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Page 1 of 63 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. MENDONÇA, 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. Mendonça Justice of Appeal
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  • Page 1 of 63

    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

  • Page 2 of 63

    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

  • Page 3 of 63

    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

  • Page 4 of 63

    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]

  • Page 5 of 63

    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

  • Page 6 of 63

    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.

  • Page 7 of 63

    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

  • Page 8 of 63

    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

  • Page 9 of 63

    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.

  • Page 10 of 63

    (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

  • Page 11 of 63

    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

  • Page 12 of 63

    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

  • Page 13 of 63

    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

  • Page 14 of 63

    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

  • Page 15 of 63

    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

  • Page 16 of 63

    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

  • Page 17 of 63

    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

  • Page 18 of 63

    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

  • Page 19 of 63

    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:

  • Page 20 of 63

    (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

  • Page 21 of 63

    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

  • Page 22 of 63

    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.

  • Page 23 of 63

    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,

  • Page 24 of 63

    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

  • Page 25 of 63

    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

  • Page 26 of 63

    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

  • Page 27 of 63

    (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

  • Page 28 of 63

    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

  • Page 29 of 63

    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

  • Page 30 of 63

    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.

  • Page 31 of 63

    [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.

  • Page 32 of 63

    (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.

  • Page 33 of 63

    (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.

  • Page 34 of 63

    [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.

  • Page 35 of 63

    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.

  • Page 36 of 63

    (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

  • Page 37 of 63

    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

  • Page 38 of 63

    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.

  • Page 39 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.

  • Page 40 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

  • Page 41 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

  • Page 42 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

  • Page 43 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

  • Page 44 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

  • Page 45 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