment, but having regard to the substantial evidence already filed by the Claimant and the lack of any response by the Defendant to what appears on its face to be a clear case of non-payment on several Interim Payment Certificates (IPCs) issued by the Engineer under the parties contract, this application can be viewed as a means to delay the payment of sums due to the Claimant. It would certainly be counterproductive and inconsistent with the parties' agreement to arbitrate disputes to now submit this matter to arbitration when nothing has been demonstrated to this Court of any serious dispute between the parties that can or ought to be arbitrated or which merits the diversion of this claim from its litigation path to the arbitration process.
In this judgment, I first examine the parties' agreement to arbitrate, the applicable principles to grant a stay under section 7 of the Arbitration Act and the inherent jurisdiction of the Court. I also analyse the Defendant's application by a brief examination of the relevant facts and its application to the threshold requirements under section 7 of the Arbitration Act. The starting point is the parties' agreement to arbitrate which is not in contest.
The provisions for dealing with disputes under the FIDIC Yellow Book Contract Appendix 2—Conditions of Contract are set out in Clause 20 and sets out the terms, conditions and provisions and procedures in relation thereto. Sub clause 20.1 deals with contractors' claims and Clause 20.2 deals with the appointment of a Dispute Arbitration Board (DAB) to determine those disputes referred to it for arbitration. Clauses 20.2 to 20.8 set out the procedure in relation to disputes adjudicated by the DAB. Importantly, by sub clause 20.2 the parties agreed to appoint a DAB twenty eight (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. Neither party in this case has done so.
Sub-clause 20.4 of the General Conditions of the FIDIC Yellow Book Contract contains the parties' agreement to arbitrate. It states inter alia:
“If a dispute of any kind whatsoever arises between the Parties in connection with, or arising out of, the Contract of the execution of the Works, including any dispute as to any certificate, determination, instruction, opinion or valuation of the Engineer, then after a DAB has been appointed pursuant to Sub-Clause 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 copies to the other Party and the Engineer. Such reference shall state that it is given under this Sub-Clause.”
Notably sub clause 20.5 encourages parties to settle their dispute amicably before commencing arbitration:
“Where 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 arbitration. However, unless both Parties agree otherwise, arbitration 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.”
The parties' agreement to submit matters to arbitration is quite wide. They agreed that a dispute “of any kind whatsoever” in relation to the execution of the works may be referred to arbitration. Sub clause 20.4 is a common mechanism for parties in the commercial world to resort to this ADR mechanism to swiftly resolve their disputes. Importantly, it is a method of resolving a dispute by, in most cases, subject specialists where parties have the ability to appoint experts in such building contract disputes. Sub clause 20.4 however, does not deprive a party of submitting its dispute to the High Court. Of course any such claim instituted is subject to the Court's inherent jurisdiction and in this case section 9 of Arbitration Act to stay the proceedings pending the determination of the arbitration process as provided for in the contract.
Although no submissions were made by EFCL to invoke the Court's inherent jurisdiction, I have also considered the Court's wide discretion and case management powers in the analysis of the EFCL's application for a stay.
Mendonca JA in LJ Williams Ltd v Zim Integrated Shipping Services Ltd and Zim America Shipping Services Co. Inc Civil Appeal No. PO59 of 2014 noted at paragraph 17:
“17. It is not in dispute that, in addition to the power to stay proceedings under section 7 of the Arbitration Act, the High Court also has the power under its inherent jurisdiction to control proceedings to stay proceedings in favour of arbitration. The scope of this jurisdiction has to a large extent been overtaken by the power given under section 7 of the Arbitration Act. It is fair to say that in this matter the focus was on the statutory jurisdiction and it was not advanced by Zim Israel that should its application fail under section 7 the Court should nevertheless grant the stay under its inherent jurisdiction.”
EFCL's application has been similarly articulated in this case. Its main focus is on section 7 of the Arbitration Act. Although section 7 of the Arbitration Act confers a discretion on the Court to stay proceedings in favour of arbitration the Court also has an inherent jurisdiction to do so. Dealing with the section 7 jurisdiction it must be noted that our arbitration legislation is much a relic of the pa Kingdom's (UK) Arbitration Act of 1 jurisdictions 3, notably the UK. The A modern framework to make arbitratio technicality for parties in a commercial in this jurisdiction. However, one must 1996 as a guide to interpreting section Act deliberately and expressly espouses principle of non-intervention was discus by the Courts. The principle of non-intervention was discussed in Lesotho Highlands Development Authority v Impregilo SpA and others [2006] 1AC 221. In Cetelem SA v Roust Holdings Ltd [2005] 1 WLR 3555 the Court of Appeal noted:
“a central and important purpose of the 1996 Act was to emphasise the importance of party autonomy and to restrict the role of the courts in the arbitral process. In particular the Act was intended to ensure that the powers of the court should be limited to assisting the arbitral process and should not usurp or interfere with it.”
Section 9 of the UK Arbitration Act 1996 confers on the Court a discretion to stay proceedings “unless satisfied that the arbitration agreement is null, void, inoperative or incapable of being performed.” 4 It gives primacy, therefore, to party autonomy and so long as the arbitration agreement cannot be impeached then the parties should submit their dispute to arbitration and not litigation.
In contrast, section 7 of the Arbitration Act of Trinidad and Tobago confers a “wider” discretion for the Court's “intervention” in a contractual dispute governed by FIDIC which for arbitrators and ADR specialists can significantly undermine the arbitration and ADR movement. Section 7 of the Arbitration Act provides:
“7. If any party to an arbitration agreement, or any person claiming through or under him, commences any legal proceedings in the Court against any...
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