Fireminds Operations Ltd v Bermuda Investment Advisory
| Jurisdiction | Bermuda |
| Judgment Date | 08 October 2021 |
| Docket Number | Civil Jurisdiction 2021 No xxx298 |
| Court | Supreme Court (Bermuda) |
[2021] Bda LR 90
Civil Jurisdiction 2021 No xxx298
In The Supreme Court of Bermuda
Arbitration agreement — Delay — Termination application — Breach of contract
The following cases were referred to in the judgment:
James Lazenby v McNicholas Construction Co Ltd [1995] 1 WLR 615
Dera Commercial Eestate v Drya Inc [2019] EWHC 1673
Bermuda Cablevision v Greene [2004] Bda LR 18
Professional Services Insurance Co Ltd v Gerling-Konzern Allegemeine Versicherungs [2003] Bda LR 55
North London Railway Co v Great Northern Railway Co (1883) 11 QBD 30
Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981] AC 909
Mr R Horseman for the Plaintiff
Mr K Robinson for the Defendant
RULING of Mussenden J
1. The Plaintiff caused an Originating Summons to be issued on 23 September 2021 (the “Termination Application”) seeking an order to terminate arbitration proceedings that had been commenced by the Defendant on or about 27 September 2019 (the “Arbitration Proceedings”) pursuant to Section 39(2) of the Arbitration Act 1986 (the “Act”) and to restrain the Defendant from proceeding to appoint an arbitrator until the Termination Application had been determined.
2. By a Summons dated 23 September 2021 the Plaintiff now seeks an order that the Defendant be restrained from pursuing the Arbitration Proceedings until the determination of the Termination Application.
3. Mr Michael Branco, the Plaintiff's Chief Executive Officer, in an affidavit sworn on 21 September 2021, provided the background of the matter. By way of a Master Services Agreement (the “MSA”) and a Statement of Works (the “SOW”) both effective as of 12 December 2018, the Plaintiff was engaged by the Defendant to provide it with managed IT Services. A dispute arose and subsequently on 27 September 2019 the Defendant commenced the Arbitration Proceedings pursuant to Clause 12 of the MSA which provided for arbitration for dispute resolution (the “Arbitration Agreement”). The Defendant then terminated the contracts effective 27 September 2019.
4. Clause 12 of the MSA provided the procedure and timelines for any arbitration proceedings. Clause 12(c) set out a limitation period “Either party may commence arbitration by giving Written Notice to the other party demanding arbitration and providing full particulars of the dispute. A Written Notice must in all cases be given within thirty (30) days of the cause of action or dispute arising. Such 30-day period shall be considered a limitation period with the effect that any claim or notice brought after the expiry of such period shall give the other party an absolute limitation defense.” Clause 12(f) stated “Notwithstanding the foregoing, the parties agree that the arbitration shall be heard no later than 120 days after the service of the Written Notice.” The Plaintiff contends that the Defendant's claims are time barred.
5. Thereafter, starting in October 2019 there were attempts to appoint an arbitrator without success. Marshall Diel & Myers (“MDM”) acted for the Defendant at that stage whilst Wakefield Quin always acted for the Plaintiff in this matter. On 5 November 2019 a without prejudice meeting took place when the Plaintiff states that the parties reached an agreement to settle the matter (the “Settlement Agreement”). The terms included the Plaintiff providing the Defendant with a $36,000 credit against sums owed to the Plaintiff, the provision of 100 hours of the Plaintiff's time (at no cost to the Defendant) to effect the migration of the IT services to a new IT supplier (the “Migration”) and further discussions if additional hours were needed for the Migration. Two days later on 7 November 2021 the Defendant indicated that it had to reconsider matters and alleged that no agreement had been reached as the points were “subject to contract”.
6. On 5 December 2019 the Plaintiff issued the credit to the Defendant's account in accordance with the Settlement Agreement. The amount of the $36,000 credit was more than the $32,842.50 that the Defendant claimed in its Points of Claim.
7. The Migration started which required the Plaintiff, at the Defendant's request, to maintain and not disconnect the IT servers holding the Defendant's information until the Migration was complete. There was a series of correspondence between the parties about the process and progress of the Migration and sometimes this necessitated correspondence between counsel. On 1 December 2020 the Plaintiff received notification from the Defendant that the Migration was complete. The last communication from MDM to Wakefield Quin was on 4 March 2020. The Plaintiff had recorded 97 hours of work on the Migration over approximately 15 months.
8. On 11 August 2021 Wakefield Quin received a letter from Carey Olsen indicating that Carey Olsen had been instructed to take over the matter, that the Defendant wanted to proceed to arbitration, its claims now amounting to $107,069.84 remained unresolved and failing an admission of liability, it would write to the Bermuda Bar Association to appoint an arbitrator. Wakefield Quin replied that the binding Settlement Agreement had been agreed but that even if one had not been reached, any further claims would be time barred.
9. The Defendant informed the Court that since the date of the Branco affidavit it had asked the Bermuda Bar Association to immediately appoint an arbitrator. It had also proposed to the Plaintiff that it make a stay application to the arbitrator once appointed, which it would not oppose (the “Undertaking”). However, the Plaintiff wrote to the Bermuda Bar Association requesting it not appoint an arbitrator.
10. The Plaintiff also wrote to the Defendant suggesting a specific arbitrator if the Termination Application was unsuccessful. The Defendant replied that the Court does not have jurisdiction to grant a stay of the Arbitration Proceedings and reiterated its Undertaking to not oppose any application for a stay made to an appointed arbitrator.
11. The Plaintiff submitted that its Termination Application was based on sections 39(2) and (3) of the Arbitration Act 1986 (the “Act”) which empowered the Court to terminate an arbitration and prohibit further arbitration proceedings if there had been delay.
“39 (2) Where there has been undue delay by a claimant in instituting or prosecuting his claim pursuant to an arbitration agreement, then, on the application of the arbitrator or umpire or of any party to the arbitration proceedings, the Court may make an order terminating the arbitration proceedings and prohibiting the claimant from commencing further arbitration proceedings in respect of any matter which was the subject of the terminated proceedings.
(3) The Court shall not make an order under subsection (2) unless it is satisfied that—
(a) the delay has been intentional and vexatious; or
(b) there has been inordinate and inexcusable delay on the part of the claimant or his advisers; and that—
(i) the delay will give rise to a substantial risk that it is not possible to have a fair trial of the issues in the arbitration proceedings, or
(ii) the delay is such as is likely to cause or to have caused serious prejudice to the other parties to the arbitration proceedings either as between themselves and the claimant or between each other or between them and a third party.”
12. The Plaintiff submitted that having filed the Originating Summons on 21 September 2021 it was hoped there would be...
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