The Bermuda International Conciliation and Arbitration Act, 1993 Re
| Jurisdiction | Bermuda |
| Judge | Kawaley, J. |
| Judgment Date | 21 June 2013 |
| Court | Supreme Court (Bermuda) |
| Docket Number | 84 of 2013 |
| Date | 21 June 2013 |
Supreme Court
Kawaley, C.J.
84 of 2013
Mr. John Wasty and Mr. Henry Tucker, Appleby (Bermuda) Limited, for the applicant
Mr. Paul Smith, Conyers Dill & Pearman Limited, for the respondent
Statute - Interpretation — Whether Section 41 of the Bermuda International Conciliation And Arbitration Act 1993 was designed to facilitate enforcement of International Arbitration awards — restriction of the ability of persons against whom the Award has been made to resist enforcement by reason of Non-Compliance with Procedural requirements.
In this matter the respondent has applied to set aside the Ex Parte Order made on March 22, 2013 granting leave to enforce an arbitration award granted on and an Ex Parte Mareva injunction granted on March 26, 2013. The matter came on for hearing yesterday afternoon and counsel for the respondent indicated that an application to suspend the award had been made to the Curial Court and that a decision was expected yesterday. The matter was adjourned to await the decision.
This morning, Mr. Smith conceded that the application to challenge the award together with the application to suspend the award pending that challenge had both been dismissed by the Curial Court. And those circumstances he was bound to concede that he could not credibly pursue his applications to set aside the Mareva injunction and the Order granting leave to enter judgment in terms of the Award.
That concession was made subject to one “long stop” (I.e. last ditch.) argument. That was the concession that the Award could not be enforced and the March 22, 2013 Order ought not to have been made because the applicant had failed to comply with the requirements of section 41 of Bermuda International Conciliation and Arbitration Act, 1993.
Section 41 of the 1993 Act
Section 41 provides as follows:
“Evidence
41 The party seeking to enforce a Convention award must produce–
(a) the duly authenticated original award or a duly certified copy of it;
(b) the original arbitration agreement or a duly certified copy of it; and
(c) where the award or agreement is in a foreign language, a translation of it certified by an official or sworn translator or by a diplomatic or consular agent.”
The statute is silent, while it is expressed in mandatory terms, about the precise time when the relevant evidence must be produced in the context of a procedural framework where an ex parte application for leave to enter judgment is made giving the respondent an opportunity to apply inter partes to set it aside. So there are two areas of ambiguity:
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(1) what consequences flow from non-compliance with the strict provisions of the statute; and
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(2) what does the statute actually mean in terms of time when it says that a “duly authenticated original award or a duly certified copy of it must be produced” and that “the original arbitration agreement or a duly certified copy of it” must be produced. Does that obligation have to be fulfilled at the beginning of the application or can it be satisfactorily met later?
The provisions of section 41, it has to be said, undeniably appear in the context of a statute that is designed to facilitate the enforcement of international arbitration awards and to restrict the ability of the person against whom the award has been made to resist enforcement. This is clear from section 42 of the statute and various authorities which have been referred to by the applicant in its Skeleton Argument in support of the substantive relief which it seeks in this action. (Such authorities included: Dowans Holdings SA v. Tanzania Electric Supply Co. Ltd [2011] EWHC 1957(Comm); LV Finance Group Ltd. v. IPOC International Growth Fund Ltd [2006] Bda LR 67; IPCO (Nigeria) Ltd. v. Nigerian National Petroleum Corp [2005] 2 Lloyd's Rep 326.)
Findings: general principles for ascertaining the legal consequences of noncompliance with statutory requirements expressed in mandatory terms
The starting point, in my view, for analysing the question of what consequences flow from non-compliance with the statute, putting aside the facts of the present case, is to consider how one categorises the provisions of section 41 and what approach generally do the Courts of this jurisdiction and similar jurisdictions take to interpreting provisions which contain mandatory procedural requirements.
Firstly, in my view, it is clear beyond serious argument that section 41 is a procedural provision in mandating the production of a “duly authenticated award or a duly certified copy of it” as opposed to mandating that an original award must exist. So I find that section 41, insofar as it speaks to the formalities of proof of the existence of an award and an arbitration agreement is a procedural provision. It may be viewed as a substantive provision insofar as it requires a party seeking to enforce an arbitration award to prove that they actually obtained an award and that the award was actually based on an arbitration agreement which exists.
The Bermuda Courts have considered the question of the effects of non-compliance with procedural provisions in two cases. The first instance decision was my own decision in DPP v. Roberts [2006] Bda LR 19 where I considered the question “[w]hen does the failure to comply strictly with statutory procedural requirements invalidate the proceedings?” at paragraphs 61 to 73. It must be said that in that case the focus was very much on time limits. Be that as it may, the conclusion that I reached was:
“74. For the above reasons, I found that the failure of this Court to strictly comply with the requirements of section 11(6), by proceeding with the application after the three months period prescribed had expired without having postponed the application within the time limit on the grounds of exceptional circumstances, did not of itself deprive the Court of jurisdiction to proceed and make a confiscation order.”
Mr. Roberts appealed to the Court of Appeal and that Court's decision is reported at [2008] Bda LR 37. Stuart-Smith, J.A. gave the judgment of the Court and at paragraph 18 he noted as follows:
“Mr. Phipps does not submit that the time limits set by section 11 are mandatory in the sense that non-compliance deprives the Court of jurisdiction. He could not do so in the light of the decision of the House of Lords in R v. Soneji [2005] 4 All ER 321.”
So it was implicitly decided by the Court of Appeal that the House of Lords decision in Soneji actually represented the Bermuda law position on how one interprets procedural requirements and determines what consequences flow from their breach. The case of Soneji is instructive, in my judgment, in laying out the correct analytical approach to considering the question of statutory non-compliance with procedural provisions generally, beyond the narrow scope of quasi-criminal context.
Because the question in Soneji was considered in the quasi-criminal context it seems to me that the reasoning has even greater force in the civil context. Because the criminal law is generally much more inclined to benefit accused persons by holding the Prosecution to very strict compliance with statutory formalities. And so if the Courts in the criminal or quasi-criminal context have been willing to construe procedural provisions expressed in mandatory terms flexibly, then it seems to me that the civil Courts, particularly in the context of a statute which is seeking to amplify the scope for enforcing arbitral awards, should be even more ready to adopt a flexible approach.
The leading judgment in Soneji was delivered by Lord Steyn and the crucial portions of his judgment are set at paragraphs 14 to 23 of the transcript which in its neutral citation is [2005] UKHL 49. It is helpful to read a few extracts from the judgment. First of all at paragraph 14 under the heading the “The Core Problem”, Lord Steyn said this:
“14. A recurrent theme in the drafting of statutes is that Parliament casts its commands in imperative form without expressly spelling out the consequences of a failure to comply. It has been the source of a great deal of litigation. In the course of the last 130 years a distinction evolved between mandatory and directory requirements. The view was taken that where the requirement is mandatory, a failure to comply with it invalidates the act in question. Where it is merely directory, a failure to comply does not invalidate what follows. There were refinements. For example, a distinction was made between two types of directory requirements, namely (1) requirements of a purely regulatory character where a failure to comply would never invalidate the act, and (2) requirements where a failure to comply would not invalidate an act provided that there was substantial compliance. A brief review of the earlier case law is to be found in Wang v Commissioner of Inland Revenue [1994] 1 WLR 1286, 1294D–1295H.”
He then goes on to discuss “A New Perspective” and quotes the judgment of Lord Hailsham in London & Clydeside Estates Ltd v. Aberdeen District Council [1980] 1 WLR 182 at 189E–190C. He describes this judgment in this way (at paragraph 15):
“This was an important and influential dictum. It led to the adoption of a more flexible approach of focusing intensely on the...
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