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REPUBLIC OF TRINIDAD AND TOBAGO

IN THE COURT OF APPEAL

C.A. No. 281 of 2008

H.C.C. No. CV2007-02224

In the Matter of the Arbitration Act Chapter 5:01, Sections 18, 19 and 32

And

In the Matter of an Application under Parts 60 and 61 of the Civil

Proceedings Rules 1998 (as amended)

And

In the Matter of the Decision of Dr. Robert Gaitskell QC, the Sole Arbitrator

of an Arbitration under the ICC Rules of Arbitration 1998

BETWEEN

NATIONAL INSURANCE PROPERTY DEVELOPMENT COMPANY LIMITED

Appellant

And

NH INTERNATIONAL (CARIBBEAN) LIMITED

Respondent

PANEL: A. MENDONA, J.A.

P. JAMADAR, J.A.

N. BEREAUX, J.A.

APPEARANCES: A. Newman QC, A. Ali, N. Bisram and S. Harrison for

the Appellant

A. Fitzpatrick SC, L. Lucky-Samaroo and J. Mootoo

for the Respondent

DATE DELIVERED: 20 December 2013

I have read in draft, the judgment of Bereaux J.A. I agree with it and have

nothing to add.

A. Mendona

Justice of Appeal

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I also agree.

P. Jamadar

Justice of Appeal

JUDGMENT

DELIVERED BY BEREAUX, J.A.

[1] This appeal arises out of an arbitral award in respect of a contract between

National Insurance Property Development Company Limited (NIPDEC) and NH

International (Caribbean) Limited (NHIC) by which NHIC was contracted to

construct a new hospital in Scarborough, Tobago.

[2] NIPDEC challenged the award by filing these proceedings. By its fixed

date claim filed on 26th

June 2007, it sought -

(i) an extension of time for filing its claim

(ii) an order directing the arbitrator to state a case as to the proper construction

of clause 2.4 of the FIDIC conditions of contract

(iii) an order setting aside the award

(iv) the remission of the award to the arbitrator together with the opinion of the

Court on the proper construction of clause 2.4.

[3] On 14th

November 2008, the judge dismissed NIPDECs claim. NIPDEC

now seeks to reverse the decision. It seeks the same orders set out at paragraph 2.

The grounds upon which the orders are sought are that the arbitrator erred on the

face of the award, that the arbitrator wrongly refused to state a case for the

opinion of the court, that there was procedural mishap and that the arbitrator

technically misconducted the proceedings.

Facts

[4] By agreement in writing dated 6th

March 2003, NIPDEC engaged NHIC to

construct the Scarborough hospital. The works were jointly financed by the

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Government of the Republic of Trinidad and Tobago (GORTT) and the Inter-

American Development Bank (IDB). The parties agreed to be bound by the

Conditions of Contract for Construction, First Edition 1999 (International

Federation of Consulting Engineering - General Conditions (FIDIC COC).

[5] The time frame for completion was seven hundred and thirty (730) days

from the date of commencement of the works. The works began on 17th

March

2003. The original date of completion was 17th

March 2005. The original contract

price was in the sum of TT$118,185,069.15. When value added tax was included

the total sum amounted to TT$135,912,829.52. Disputes arose however and by

letter dated 24th

August 2004, addressed to the International Court of Arbitration

(ICC), NHIC referred several areas of dispute to arbitration pursuant to clause

20.6 of FIDIC COC.

[6] The cost of the project rose as the works were executed. By April 2005,

the estimated contractual price was TT$286,992,070.00. This was subsequently

adjusted by the Engineer to TT$224,129,801.99. There was some dispute as to

the accuracy of that figure and an Independent Quantity Surveyor was appointed

who ultimately verified the Engineers certification of the contract price at

TT$224,129,801.99.

[7] Dr. Robert Gaitskell QC was appointed the sole arbitrator on 3rd

October

2005. The parties agreed terms of reference to the arbitration on 1st December

2007. These were subsequently amended on 15th

January 2007. The arbitrator

published four partial awards. His fifth and final award was published on 14th

September 2011. It is the second partial award (SPA) which is the subject matter

of this appeal. It was given on 16th

April 2007. The arbitrator found that NHIC

was entitled to suspend the contract by its notice dated 3rd

November 2006.

[8] Clause 2.4 of FIDIC COC is extremely pertinent to this appeal as it was to

the SPA. Its interpretation was not directly referred to arbitration. What was

referred was the validity of NHICs suspension and subsequent termination of the

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works under clause 16(1) and (2) respectively of FIDIC COC. The validity of the

suspension was one of a list of ten items of dispute. NHICs subsequent

termination of the contract under clause 16(2) was the fourth item on the list. The

efficacy of that termination is dependant on whether the suspension under 16(1)

was valid. The other eight areas of dispute are not relevant to this appeal.

[9] By clause 16, NHIC was entitled to suspend work, or reduce the rate of

work and to terminate the contract if NHIC did not receive reasonable evidence,

as required by clause 2.4, within a specified period of time. Clause 16 provides,

inter alia:

16.1 If the Engineer fails to certify in accordance with Sub-

Clause 14.6 [issue of Interim Payment Certificates] or the

Employer fails to comply with Sub-Clause 2.4 [Employers

Financial arrangements] or Sub-Clause 14.7 [Payment], the

Contractor may, after giving not less than 21 days notice to the

Employer, suspend work (or reduce the rate of work) unless and

until the Contractor has received the Payment Certificate,

reasonable evidence or payment, as the case may be and as

described in the notice . If the Contractor subsequently

receives such Payment Certificate, evidence or payment (as

described in the relevant Sub-Clause and in the above notice)

before giving a notice of termination, the Contractor shall

resume normal working as soon as is reasonably practicable

16.2 The Contractor shall be entitled to terminate the Contract

if: (a) the Contractor does not receive the reasonable evidence

within 42 days after giving notice under Sub-Clause 16.1

[Contractors Entitlement to Suspend Work] in respect of a

failure to comply with Sub-Clause 2.4 [Employers Financial

Arrangements]

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Clause 2.4 provides as follows:

The Employer shall submit, within 28 days after receiving any

request from the Contractor, reasonable evidence that financial

arrangements have been made and are being maintained which

will enable the Employer to pay the Contract price (as estimated

at that time) in accordance with Clause 14 [Contract Price and

Payment]. If the Employer intends to make any material change

to his financial arrangements, the Employer shall give notice to

the Contractor with detailed particulars.

On 28th

April, 2005, NHIC invoked clause 2.4. On the 31st May, 2005, on the

basis that it had not received any reasonable evidence, it issued a twenty one day

notice under clause 16.1, threatening to suspend/reduce work.

[10] On the 23rd

September, 2005, NHIC suspended work under the contract,

alleging that NIPDEC was in breach of clause 2.4. On 3rd

November 2006 it gave

notice of termination of the contract pursuant to clause 16.2 on the same ground.

Between September 2005 and November 2006, the parties appeared to have been

in discussions aimed at securing a mutual disengagement from the contract

pursuant to its terms. Those discussions did not bear fruit and NHIC purported to

terminate pursuant to clause 16.2 in November 2006. NIPDEC denied that it was

breach of clause 2.4. NIPDEC contended that its correspondence to NHIC dated

28th

December, 2004, 29th

December, 2004, 5th

July, 2005, 6th

July, 2005, 6th

October, 2006 and 20th

October, 2006, satisfied the evidential threshold required

clause 2.4. One of the questions in this appeal is whether the arbitrator was right

to hold that the correspondence of 5th

and 6th

July 2005, 6th

October 2006 and 20th

October 2006 did not satisfy the evidential threshold under clause 2.4. NIPDEC

contends that he was wrong and that this is an error on the face of the award.

[11] The arbitrator in his SPA upheld NHICs contentions that NIPDEC did not

provide reasonable evidence that financial arrangements had been made and were

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being maintained so as to enable NIPDEC to pay the contract price. NHIC was

therefore entitled to reduce its rate of work and to suspend and to terminate the

contract in the manner that it had.

[12] By letter dated 18th

May, 2007, (after the SPA had been made) NIPDEC

invited the arbitrator to state a special case for the courts consideration pursuant

to section 32 of the Arbitration Act, Chap 5:01, with respect to the proper

interpretation of clause 2.4. In its letter, NIPDEC set out certain considerations

for the Court in respect of clause 2.4.

[13] The arbitrator, by e-mail dated the 31st May, 2007, rejected NIPDECs

request for a case stated. In summary, he concluded as follows:

(i) s. 32(1) and (2) do not permit a case to be stated, where a binding

decision has already been produced on the issues in question.

(ii) The SPA was made on 16 April, 2007 and was issued by the ICC shortly

thereafter. NIPDECs request for a case stated was dated 18 May, 2007.

The SPA deals with questions formulated by the parties and at no time

prior to receipt of the request did NIPDEC suggest that there be any case

stated.

(iii) In such circumstances he was functus officio in respect of those issues, and

did not have the jurisdiction, to state a case for the court.

Further Submissions

[14] We reserved judgment in the appeal, on 23 November 2011. By letter of

29th

June 2012 to the Clerk of Appeals, NHIC raised a further issue. It alleged

that NIPDEC had abandoned the appeal because it had made an unequivocal final

election to adopt the final award and, consequently, all awards which had

preceded it. The final award was the product of the previous four partial awards.

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The SPA forms a basis upon which the final award was made. If NIPDEC

accepted the final award it meant that NIPDEC was no longer interested in

pursuing its challenge to the SPA.

[15] NHIC further submitted that the unequivocal election had come in the

form of an application by NIPDEC, filed on 23rd

February 2012, seeking to strike

out NHICs claim form in civil action, CV2011-04420. In its affidavit in support,

NIPDEC requested that the Court enforce the final award under section 20 of the

Arbitration Act and give judgment in terms.

[16] NHIC contends that NIPDEC by its defence, counterclaim and affidavit in

that civil action and by its conduct in pursuing its application, finally and

irrevocably abandoned this appeal. NHIC sought a further hearing of the appeal.

The parties were directed to file written submissions on the issue with which

direction they have complied. The matter now falls for decision.

The delay in giving judgment

[17] Before dealing with the questions which arise in this appeal, we must

apologise to the parties for the considerable delay in giving this judgment. By the

way of explanation (as opposed to excuse) we say that, apart from the volume of

the documents which we had to examine in this case, events occurred, during the

course of consideration of this matter, which resulted in the depletion of the

complement of appeal judges available to deal with an ever increasing list of

appeals (particularly procedural appeals which must be heard within a particular

time period). These events have been the subject of official comment and it is

unnecessary to elaborate here. Rather than reduce the number of appeals to be

listed for hearing, we endeavoured to increase the number of times each judge sat

monthly. The result is that while, in fact, more appeals were heard and

completed, the reserve time for more difficult and complicated appeals rose.

Happily, the Court of Appeal was finally back to full complement as at 1st

November 2013. Further administrative arrangements are also being made to

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address the problem of protracted reserve time.

The issues

[18] The three broad issues in this case are:

(i) Did NIPDECs application to strike out NHICs claim in CV2011-04420

constitute an abandonment of the appeal?

(ii) Was the judge right to refuse to direct the arbitrator to state a special case?

(iii) Was the judge also right to refuse to remit or set aside the award?

[19] The first issue is a straight forward question. As to the second broad issue

the question arises as to the true purport and meaning of section 32 of the

Arbitration Act (the Act).

As to the third broad issue several subsidiary questions arise:

(i) Was there a procedural mishap arising out of NIPDECs failure to request

that the arbitrator state a case for consideration by the High Court?

(ii) Was there referral to arbitration a general or specific reference?

(iii) Was there an error on the face of the record?

Summary of Decision

[20] (i) NIPDECs application to strike out NHICs claim in CV2011-

04420 did not constitute an abandonment of the appeal. Its decision to

apply to enforce the Final Award was not an irrevocable election because

it was not faced with a choice between alternative rights. A successful

challenge to the SPA would necessarily result in a payment to NIPDEC of

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a greater sum that made under the Final Award

(ii) The judge was right to refuse to direct that the arbitrator state a special

case because on a proper interpretation of section 32 of the Act, it did not

contemplate the direction of a case stated after the arbitrator had made his

award.

(iii) The judge was also right to refuse to remit the award or to set it aside on

the basis of procedural mishap or miscarriage of justice, because

NIPDECs failure to request that the arbitrator state a case for the High

Court under section 32 did not result in an injustice to NIPDEC, neither

did it constitute a deviation from the route which the reference should

have taken toward its destination.

(iv) However, the judge fell into error in finding that the reference to

arbitration was a specific reference. The referral of the dispute to

arbitration was in fact a general reference. The Court is free to review the

arbitral award and to remit it or set it aside, if there is in fact an error on

the face of the record.

(v) There were several errors on the face of the record. The arbitrator

committed several errors of law on the face of the record. These were:

(a) His finding that reasonable evidence that financial arrangements have

been made and are being maintained would ordinarily involve prima facie

some evidence of Cabinet approval having been maintained.

(b) His finding that the letters of 5th

and 6th

July 2005 and 6th

October 2006

did not satisfy the provisions of clause 2.4.

(c) His finding that the letter of 5th

July 2005 was equivocal because of the

use of the words without prejudice.

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(d) His finding that the letter of 6th

October 2006 in any event did not satisfy

the 28th

April 2005 notice because it referred to a contract price

($224,129,801.99) which was lower than the contract price

($286,992,070) to which the notice related and for which assurance of

financial arrangements were sought.

These were errors of law because:

(i) He placed too much emphasis on necessity for Cabinet approval to satisfy

the requirement of reasonable evidence. He set the bar too high and set

too high a standard as to the meaning of reasonable evidence in clause

2.4.

(ii) His finding that the 6th

October 2006 letter, by its reference to the lower

contract price of $224,129,801.99, did not amount to reasonable evidence,

was a finding to which no reasonable arbitrator could come.

Did NIPDEC abandon the appeal

[21] NHIC submits that NIPDEC by seeking to enforce judgment on the final

award, elected to abandon this appeal. This principle of election has a common

law and equitable element. In this case, NHIC contends that NIPDECs election

was a common law election. At common law, election arises when a party is

faced with two inconsistent courses of action and it elects one of these alternative

courses over the other. The decision must be unequivocal. The election

irrevocably binds the party making the choice. See Motor Oil Hellas Refineries

v Shipping Corporation of India [1990] 1 Lloyds Rep 390. Lord Goff at page

398 stated that:

it is a prerequisite of election that the party making the election

must be aware of the facts giving rise to this new right. Where with

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knowledge of the relevant facts a party has acted in a manner

consistent only with his having chosen one of the two alternative

and inconsistent courses of action open to him, he is held to have

made his election accordingly. It requires an unequivocal

representation

[22] It is sufficient to show that the electing party has made an unequivocal

representation of his decision, in circumstances in which his knowledge of the

facts and of his legal rights allowed him to make an informed choice and that he

communicated that decision to the other party.

[23] At paragraph 26 of his further written submissions Mr. Fitzpatrick

submitted that the Final Award, which was based upon all the interim awards

which preceded it, including the SPA, was produced on 14th

September 2011. At

that point NIPDEC had a choice: it could either withdraw the current appeal

against the SPA (which was pending decision) and proceed to enforce the Final

Award; or it could continue with the prosecution of the appeal to decision, taking

no steps in the interim to enforce the Final Award. He relied on the decision in

Meng Leong Development Pte Ltd. v. Jip Hong Trading Co. Pte. Ltd. (1985)

1 ALL E.R. 120.

[24] He added that the alternative courses of action open to NIPDEC were

entirely inconsistent with each other. A court has no power in this jurisdiction to

affirm part and disaffirm part of an arbitral award. It must decide whether the

award is good or whether it should go in its entirely, either by way of setting aside

or referral. In those circumstances a party which enforces an award cannot

afterwards be heard to say that he wishes to appeal it, for by so doing, he would

be claiming that the award was entirely wrong, and should be set aside or

remitted, a circumstance which would mean that he would have no right to any

benefit thereunder.

[25] He submitted that NIPDEC by its Defence and Counterclaim and by its

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affidavit filed on 23rd

February 2012 in the recent action, as well as by its

subsequent arguments before the court chose to seek an order under section 20 of

the Arbitration Act enforcing the Final Award.

[26] In exercising its right under section 20, NIPDEC was relying on the SPA

and was acting in a manner consistent only with having chosen not to appeal the

SPA or to challenge any of the partial awards on which the final award is

founded.

[27] In additional submissions filed on 26th

September 2012 Mr. Fitzpatrick

further submitted that the arbitral award can only be set aside or remitted in its

entirety. It is indivisible. NIPDEC could not pursue the challenges to the SPA

and the third partial award while seeking to enforce the final award. Once the

final award had been published, any options to withdraw its challenges to the SPA

and the third partial award were closed.

[28] I agree with Mr. Newmans submission that NIPDECs decision to apply

to the Court to enforce the final award did not constitute an irrevocable election.

NIPDECs conduct was not unequivocal. The challenge to the SPA, if successful,

(as it has been) can result in (and has so resulted) in the award being set aside and

remitted to the arbitrator with a direction that the suspension and termination of

the award by NHIC was wrongful. Such a consequence necessarily meant the

payment of a greater sum by NHIC to NIPDEC than that granted by the final

award.

[29] The dictum of Lord Atkin in Lissenden v. CAV Bosch Ltd [1940] AC

412 at 429 (helpfully cited by Mr. Newman) is apt:

The applicant is not faced with alternative rights: it is the same

right that he claims but in larger degree. In Mills v. Duckworth

(1), a plaintiff who has been awarded damages for negligence

had taken the judgment sum out of a larger sum paid into Court

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and then had appealed against the quantum of damages and was

met by a similar objection to his appeal. Lord Fairfield in

overruling the objection pointedly said: The plaintiff said I am

not going to blow hot and cold. I am going to blow hotter.

Here the applicant is not faced with a choice between alternative

rights: he has exercised an undisputed right to compensation:

and claims to have a right to more. You have not lost your right

to a second helping because you have taken the first

[30] I do not accept that the Final Award renders the entire award indivisible.

In my judgment a successful challenge of the SPA simply requires the SPA to be

reconsidered by the arbitrator as directed by the Courts. It is severable from other

partial awards.

[31] I turn then to the issues raised in the substantive appeal.

Jurisdiction of the Court

(i) Power to Remit

[32] NIPDEC seeks to have the award set aside for error on the face of the

record. It also seeks to have the award remitted to the arbitrator on the ground

that there was a procedural mishap resulting in an injustice to it. The courts

jurisdiction to remit is statutory. It is set out in section 18(1) of the Act which

provides

(1) In all cases of reference to arbitration, the court may

from time to time remit the matters referred, or any of them to the

reconsideration of the arbitrators or umpire.

[33] The judge, following the decision of Jamadar J (as he then was) in ICS

Grenada Limited v. NH International (Caribbean) Limited, H.C.A. 1541 of

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2002 accurately sets out, at paragraph 53 of her judgment the bases upon which a

court of law will order the remission of an award to the arbitrator. These are:

(i) Where the award is bad on its face.

(ii) Where there is misconduct on the part of the arbitrator.

(iii) Where there has been a mistake by the arbitrator.

(iv) Where, after the award has been made, fresh evidence has been

discovered.

[34] NIPDEC in its written submissions had contended that both Jamadar J and

the judge had adopted a restrictive construction of section 18. The submission is

not accurate. Like Jamadar J., the judge held that these categories had been

extended to include situations in which there had been a misunderstanding

leading to injustice or (as the judge opined) some procedural mishap which led

to injustice. I agree.

[35] The latter category has been the subject of juridical controversy. See the

comments of the authors of Mustill and Boyd, 2nd

edition 1989, at pages 549-

550 as follows:

In recent years it has been held that an award may be remitted

if there has been a misunderstanding leading to injustice, even

though the arbitrator has not committed misconduct. These

decisions undoubted go beyond the list set out above. Whether

they are sustainable on the law as it now stands depends upon

whether the list is exclusive, or whether the Court has a general

discretion to remit whenever justice so demands, the list

furnishing no more than illustrations and guidance as to the way

in which the Court will intervene. This question is controversial:

there is strong authority for each view. The weight of the

existing authority is in favour of the more restricted view

[36] In Indian Oil Corporation v. Coastal (Bermuda) Ltd. [1990] 2 Lloyds

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Rep. 407, Evans J in considering section 22 of the English Arbitration Act 1950

[CHECK] (the equivalent of our section 18(1)) concluded, after some discussion,

that the power to remit an award under section 22 can and should be

exercised when there is otherwise the likelihood of a substantial miscarriage of

justice, either because the arbitrator has been mishandled (that is misconduct) or

where there has been some other procedural mishap, even if the mishap is due

to the party seeking remission. His comments, as they relate to the law in respect

of section 22(1) bear full reproduction. He said, starting at page 414:

The statutory power of remission is discretionary and it is not

subject to any statutory limits. However, the discretion although

unlimited in terms may be subject to restrictions imposed by

judicial decision (Mustill and Boyd (2nd

ed) P. 548). There have

been many decisions revealing two lines of authority, and the

question remains controversial (Mustill and Boyd again, p. 550).

Some authorities support the view that the power may be

exercised whenever justice so demands, others the narrower view

that the circumstances must fall within one of a number of

categories which have been recognized in past judgment of the

Courts (ibid).

According to Russell on Arbitration (19th

and 20th

eds.):

there is a never-ending war between two irreconcilable

principles, the high principle which demands justice though the

heavens fall, and the low principle which demands that there

should be an end to litigation.

I must admit that I do not read the authorities in this way. True,

the power should not be exercised unless the failure to do so

would or might cause injustice to the applicant: compare The

Aros, [1978] 1 Lloyds Rep. 456 at p. 463 per Mr. Justice

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Brandon. But at the same time it is of over-riding importance

that the finality of awards hall be preserved which, on any view

of the matter , imposes severe restraints on the exercise of the

statutory power: per Sir Roger Ormrod in The Montan, [1985] 1

Lloyds Rep. 189 at p. 198.

These two factors, in my view, are not inconsistent with each

other. If either of them is to prevail, then it should be the

requirement of justice. But justice, even fairness, is not an

abstract concept. It has to be applied in this context between two

parties who were in dispute with each other and who agreed that

the dispute should be resolved by an arbitral tribunal. They

agreed that the tribunals award should be final. But they agreed

this on the basis that the arbitration procedures would be

regulated by law. The Court has statutory power to set aside an

award when the arbitrators misconduct themselves or the

reference - s. 25 of the 1950 Act - but it also has to unqualified

discretion to remit the award to the chosen tribunal under s. 22.

If the power is exercised, but only in circumstances when it

would be unjust not to do so, then there is not, in my judgment,

an uncovenanted nor an unacceptable restriction on the agreed

finality of the tribunals award. As Lord Atkin said in a different

context, recently cited with approval by the Court of Appeal

(Criminal Division) Finality is a good thing, but justice is

better. (Ras Behari Lal v. The King-Emperor, (1933) 50

T.L.R.1).

It remains, of course, a matter for judicial decision whether such

injustice exists, or would exist, in the particular case, and in the

nature of things previous cases will provide examples of the

circumstances in which it can be recognized. In addition, some

judgments will be binding on inferior Courts whenever the same

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or indistinguishable facts arise again. So far as binding

authority is concerned, the extent of the jurisdiction arose for

consideration in The Montan (above) and Sir John Donaldson,

M.R. said this (at p. 192):

Section 22 empowers the Court to remit an award to an arbitrator

for reconsideration. It provides the ultimate safety net whereby

injustice can be prevented, but it is subject to the consideration

that it cannot be used merely to enable the arbitrators to correct

errors of judgment, whether on fact or law, or to have second

thoughts, even if they would be better thoughts.

Lord Justice Robert Goff, agreed that the award in that case

should be remitted, and Sir Roger Ormrod at p. 198, in the

passage already referred to, said that the section preserved the

power to order remission:

if the interest of justice demanded and the circumstances

permitted.

I respectfully agree with these descriptions of the Courts power,

and I would probably be bound to adopt them, even if I did not.

It would be unusual if the unqualified statutory discretion was

limited by decisions in previous cases, binding precedent apart,

and it would be surprising if the statutory power is so encrusted

(the apt word used in argument in the present case) by judicial

statements that it cannot be exercised when justice so requires. I

must respectfully dissent, therefore, from the conclusion reached

in The Apollon, [1985] 1 Lloyds Rep. 597, that there is only

power to order remission on one of the four grounds listed by the

Court of Appeal in 1898 (quoted in Mustill & Boyd p. 549) or

otherwise when a further category has been expressly recognized

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by the Courts.

[37] In MF King v. Thomas McKenna Ltd. [1991] 2 W.L.R. 1234 Lord

Donaldson of Lymington, MR added his voice to the view that the jurisdiction of

the Court under section 22(18) was unlimited. He stated at 1241 (under the

rubric scope of the power to remit):

In ascertaining the limits of the court's jurisdiction, properly so

called, I see no reason why section 22 and the other sections

should not be construed as meaning what they say. Certainly so

far as section 22 is concerned, there is no element of doubt or

ambiguity. The jurisdiction is wholly unlimited.

[38] Later at page 1243 letter A he added:

In my judgment the remission jurisdiction extends beyond the

four traditional grounds to any cases where, notwithstanding that

the arbitrators have acted with complete propriety, due to mishap

or misunderstanding, some aspects of the dispute which has been

the subject of the reference has not been considered and

adjudicated upon as fully or in a manner which the parties were

entitled to expect and it would be inequitable to allow any award

to take effect without some further consideration by the

arbitrator. In so expressing myself I am not seeking to define or

limit the jurisdiction or the way in which it should be exercised in

particular cases, subject to the vital qualification that it is

designed to remedy deviations from the route which the reference

should have taken towards its destination (the award) and not to

remedy a situation in which, despite having followed an

unimpeachable route, the arbitrators have made errors of fact or

law and as a result have reached a destination which was not

that which the court would have reached. This essential

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qualification is usually underlined by saying that the jurisdiction

to remit is to be invoked, if at all, in relation to procedural

mishaps or misunderstandings. This is, however, too narrow a

view since the traditional grounds do not necessarily involve

procedural errors. The qualification is however of fundamental

importance. Parties to arbitration, like parties to litigation, are

entitled to expect that the arbitration will be conducted without

mishap or misunderstanding and that, subject to the wide

discretion enjoyed by the arbitrator, the procedure adopted will

be fair and appropriate. What they are not entitled to expect of an

arbitrator any more than of a judge is that he will necessarily

and in all circumstances arrive at the "right" answer as a matter

of fact or law. That is why there are rights of appeal in litigation

and no doubt would be in arbitration were it not for the fact that

in English law it is left to the parties, if they so wish, to build a

system of appeal into their arbitration agreements and few wish

to do so, preferring "finality" to "legality," to adopt Lord

Diplock's terminology.

These decisions have since been eroded by the repeal of the 1950 Act and by the

case law deriving from the new legislation. They remain apposite to section 18

and reflect what is the appropriate approach to its application.

(ii) The courts power to set aside

[39] As the judge stated at paragraph 72 of her judgment, the Courts of

Trinidad and Tobago have both an inherent jurisdiction and a statutory

jurisdiction to set aside an arbitral award. The statutory power to set aside (as set

out in section 19(2) of the Act) arises where the arbitrator has misconducted

himself or the proceedings, or, where an arbitration or an arbitration award, has

been improperly procured. The courts inherent jurisdiction to set aside arises

where:

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(i) there is an error on the face of the award

(ii) the award is made in excess of jurisdiction, whether wholly or partly

(iii) there is a patent substantive defect.

See Mustill and Boyd - second edition - The Law and Practice of Commercial

Arbitration at page 91.

[40] As noted by Jamadar J in ICS:

The inherent power of the court to set aside an award was given

statutory recognition by section 3 of the local Act (section 1 of the

1889 UK act). The situation is well summarised in Commercial

Arbitration by Mustill and Boyd (1989 ed.) at page 447, where

the authors state:

As regards the inherent powers of the Court,

section 1 of the 1889 Act provided that all

submissions should, unless a contrary intention

was expressed thereon, take effect as if they had

been made an order of court. The effect was thus

to bring virtually all references under the direct

and continuous supervision of the Court, which

would exercise powers by virtue of its own

inherent right of control, quite distinct from the

statutory powers to intervene by setting aside and

remission.

Thus, all voluntary references to arbitration attracted the courts

inherent powers of enforcement and supervision.

The courts discretion to remit or aside an arbitral award is also circumscribed by

the nature of the dispute. The court will refuse to remit or to set aside the award if

what is referred is a specific question of factor law or some principle of

construction for the determination of the arbitrator. This is so even if the error is

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clear on the face of the award. Neither will the award be remitted or set aside

because the court disagrees with the conclusion to which the arbitrator came,

unless of course it is clear on the face of the award that the arbitrator has

proceeded illegally. Two leadings cases fall to be considered here. Kelantan

Government v. Duff Development Co. [1923] A.C. 395 and F.R. Absalom Ltd.

v. Great Western (London) Garden Village Society [1973] A.C. 592.

[41] In Kelantan, the Government of Kelantan granted to an English company

certain portion of State lands and certain mining rights, by a deed of indenture. A

dispute as to the construction of the deed was referred to arbitration (as provided

for by the deed). The arbitrator decided against the Government. A motion to set

aside his award was refused by Russell J and by the Court of Appeal. The

Government appealed to the House of Lords which affirmed the decision of the

Court of Appeal. Viscount Cave at page 408 stated:

it is desirable to refer to a question which was mentioned

(though not decided) in the judgments of the learned judges of

the Court of Appeal and which was again raised in the argument

before this House - namely, the question whether there was not

here such a reference to the arbitrator on the construction of the

deed of cancellation that his conclusions on that point must be

accepted as final and not open to be questioned on application to

the Court. My Lords, in my opinion there was in this case a

reference to the arbitrator of the questions which had arisen on

the construction of the deed of cancellation. The arbitration

clause in the deed applied in terms to every dispute, difference or

question which might arise between the parties touching the

"construction, meaning, or effect" of the deed. The appointment

of the arbitrator showed that differences had arisen as to

construction, and the arbitrator was appointed to determine those

differences. In the pleadings delivered in pursuance of the

arbitrator's direction, the questions of construction were again

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clearly raised. Lastly, the appellants in their case delivered for

the purpose of this appeal (para. 13) stated that among the points

to be determined by the arbitrator were: "(1.) What, upon the

true construction of the Deed of Cancellation, was the nature

and extent of the obligation of the Government in regard to the

making of the cart road? (2.) Whether, upon the true

construction of the Deed of Cancellation, the Government had

entered into a covenant with the Company to construct the

railway, and if so, in what terms, and what was the nature and

extent of the obligation of the Government under such

covenant?" The reference, therefore, was a reference as to

construction.

If this be so. I think it follows that, unless it appears on the face

of the award that the arbitrator has proceeded on principles

which were wrong in law, his conclusions as to the construction

of the deed must be accepted. No doubt an award may be set

aside for an error of law appearing on the face of it; and no

doubt a question of construction is (generally speaking) a

question of law. But where a question of construction is the very

thing referred for arbitration, then the decision of the arbitrator

upon that point cannot be set aside by the Court only because the

Court would itself have come to a different conclusion. If it

appears by the award that the arbitrator has proceeded illegally -

for instance, that he has decided on evidence which in law was

not admissible or on principles of construction which the law

does not countenance, then there is error in law which may be

ground for setting aside the award; but the mere dissent of the

Court from the arbitrator's conclusion on construction is not

enough for that purpose.

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At page 410 he said:

To the same effect are the decisions of this House in Holmes

Oil Co. v. Pumpherston Oil Co. (4) and of the Judicial

Committee of the Privy Council in Attorney-General for

Manitoba v. Kelly (5); and in In re King and Duveen (6)

Channell J. stated the rule concisely as follows: "It is no doubt a

well-established principle of law that if a mistake of law appears

on the face of the award of an arbitrator, that makes the award

bad, and it can be set aside ...., but it is equally clear that if a

specific question of law is submitted to an arbitrator for his

decision, and he does decide it, the fact that the decision is

erroneous does not make the award bad on its face so as to

permit of its being set aside. Otherwise it would be futile ever to

submit a question of law to an arbitrator.

[42] Lord Parmoor at page 417 put the issue the other way:

Where a question of law has not specifically been referred to an

umpire, but is material in the decision of matters which have

been referred to him, and he makes a mistake, apparent on the

face of the award, an award can be set aside on the ground that it

contains an error of law apparent on the face of the award

He added at page 418 that:

In the present appeal it was argued by the counsel on behalf of

the appellants that the question of the construction of the deed

had not been specifically referred to the arbitrator, although the

construction of the deed was absolutely necessary for the

determination of the disputes which had been referred to him. In

my opinion this contention is not maintainable. Whether,

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however, a question of law has been specifically submitted to

arbitration, falls in each case to be determined on the terms of

the particular submission. If the Court, before which the award

is sought to be impeached, comes to the conclusion that the

alleged error in law, even if it can be maintained, arises in the

decision of a question of law directly submitted to the arbitrator

for his decision then the principle stated by Channell J. in In re

King and Duveen (2) applies, and the parties having chosen their

tribunal, are not in a position to question the award, or to

claim to set it aside.

[43] F.R. Absalom Ltd. v. Great Western (London) Garden Village Society

[1993] AC 592 was a decision which went the other way. The facts bear

repetition because they are comparable to this case and raise a similar legal issue.

A building contract provided by clause 30 that:

The contractor shall be entitled .... under certificates to be issued

by the architect to the contractor .... to payment by the employer

from time to time by instalments, when in the opinion of the

architect actual work to the value of 1000l. has been executed in

accordance with the contract, at the rate of 90 per cent. of the

value of the work so executed in the building and materials

actually on the site for use on the works until the balance in hand

amounts to the sum of 2000l.

[44] The contract also provided that if any dispute should arise between the

employer, or the architect on his behalf, and the contractors as to the construction

of the contract or as to the withholding by the architect of any certificate to which

the contractors might claim to be entitled, the dispute was to be referred to an

arbitrator. By clause 26, if the contractors should suspend the work, except in

case of a certificate being withheld, the architect was empowered to give notice to

the contractors to proceed with the work with all reasonable dispatch. Disregard

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of this notice might involve the contractors in serious consequences.

[45] After 9000l. or more had been paid by the employers to the contractors

upon certificates given by the architect, the contractors claimed that on March 11,

1929, they were entitled to a further substantial sum which had not been included

in the architect's certificates. The employers insisted that the contractors had been

overpaid, and that no certificate was due to them. The contractors thereupon

stopped work, and the architect served upon them a notice under clause 26.

[46] The parties then submitted to an arbitrator the disputes in regard to (1)

the issue of certificates and (2) the validity of the notice served by the architect

under clause 26 of the contract. The arbitrator found that on May 11, 1929, there

remained due to the contractors a sum of 793l. 17s. 10d., and awarded that

having regard to the provisions of clause 30 the architect had up to the said

11th day of March, 1929, issued to the contractor certificates in accordance with

the terms of the contract. He further awarded that the notice given under clause

26 was properly given and was valid.

[47] It was held that the construction of clause 30 had not been specifically left

to the arbitrator and the award should be set aside for error of law appearing on

the face of it because he erred in his construction of clause 30. Lord Russell of

Killowen in his speech at page 607 stated:

My Lords, it is, I think, essential to keep the case where disputes

are referred to an arbitrator in the decision of which a question

of law becomes material distinct from the case in which a specific

question of law has been referred to him for decision. I am not

sure that the Court of Appeal has done so. The authorities make

a clear distinction between these two cases, and, as they appear to

me, they decide that in the former case the Court can interfere if

and when any error of law appears on the face of the award, but

that in the latter case no such interference is possible upon the

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ground that it so appears that the decision upon the question of

law is an erroneous one.

At page 608 he said:

The same distinction appears in the judgment of the Privy

Council in the case of Attorney-General for Manitoba v. Kelly

(3), in which the following passage occurs: "Where a question of

law has not specifically been referred to an umpire, but is

material in the decision of matters which have been referred to

him, and he makes a mistake, apparent on the face of the award,

an award can be set aside on the ground that it contains an error

of law apparent on the face of the award.

[48] Mr. Newman, for NIPDEC submitted the distinction between general and

specific is far too narrow a distinction. The focus in modern cases (none of which

he cited) was to permit a review if there is shown, an error of law on the face of

the award even if the award under review was in respect of a specific reference to

arbitration. He added that an error of law can be shown, he said, even where there

is a mixed question of law and fact. When one is looking at an error of law on the

face of the award, the focus is not on the general (or generic) but rather on the

specific. He submitted that this was the slightly more modern approach. He

described the Kelantan decision as having adopted a more rigorous approach to

the question of general versus specific references. Where there is an error of law

on the face of the award it is reviewable even though it is a specific referral to the

arbitrator. I have found no authority which supports this approach. Suffice it to

say therefore that I shall continue to follow the more restrictive approach.

I turn then to the issues in this case.

Conclusions

(a) Whether the award should be remitted to the arbitrator

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(i) Failure to request a case stated

[49] It is unclear from the written submissions whether NIPDEC was still

challenging the arbitrators decision not to state a special case for the

court, pursuant to section 32 of the Act. But it still relies on its full written

submissions before the judge. Moreover, Mr. Newman addressed the

matter in argument before us. He submitted that section 32 of the Act

permitted an arbitrator to state a question in the form of a special case after

an award is given. The relevant provisions of section 32 state as follows:

(1) An arbitrator or umpire may, and shall if so

directed by the Court, state -

(a) any question of law arising in the course of the

reference, or

(b) an award or any part of an award

in the form of a special case for the decision of the Court.

(2) A special case with respect to an interim award or

with respect to a question of law arising in the

course of a reference may be stated, or may be

directed by the Court to be stated, notwithstanding

that proceedings under the reference are still

pending.

(3)

[50] He added that there is nothing in the wording in section 32 which provides

that the application to state a special case must be made before the award is given.

Rather, it was a matter of judicially imposed restrictions in the interpretation of

the statute. But those restrictions have been loosened as time has gone on. He

added that in this case the judge adopted a restrictive view. If this Court took a

restricted view of section 32, (i.e. by saying that section 32 does not contemplate

a special case being stated after the award has been made) then there was a

procedural mishap. If it took a more expansive view, then there is jurisdiction to

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remit the matter back to the arbitrator on the basis of an error law on the face of

the award.

[51] I return to the issue of procedural mishap at paragraph 53 below. The

judge found that the request to state a special case came too late. She held that the

arbitrator was functus officio in relation to the SPA and could thereafter state a

case for the court in respect of issues on which he had already made definite

findings of fact and law. She relied on the decision in Fidelitas Shipping Co Ltd

v. V/O Exportchleb, [1965] 1 Lloyd's Rep. 223 and London Dock Company v.

Shadwell 1862 7 L.T. 381.

[52] The judge was correct in her interpretation of the section 32. It is a

sufficient answer to Mr. Newmans submissions to say that on a proper

interpretation of section 32, the clear contemplation of Parliament was for a case

to be stated prior to the making of the award. I do not see such a construction of

section 32 as restrictive. It is the only reasonable interpretation of the section.

More so from a business perspective. Why should the arbitrator seek the

guidance of the court by way of case stated, after he has already given a decision.

The decisions in Fidelitas and London Dock Company v. Shadwell give clear

guidance on the point. The passages relied on by the judge at page 228

(Fidelitas) and page 382 (London Dock Company v. Shadwell) give strong

support for the decision to which she came and with which I agree. It is

unnecessary to cite them here.

(ii) Procedural mishap

[53] Mr. Newman also submitted that there was a procedural mishap which led

to an injustice in the making of the award. He contended that the procedural

mishap was NIPDECs misunderstanding of the requirement to ask the arbitrator

to state a case for the opinion of the Court on the critically important provision

of clause 2.4 of the FIDIC COC, before making the award. The serious injustice

was the prospective loss of an important ruling from the Court on the

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interpretation of an important contractual provision which [had] far reaching

implications not only for the contract but other Government/IDB contracts

where the FIDIC COC are generally adopted by the parties.

[54] Further, given NIPDECs stated intention always to seek an opinion from

the Court on this question (as confirmed by the evidence of its acting general

manager, Wendy Ali), there was in fact a deviation from the route which the

reference should have taken towards its decision. Put another way, there was a

procedural mishap because of NIPDECs misunderstanding, with the result that

the arbitration did not proceed in the manner that it should have. He relies on the

decision in Indian Oil Corporation v. Coastal (Bermuda) Ltd. [1990] 2

Lloyds Rep. 407, and on the decision in King v. Thomas McKenna (supra):

[55] Mr. Fitzpatrick for NHIC also relies on the King decision, in particular, on

the dictum of Lord Donaldson MR cited above at paragraph 24. He contends,

inter alia, that, arising out of the King decision, in order to constitute a procedural

mishap:

(i) The event must have arisen during the course of the reference to the

arbitration and must have resulted in a deviation from the route which the

reference should ordinarily have taken towards the award.

(ii) The event must have resulted in some aspect of the dispute not being

considered and adjudicated upon as filling or in the manner that the parties

were entitled to expect and it would be inequitable to allow the award to

have effect without some further consideration by the arbitrator.

He contended that on NIPDECs own evidence, the arbitration proceeded exactly

as NIPDEC intended, since it was NIPDECs conscious decision not to request

that a case be stated for the court prior to the issue of the award.

[56] The decisions in Indian Oil Corporation and King fall to be considered

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here. In King there was an arbitration of a building dispute. During the course of

argument before the arbitrator on the issue of costs, counsel for the building

owners decided not to reveal to the arbitrator that there was a sealed offer from

the owners in the sum of five thousand pounds (5000) for the outstanding works

claimed by the contractor. In error, she failed to indicate either to the arbitrator or

the contractors that she wanted the issue of costs to be held over until questions of

liability and quantum were determined. The arbitrator awarded the sum of four

thousand, seven hundred and forty-three pounds (4,743) in full settlement of all

claims and not knowing of the sealed offer, awarded the contractors the costs of

the arbitration.

[57] The trial judge held that a deliberate but mistaken tactical decision by

counsel, not to inform the arbitrator of the sealed offer, or to request an interim

award thus reserving the issue of costs, constituted a procedural mishap, entitling

a court to exercise its discretion to remit the award. The decision was upheld an

appeal.

[58] In Indian Oil Corporation v. Coastal (Bermuda) Ltd. (supra) (also

relied on by NIPDEC) the arbitrators had found in favour of Coastal as a result of

the decision by IOCs counsel not to amend the pleaded case to include facts

already in evidence. This would have permitted them to advance a stronger case;

one which in the opinion of one arbitrator, might very well have succeeded.

[59] Evans J remitted the matter to the arbitrators. He held, inter alia, that the

consequences for IOC of the failure of its counsel to seek leave to amend the

pleadings (even when that had been raised by the tribunal itself), had been very

serious; that if the evidence disclosed facts which established a defence in law to

the claim but the tribunal failed to take account of that defence because the legal

issues were not correctly formulated in IOC pleadings, then (even if the failure

was due to IOCs own counsel) there had been an injustice to IOC which could be

remedied by remitting the award under section 22.

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[60] In this case the judge (adopting the language of Lord Donaldson) held that

there had been no deviations from the route which the reference should have

taken toward its destination. She found that arbitrator dealt properly and fairly

with the issues raised by the parties and the questions posed to him by the

amended TOR. There was no serious or substantial injustice to NIPDEC as a

result of its not requesting the arbitration.

[61] The judge was correct to reject NIPDECs arguments. In both Indian Oil

Corporation v. Coastal (Bermuda) Ltd. and King v. Thomas McKenna,

counsels error occurred during the arbitration and resulted in material issues both

factual and legal not being considered by the arbitrator. These errors resulted in

decisions adverse to the aggrieved party. There was a real probability, in both

cases, that, had those issues been considered by the arbitrators, the awards would

have been different.

[62] In this case, the failure to request a case stated referral was a matter of

choice for NIPDEC (however inadvertent that might have been). Its decision not

to ask for a referral did not cause the arbitrator to ignore or to fail to consider

material issues in the arbitration, which resulted in an injustice to NIPDEC.

Neither was it a deviation from the course which the arbitration would ordinarily

have taken towards its conclusion. The judge was right to reject the contention.

While the non referral may have deprived the parties of the benefit of an

important ruling from the court on the purport of an important contractual

provision, there was no injustice to NIPDEC.

[63] Indeed, it is in the nature of arbitration proceedings, that court proceedings

are generally excluded. The provisions of clause 2.4 are not so much a matter of

rocket science, as to require some earth shaking decision of the Supreme Court of

Trinidad and Tobago, such that its non delivery leaves the parties bereft of advice

on the interpretation of the clause. There is no demonstrable injustice to NIPDEC

resulting from the non referral of the matter to the High Court. The submission

fails.

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(b) Should the award be remitted or set aside for error on the face of the

record

(i) General or specific reference

[64] The first question is whether, in this case, the reference to arbitration was

specific or general. The judge found at paragraph 86 that Specific questions of

law and the construction of clause 2.4 of FIDIC COC were indeed referred to the

decision of the arbitrator and the award of the arbitrator ought not to be set

aside or remitted unless I find on the face of the award that the Arbitrator had

proceeded illegally or on principles of construction which I do not countenance.

[65] Mr. Newman contended that the judge is wrong. The matters before the

arbitrator were part of a general reference to arbitration. He asserts that the

production of a list of issues for hearing and determination in a partial award (set

out in the 5th

December letter) did not serve to change the nature of the reference.

[66] Mr. Fitzpatrick responded in his written submissions that:

(a) NIPDECs complaint is, in reality, not one of construction. Rather, it is

that the arbitrator should not have found that evidence of the

Governments wealth did not constitute reasonable evidence of NIPDEC

having made and maintained financial arrangements to pay the contract

price at the relevant time.

(b) NIPDEC is really seeking to attack the arbitrators findings of fact.

(c) What constitutes reasonable evidence is not a matter of construction but

is to be determined in light of all the circumstances.

(d) It is clear that the arbitrators findings on what was required to comply

with the reasonable evidence requirements of clause 2.4 were arrived at

after a consideration of the circumstances of the case and all relevant facts.

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(e) The arbitrators findings are in answer to the specific question posed by

NIPDEC, to wit:

Assuming, without admitting, that [NHIC] was entitled to make

the request pursuant to sub-clause 2.4 did the facts and

circumstances including inter alia, the [financial arrangements

correspondence] satisfy the evidential threshold required by

sub-clause 2.4?

[67] In his oral submissions Mr. Fitzpatrick stated that whether the financial

correspondence constitutes sufficient evidence was a question of fact. That was

demonstrated by the positions of both parties and the approach of the arbitrator in

coming to his conclusion. Mr. Fitzpatrick submitted further, that specific

questions of law having been asked and answered, the general rule is that the

arbitrator is the sole and final judge of all questions of law and fact. The Court

will not interfere with the award, even if it is erroneous, unless it appears on its

face that the arbitrator has proceeded illegally.

[68] In my judgment, the reference was not a specific reference. The

construction of clause 2.4 is at the heart of the issue of validity under section 16

but its interpretation arises in the course of deciding whether the invocation of

clause 16 by NHIC was correct.

[69] An examination of the amended Terms of Reference and Appendix B to

the amended Terms of Reference is required. The issues addressed in the SPA

were not originally referred to the arbitrator. The disputed events occurred in

November 2006, well after the date of the initial request for arbitration and the

original Terms of Reference which were dated 1st December 2005. The parties

therefore agreed to amend the Terms of Reference to enlarge the arbitrators

jurisdiction to include matters not originally referred. The liability issues which

formed the subject matter of the SPA were then expressly included in the

amended Terms of Reference.

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[70] The parties agreed, by a jointly signed letter of agreement dated 5th

December 2006, that certain liability issues should be dealt with in the first

substantive hearing. Thereafter they also agreed the following broad issues:

1. Validity of NHICs Suspension.

2. Whether the Engineer suspended any portion of the Works.

3. Whether Nipdec agreed to NHICs suspension and/or reduction in the rate

of work.

4. Validity of NHICs termination.

5. Validity of Nipdecs termination - 15.2/acceptance of repudiation.

6. Nipdecs seizure of NHICs Goods and Equipment following termination.

7. Contractual requirements for notification of claims by the Employer and

by the Contractor - DEFERRED TO SECOND HEARING.

8. Extent of legal responsibility for design.

9. Compliance by NHICs with sub-clause 8.3 of the Contract - DEFERRED

TO SECOND HEARING.

10. Reviewability of Engineers awards of extension of time.

[71] An examination of the list reveals that the interpretation of clause 2.4 was

not directly listed as an issue for arbitral decision. What was actually referred

was the validity of NHICs suspension and subsequent termination of the contract

pursuant to clause 16(1) and (2) respectively of the contract (items 1 and 4 of the

list). There was no specific referral of clause 2.4. Rather (consistent with

Absalom) the interpretation of clause 2.4 arises in the course of consideration of

clause 16.

[72] Appendix B to the amended Terms of Reference bears this out. Paragraph

1-3 plainly states that the parties having agreed the broad issues (set out above);

Thereafter, at the invitation of the arbitrator (emphasis mine) the

parties formulated specific questions to reflect issues 1-6, 8 and 10

aforesaid.

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Therefore, the questions which were posed to the arbitrator, arose after the

validity of NHICs suspension, pursuant to clause 16(1), had already been

referred to him. The arbitrator, in order to obtain assistance on that broad issue,

asked that specific questions to be posed no doubt in an effort to focus on the

issues.

[73] The arbitrator then decided that certain of those questions were to be dealt

with at the first hearing. Among them were the following questions (which alone

are relevant to this appeal). I shall set them out in the format in which they are set

out in Appendix B (subject to contextual changes).

Broad Issue (1): Validity of the Claimants suspension

1.4.1 Claimants [NHICs] Questions

(a) Was [NHIC] entitled to reduce the rate of work under sub-

clause 16.1 on 23rd

June 2005 by reason of [NIPDEC]

failure to provide reasonable evidence as required by sub-

clause 2.4 that financial arrangements had been made and

were being maintained so as to enable [NIPDEC] to pay

the contract price as estimated at the time?

(b) Was [NHIC] entitled to suspend the works under sub-

clause 16.1 from 23rd

September 2005 until termination by

reason of [NIPDECs] failure to provide reasonable

evidence as required by sub-clause 2.4 that financial

arrangements had been made and were being maintained

so as to enable NIPDEC to pay the contract price as

estimated at the time?

1.4.2 Respondents [NIPDECs] Questions.

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(i) Given the true meaning and effect of sub-clause 2.4 of the

Contract and in the events which have transpired, was

[NHIC] entitled to request from NIPDEC reasonable

evidence that financial arrangements had been made and

were being maintained and which enable the Employer to

pay the Contract Price as contemplated by Sub-Clause 2.4

of FIDIC (the request)?

(Question IV on the list)

(ii) Assuming, without admitting, that NHIC was entitled to

make the request pursuant to Sub-Clause 2.4, did the facts

and circumstances including, inter alia, [Nipdecs] letters

and memoranda dated 28th

December 2004, 29th

December

2004, 5th

July 2005, 6th

July 2005, 6th

October 2006 and

20th

October 2006 (the financial arrangements

correspondence) satisfied the evidential threshold

required by sub-clause 2.4?

(Question V on the list)

[74] In my judgment therefore, the questions raised by the parties, were posed

at the direction of the arbitrator to assist him in coming to a decision on the

validity of NHICs decision to suspend under clause 16. Clause 2.4, though

central to the decision, was a provision which fell to be interpreted by the

arbitrator in the course of his consideration of clause 16. It was not specifically

referred to the arbitrator as a question of law.

[75] The judge therefore erred in holding that the questions were specific

references to arbitration. She did not give full consideration to the contents of

Appendix B of the amended Terms of Reference which showed that the questions

were requested by the Arbitrator after the referral had been made to him. The

matter not being a specific question, this court can remit the matter for the

arbitrator, or set the award aside if there is shown to be an error on the face of the

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award.

(ii) Is there an error on the face of the award

[76] I find it necessary to look at the arbitrators findings and pattern of

reasoning. I have summarised the arbitrators decision, including the questions he

poses and considers, as follows:

(a) The mere fact that an Employer is wealthy is inadequate for the

purposes of Sub-Clause 2.4. Similarly, the mere fact that an Employer

has good reasons for wanting a project completed does not itself mean

he has made and maintained the necessary financial arrangements.

Accordingly, the evidence given at the hearing to the effect that the

GORTT has very substantial funds is, prima facie, insufficient by itself

for satisfying 2.4. Does the mere fact that the GORTT has funds in

general mean it has made arrangements enabling it to pay? The

answer emerging from the evidence as regards the significance of

cabinet approval, is that (quite property, and for very good public policy

reasons) the GORTT cannot pay large sums of public money in respect

of cost overruns on construction contracts unless cabinet approval is

given in advance or, perhaps, retrospectively. The issue of cabinet

approval cannot simply be ignored. It is, at some point, an essential

element of any arrangement to pay.

(b) The first point to arise is whether the letters of 5th

and 6th

July 2005

satisfied the 2.4 requirements i.e. whether the letters contained

reasonable evidence of arrangements enabling the Employer to pay

the then - current estimated Contract Price (TT$286 million - see MoH

letter of 5th

July 2005). In determining whether the letters constitute

reasonable evidence, all relevant circumstances must be considered.

(c) It is noteworthy that Sub-Clause 2.4 does not simply require evidence

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that the Employer is able to pay. Instead it requires evidence that

financial arrangements have been made and are being maintained

which will enable the Employer to pay. Proper weight has to be given to

all the words which have been included in Sub-Clause 2.4.

(d) Reasonable evidence that financial arrangements have been made

and are being maintained which will enable the employer to pay the

contract Price would ordinarily involve, prima facie, some evidence of

cabinet approval having been obtained (see Sub-Clause 2.4).

(e) As at 5th

and 6th

July 2005 it was probable that no financial

arrangements had in fact been made to enable the Government of the

Republic of Trinidad and Tobago to pay NHIC for the sums, beyond the

initial IDB loan, that were being incurred and that, consistent with that

position, the letters of 5th

and 6th

July 2005 did not provide (as required

by 2.4) reasonable evidence that financial arrangements had been

made and were being maintained which would enable the employer to

pay the estimated contract price.

(f) Although the letters of 5th

and 6th

July had the potential to convey

reasonable evidence for the purposes of clause 2.4, Mr. Elias by his

letter of 8th

July raised the issue of the use of the terms without

prejudice and whether Cabinet approval had been obtained. If

Ministry of Health had responded to these queries by explaining that the

term without prejudice did not mean that the Ministry was avoiding

taking responsibility for the contents of the letter and that

notwithstanding the absence of Cabinet approval these were adequate

arrangements to pay, then the letter would, when read in light of those

subsequent clarifications, have amounted to reasonable evidence. But

this did not happen. Mr. Elias received no response to his letter. The

failure to respond is a relevant circumstance in deciding whether the

employer submitted reasonable evidence.

of 63

(g) The letter of 5th

July was equivocal because of use of the phrase

without prejudice and because of the absence of reference to Cabinet

approval.

(h) There being no response to Elias letter of 8th

July and by choosing to

leave the letters of 5th

and 6th

July in their equivocal state, the employer

failed to provide reasonable evidence of financial arrangements. A

timely reply to Mr. Elias letter may well have rendered the letters

reasonable evidence because the letters did supply some evidence of

financial arrangements. Since no such reply was produced at all, the

evidence remained inadequate for the purposes of sub clause 2.4.

(i) The earliest date at which it could be said that financial arrangements

had been made which would enable the employer to pay the Contract

Price was the point at which the letter dated 29th

September 2006 from

Nipdec was approved and signed on 3rd

October 2006 by the Attorney

General and Minister Enil, in circumstances where the Minister of

Health (the Honourable John Rahael) had held discussions with the

Prime Minister and Minister Enil and the Attorney General on the same

day (3rd

October 2006).

(j) Thus, the necessary financial arrangements had been made on 3rd

October 2006. Clause 2.4 further requires that the employer should

submit to the contractor reasonable evidence that those financial

arrangements have been made. Thus the question arises, was such

reasonable evidence provided?

(k) Until the employer passed on the information about approval of 3 key

Cabinet Ministers to the course of action of the letter of 6th

October

2006, it had not submitted reasonable evidence. The employer did not

take the opportunity until 3rd

November 2006 to explain the steps to get

Cabinet approval.

of 63

(l) The MoH 6th

October 2006 letter was drafted after Nipdec had taken

legal advice. It was produced on 6th

October, 2006, but Nipdec only

hand-delivered it to NHIC on 19th

October 2006. On 27.10.06 NHIC

requested confirmation of cabinet approval. Since two weeks before, the

Permanent Secretary had taken action to go to cabinet for approval

(T4/80/lines 3-5). Although the Permanent Secretary had by 30th

October 2006 actually prepared a Cabinet Note she did not succeed in

telling NHIC of that prior to the expiry of the deadline of 31st October

2006. The deadline was stated in NHICs 27th

October 2006 letter. She

got the NH letter on 27th

October, which was a Friday. So NH were not

told about the steps to get cabinet approval, and on 3rd

November 2006

NH issued a notice of termination.

Did the employer provide reasonable evidence pursuant to clause 2.4 on

or after 3rd

October 2006?

(m) The suspension in mid-2005 arose by reason of the Clause 2.4 request

preceding the suspension. The cost report No. 5 issued on 23rd

May

2005 showed an estimated contract price of TT$286,992,070. NHICs

21 days notice under Clause 16.1, in respect of suspending work unless

2.4 evidence was produced, was dated 31st May 2005. The Permanent

Secretarys letter of 5th

July 2005 refers to funds in the sum of

TT$286,992,070 to meet the estimated final cost to completion. This

remained the estimated final cost until, on 5th

October 2006, Mr. Zak of

Stantec determined a figure of TT$224,129,801.99. It is this latter,

lower, figure that is referred to in the MoH letter of 6th

October 2006.

(n) It is Nipdecs case, that the relevant Clause 2.4 request is that made at a

time when the estimated contract price was the higher figure of

TT$286,992,070. Certainly, Permanent Secretary Jones letter of 6th

October 2006 does not provide reasonable evidence of financial

arrangements having been made and maintained which would enable

of 63

the employer to pay the higher figure (about TT286 million) as distinct

from the lower figure (TT$224 million). Thus, even if the information

had been passed on about the approval by the three key Cabinet

Ministers, that would simply have been to give reasonable evidence as

regards a payment limited to $224,129,801.99, and not in respect of the

higher figure of $286,922,070. Yet it is Nipdecs case that the request

from the contractor that underlies the reasonable evidence that the

Employer was seeking to submit to the Contractor by the Ministry of

Healths letter of 6th

October 2006 was the request made at the time

when the relevant estimated final cost to completion was $286,992,070.

Hence, (on Nipdecs own case) even if the information about the three

Cabinet Ministers had been provided, the letter of 6th

October 2006

would not have satisfied the requirements of Clause 2.4. In such

circumstances, assuming NHIC satisfied all the other requirements as

regards time periods, and procedure as set out in Clauses 2.4 and 16, it

was entitled by Clause 16.2(a) to terminate the contract in November

2006.

[77] I also find it necessary to set out the correspondence before the arbitration

as it relates to the financial arrangements to satisfy clause 2.4. I shall set out in

their entirety the letters of 5th

and 6th

July 2005 respectively from the Permanent

Secretary, Ministry of Health and the general manager of NIPDEC. These letters

are in response to NHICs letter of 28th

April 2005 invoking clause 2.4 and

requesting reasonable evidence that financial arrangements have been made

and are being maintained to pay the then contract price at this time. The then

estimated contract price was then $286,992,070.00.

[78] I shall also set out in some detail NIPDECs letter of 29th

September 2006,

to the Minister of Health, the letter of 6th

October 2006 from the Permanent

Secretary Ministry of Health (the draft of which was submitted to the Minister by

NIPDECs September 29th

letter), NIPDECs letter of 20th

October 2006 and

NHICs reply dated 27th

October 2006

of 63

July 6, 2005

Mr. John Connon

Managing Director

NH International (Caribbean) Limited

39 Long Circular Road

St. James

Dear Sir,

Re: Scarborough Hospital - Confirmation of Funds

In accordance with Clause 2.4 please note that the Ministry of

Health has advised without prejudice that funds are available in

the sum of TT$286,992,070.00 to meet the final cost to completion

for the Scarborough Hospital. Attached is a copy of a letter from

the Permanent Secretary, Ministry of Health to NIPDEC on this

matter.

Please note that the Ministrys interim declaration is made in good

faith pending a Final Cost Agreement by the relevant parties

concerned as per the procedural rules governing the determination

of the Final Cost to completion.

Yours faithfully

/s/ Margaret Mc Dowall-Thompson

Margaret Mc Dowall-Thompson

General Manager

July 05, 2005

Mr. Kenneth Crichlow

Programme Manager

National Insurance Property Development Co. Ltd.

56-60, St. Vincent Street

PORT OF SPAIN

Dear Mr. Crichlow

IDB Loan No. 937/OC - TT - Scarborough Hospital - Request for

evidence of Financial Arrangements

Reference is made to your fax dated June 29, 2005 and to the legal

advice from your Attorneys Mr. M. Hamel-Smith & Co. on the

of 63

captioned subject.

The Ministry of Health is aware of the procedural matters

pertaining to the determination of the final estimated contract

price, which is yet to be finalized and agreed upon. Given the

prevailing circumstances, the only document the Ministry can rely

on is the Quantity Surveyors Cost Report No. 5 (as at 30th

April,

2005) dated May 23, 2005. This report indicated an Estimated

Final Cost to completion of TT$286,992,070.

In this regard, the Ministry of Health hereby advise, without

prejudice, that funds are available in the sum of TT$286,992,070

to meet the estimated final cost to completion for the Scarborough

Hospital.

Please be advised that the Ministrys interim declaration is made

in good faith pending a Final Cost Agreement by the relevant

parties concerned as per the procedural rules governing the

determination of the Final Cost to completion.

Please be guided accordingly.

Yours sincerely,

/s/ Reynold Cooper

Permanent Secretary

29th

September 2006

Honourable John Rahael

Minister of Health

Ministry of Health

63 Park Street

Port of Spain

Dear Honourable Mr. Rahael,

Re: New Scarborough Hospital, Tobago -

We refer to the mater at caption and particularly our numerous

discussions as to the immediate re-possession of the Scarborough

Hospital site to facilitate the resumption of construction work.

You will be reminded that, notwithstanding the position taken by

NIPDEC and the Government to NH International on the 5th

July

of 63

2005, that the sum of TT$286,992,070.00 was available to meet the

estimated final cost to completion of the project, NH International

proceeded to suspend works on the site.

As part of the ongoing arbitration proceedings, both NIPDEC and

NH International have been engaged in considerable work with the

Independent Quantity Surveyor. This has helpfully resulted in

agreement between the parties on many items, with some items

clearly disagreed.

As a result of this, NIPDEC requested, and our Engineer, Stantec

Consulting International Limited, has by letter dated the 28th

September 2006 made a determination that the current Contract

Price is now estimated to be TT$224,129,801.99 VAT inclusive

which is lower than the contract price as previously approved by

the Ministry of Health (above).

In light of the same, our external Attorneys-at-Law have, after

consultation with Mr. Stuart Catchpole Queens Counsel, advised

that a renewed letter should be issued by the Ministry of Health to

NH International stating that financial arrangements have been

made and continue to be maintained, which will enable the

Employer to pay the Contract Price. We now enclose a draft copy

of this letter.

This course of action, at the present time, is the best available

method to achieve the pressing objective of lawfully re-gaining

possession of the site.

Once you are in agreement, we kindly request that the permanent

Secretary sign the attached letter and return the same to our

offices for delivery to NH International. We have enclosed a soft

copy of the draft letter herein for your convenience.

As always, I am available to discuss the same with you.

We look forward to your urgent response.

Yours faithfully,

NATIONAL INSURANCE PROPERTY

DEVELOPMENT COMPANY LIMITED,

October 06 2006

N.H. International (Caribbean) Limited

39 Long Circular Road

St. James

of 63

Attention: Mr. Peter V. Morris

Dear Sir,

Re: Scarborough Hospital, Tobago: Reasonable Evidence of

Employers Financial Arrangements.

We refer to your letter of 3rd

September, 2004 requesting pursuant

to Clause 2.4 of FIDIC that the Employer submit reasonable

evidence that financial arrangements have been made and are

being maintained which will enable the Employer to pay the

Contract Price (as estimated at that time) in accordance with

Clause 14. Your letter erroneously refers to NIPDEC as the

Employer. As you are aware, Employer is defined in the

Particular Conditions as being The Government of Trinidad and

Tobago.

We also refer to NIPDECs letter to you of 29th

December, 2004

enclosing a Memo addressed to NIPDEC from the Project

Administration Unit of the Ministry of Health dated 28th

December, 2004 confirming the availability of funds from

Government (as approved by Cabinet) and including the allocation

of funds for the Tobago House of Assembly Public Sector

Investment Programme. We also refer to NIPDECs letter of 6th

July, 2005 enclosing a letter to NIPDEC from the Acting

Permanent Secretary, Ministry of Health dated 5th

July 2005

submitting further reasonable evidence of financial arrangements

in compliance with Clause 2.4. NIPDECs letters and the Ministry

of Health correspondence and memoranda are hereafter referred

to as the Financial Arrangements correspondence.

In light of the definition of Employer given in the Particular

Conditions as well as the content of the correspondence referred to

above, it is clear that NHIC has always been aware that the

Government is the Employer under the relevant contract wherein

NIPDEC acts as agent of the Government only. In the

circumstances, both NIPDEC and the Government maintain that

the Financial Arrangements correspondence fully complies with

the requirements of C

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