National Infrastructure Development Company Ltd v Construtora Oas S.A.

• Jurisdiction: Trinidad & Tobago
• Judge: Mr Justice Frank Seepersad
• Judgment Date: 14 December 2022
• Neutral Citation: TT 2022 HC 291
• Docket Number: Claim No. CV2022-01832
• Court: High Court (Trinidad and Tobago)

IN THE HIGH COURT OF JUSTICE

Before

the Honourable Mr Justice Frank Seepersad

Claim No. CV2022-01832

In the Matter of the Arbitration Act Chap. 5:01

And

In the Matter of an Arbitration Between Construtora Oas S.A. and National Infrastructure Development Company Limited, LCIA Case NO. 163399 (The “Arbitration”)

And

In the Matter of the Decision of John Fellas, Adam Constable KC and Andrew White KC (The “Tribunal”)

Between

National Infrastructure Development Company Limited

Claimant

and

Construtora Oas S.A.

Defendant

Appearances:

Claimant: Ms. Anneliese Day K.C., Mr. Jason Mootoo and Mr. Hugh Saunders instructed by Ms. Marcelle Ferdinand Attorneys-at-law.

Defendant: Mr. Rolston F. Nelson S.C., Mr. Gregory Pantin and Ms. Ria Mohammed-Davidson instructed by Mr. Miguel Vasquez Attorneys-at-law.

DECISION

1 By way of Fixed Date Claim Form and Statement of Case dated May 24, 2022, the Claimant, National Infrastructure Development Company Limited (hereinafter referred to as “NIDCO”) has challenged the Partial Final Award (hereinafter referred to as “the Award”) of an Arbitral Tribunal comprised of Messrs. John Fellas, Adam Constable QC and Andrew White QC (hereinafter referred to as “the Tribunal”) delivered on April 16, 2022. In its claim, the Claimant has invited this Court to review aspects of the Award to set aside same pursuant to Section 19(2) of the Arbitration Act, Chap 5:01 (hereinafter referred to as “the Act”) and/or the inherent jurisdiction of the Court, and to remit same to the Tribunal for its reconsideration pursuant to Section 18 of the Act.

2 In its Defence filed on June 22, 2022, the Defendant, Construtora OAS S.A. (hereinafter referred to as “OAS”), contends that this claim is devoid of merit.

Factual Background

3 The factual matrix is largely undisputed and the chronology was referenced and summarised at paragraphs [151] —[239] of the Award. The relevant and material facts were also outlined at Appendix A of the Defendant's submissions filed herein and the material facts are as follows:

(aa) January 13, 2016: NIDCO's new acting President wrote to AECOM and requested that negative adjustments be applied urgently so that NIDCO's default would be “completely eliminated” prior to the deadline for payment of IPC 50.

(bb) January 14, 2016: IPC 55 was certified by AECOM in the amount of negative US$22,192,265.00.

(cc) January 22, 2016: AECOM wrote OAS stating that the new acting President had confirmed NIDCO's desire for “an amicable termination.”

(dd) January 29, 2016: IPC 56 was submitted by OAS for the period December 29, 2015 to January 28, 2016.

(ee) February 4, 2016: OAS wrote to NIDCO and requested a reduction in its performance bonds based on the reduced scope of works consequent to Addendum 2. There was no response to this request.

(ff) March 4, 2016: AECOM, as directed by the Board of NIDCO, wrote to OAS and documented its concerns regarding the lack of progress on the Project and alleged that OAS had apparently abandoned the works as defined in Clause 15.2(b) of the Contract.

(gg) March 10, 2016: OAS advised AECOM that it had decided to reduce its workforce with immediate effect but would retain the necessary employees/sub—contractors to continue to perform its obligations.

(hh) March 11, 2016: NIDCO's Chairman wrote to the Minister of Works and Transport and confirmed AECOM's March 4, 2016 letter to OAS and suggested that the “most equitable option …would be to proceed pursuant to clause 15.2(e).”

(ii) March 28, 2016: OAS responded to AECOM's letter of March 4, 2016 and denied that it had abandoned the Project and stated, inter alia, that it had injected US$31m of its own funds into the Project and that the reduction in the pace of works was as a consequence of NIDCO's non-payment.

(jj) March 31, 2016: IPC 56 was certified by AECOM in the amount of US$908,824.00. OAS wrote AECOM and sought formal confirmation of the main terms of the amicable termination in order to avoid delay in the completion of the sub-contracting process.

(kk) April 14 and 18, 2016: AECOM wrote OAS to confirm there was “no affirmative response” from NIDCO regarding the proposed amicable termination of the Contract.

(ll) April 27 —May 12, 2016: OAS renewed its performance and retention bonds.

(mm) May 5, 2016: OAS sent a Notice of Dispute to NIDCO regarding non-payment of IPCs beginning with IPC 50.

(nn) May 17, 2016: IPCs 57, 58 and 59 were certified by AECOM for work performed over the period January 29 —April 28, 2016. AECOM wrote OAS and reiterated its assertion that OAS had abandoned the works and did not have capacity to continue to meet its obligations.

(oo) May 25, 2016: OAS wrote AECOM stating that IPC 55 was not valid and the negative amounts certified therein related to events which occurred prior to Addendum 2 which had been expressly waived by the parties.

(pp) June 1, 2016: NIDCO appeared before the Parliamentary Public Accounts (Enterprises) Committee and indicated that “NIDCO does not have sufficient financial resources to take it beyond June 2016.” In relation to the Project, NIDCO indicated that “the contractor (i.e. OAS) has not terminated the contract” and “there is no official suspension from the contractor.”

(qq) June 8, 2016: Email re NIDCO's “Plan for the way forward”' stated that “There is no direct source of funding presently available for the project and none has been identified in the national budget or the quarterly fiscal review package.”

(rr) June 15, 2016: NIDCO held a Board meeting at which the decision was taken to terminate the Contract.

(ss) June 21, 2016: NIDCO served Notice of Termination and terminated the Contract as of July 6, 2016 pursuant to Clause 15.2(b).

(tt) June 28, 2016: OAS wrote and denied that it had abandoned the Project or demonstrated an intention not to continue. It stated that the problems on the Project were caused by NIDCO's payment defaults and indicated that IPC 55 was null and void as it related to events prior to Addendum 2.

(uu) July 6, 2016: Contract was terminated. NIDCO commenced drawing down on the advance payment and performance securities in the total sum of US$139,572,877.62.

• (a) July 4, 2011: NIDCO and OAS entered into a modified FIDIC Yellow Book Contract for the design and construction of an extension of the Sir Solomon Hochoy Highway to Point Fortin (hereinafter referred to as “the Project”) at a contract price of TT$5,213,893,000.00. NIDCO hired AECOM as the Engineer for the Project. The Contract provided for the issuance of interim payment certificates (“IPCs”) by OAS which would be approved and certified by the Engineer within 28 days and paid within 56 days of the Engineer's receipt of the statement and supporting documents by NIDCO.

• (b) April 10, 2013: The Contract was amended by Addendum 1 which provided that NIDCO was to pay OAS TT$108,800,000.00 in settlement of all claims up to August 30, 2012 including those relating to delay and disruptions caused by NIDCO's failure to provide full access to the site up to February 2013.

• (c) March 31, 2015: OAS filed a petition for judicial reorganisation in Brazil. OAS informed NIDCO of the filing of the petition.

• (d) April 28, 2015: NIDCO wrote to OAS and pointed out that the filing of the petition for judicial reorganisation was sufficient for NIDCO to exercise its rights under Clause 15.2(e) of the Contract but “notwithstanding this contractual right to terminate the contract, NIDCO would prefer to negotiate an arrangement with OAS whereby (sic) the scope of work under the contract was reduced” and “that it retains the right to exercise its rights under Clause 15 of the Conditions of Contract if a suitable arrangement cannot be made.”

• (e) September 3, 2015: IPC 50 was certified by AECOM for the amount of US$37m, which had to be paid on October 12, 2015.

• (f) September 4, 2015: The Contract was amended by Addendum 2 which recited that NIDCO had been unable to provide the whole of the work sites from Penal to Mon Desir by the dates set out in Addendum 1 and that OAS had filed for judicial reorganisation but wished to remain on the Project provided some scope and commercial adjustments were made. The parties agreed to certain changes in the scope of works, value engineering items and the utilisation of nominated subcontractors. Clause 5 of the Addendum released and discharged the parties from all actions, claims, debts and the like of whatever kind or nature arising (both present and future) from any events that occurred on or before the signing of the Contract Addendum.

• (g) September 7, 2015: General Elections were held in Trinidad and Tobago which led to a change in government. The new administration had concerns relative to the project.

• (h) October 2, 2015: IPC 151 was certified by AECOM in the amount of US$4,313,626.39 for work from August 18 —28, 2015.

• (i) October 12, 2015: NIDCO made a partial payment of US$7,822,187.23 towards IPC 51, leaving an unpaid balance of US$12.4m.

• (j) October 19, 2015: OAS provided official notification that pursuant to Clause 16.1 of the Contract it had the right to suspend or reduce the rate of work owing to NIDCO's non-payment in full of IPC 50.

• (k) October 22, 2015: AECOM responded to OAS and indicated that its letter under Clause 16.1 was defective. IPC 52 was certified by AECOM for the amount of US$1,623,703.73 for work from August 29 —September 28, 2015.

• (l) October 28, 2015: OAS wrote to NIDCO to provide notice of default and reserved its rights under Clause 16.1 of the Contract.

• (m) October 29, 2015: NIDCO acknowledged OAS' rights and advised that it was “working assiduously to meet its obligations to OAS under the Contract”. A new Chairman was appointed to head NIDCO.

• (n) November 12, 2015: AECOM wrote to NIDCO and proposed that negative deductions be applied to previous IPCs in order to remedy NIDCO's default. This proposal was not accepted.

• (o) November 18, 2015: NIDCO...