Global Water Associates Ltd Claimant/Appellant v Attorney General of the Virgin Islands Defendant/Respondent
| Jurisdiction | British Virgin Islands |
| Judge | Leon J |
| Judgment Date | 01 February 2016 |
| Judgment citation (vLex) | [2016] ECSC J0201-3 |
| Court | High Court (British Virgin Islands) |
| Docket Number | Claim No. BVIHC (Com) 2014/115 |
| Date | 01 February 2016 |
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
Claim No. BVIHC (Com) 2014/115
In the Matter of an Arbitration Under the Arbitration Ordinance, Cap. 6
Benjamin Strong QC, Michael Pringle, Dan Mitchell and Charles Peterson for the Appellant
Giselle Jackman Lumy and Maya Barry for the Respondent
Benjamin Strong QC (by telephone) and Charlotte Bunn for the Appellant
Giselle Jackman Lumy and Maya Barry for the Respondent
Appeal from arbitration award pursuant to Arbitration Ordinance (Cap. 6, 1976) of the Virgin Islands and CPR 60 — Appellant and Respondent entered into two contracts concurrently, one for Appellant to build a waste water treatment plant for the Respondent, and one for Appellant to operate the plant for Respondent commencing once it was built and operational.
Appellant commenced arbitrations under arbitration clauses in both contracts which proceeded together — Arbitral tribunal found that Respondent breached contract to build the plant by not delivering prepared site to Appellant — In assessing Appellant's damages, tribunal declined to include Appellant's operating contract losses — Losses were suffered because Appellant was not able to operate the treatment plant as contemplated.
Tribunal made fundamental and serious error of law on the face of the record by concluding that the operating agreement did not exist as a live'operative contract but was subject to a condition precedent — In turn this led tribunal to make other fundamental and serious errors of law on the face of the record by not awarding to Appellant its losses under the operating contract either as damages for breach of the contract to build the plant or as damages for breach of the operating contract — Operating contract was in effect and not subject to a condition precedent to its existence — Term implied into operating agreement — Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited and another [2015] UKSC 72 applied — Under Implied term in operating agreement, Respondent was obligated to make the treatment plant available to Appellant to operate for Respondent — Respondent's breach of contract to build led to its breach of the operating contract as well.
Award remitted to tribunal with directions to assess damages under both contracts having regard to Appellant's losses in relation to the operating contract.
Leon J [Ag.] : This is an appeal, pursuant to the Arbitration Ordinance (Cap. 6, 1976) of the Virgin Islands ("Ordinance") and CPR 60, by Global Water Associated Limited ("Global Water") from Final Award dated 18 August 2014 ("Award"), and in particular respecting certain damages claimed by but not awarded to Global Water by an arbitral tribunal consisting of Denys Barrow SC and E. Anthony Ross QC ("Tribunal"). The Tribunal issued Reasons for Award that are annexed to the Award.
The background to the dispute giving rise to the arbitration is as follows.
Global Water and the Government of the Territory of the Virgin Islands (in these proceedings by its representative, the Defendant/Respondent 1) ("BVI Government") entered into two contracts concurrently on 19 September 2006, one for Global Water to design and build a waste water treatment plant ("Treatment Plant") for the BVI Government (Design Build Agreement ("DBA")), and one for Global Water to manage, operate and maintain the Treatment Plant for the BVI Government (Management Operation and Maintenance Agreement ("MOMA")) commencing on a date when the Treatment Plant would be capable of processing a specified daily volume of "Influent" (as defined) ("Commencement Date", as defined in the MOMA 2). The Treatment Plant was to be built within 180 days (from the giving of a notice to proceed) and pursuant to the MOMA, Global Water was to operate the Treatment Plant for a period of 12 years (unless determined or extended under provisions of the MOMA) effective from the Commencement Date.
The DBA and the MOMA contained identical arbitration clauses 3 which provided for the arbitration to be governed by and be in accordance with the Ordinance, and contained identical governing law clauses providing that "The Contract shall be governed by the laws of the British Virgin Islands." 4 Other relevant contractual
provisions are discussed below in this Judgment. Global Water commenced two arbitrations against the BVI Government which proceeded together and resulted in the single Award.The Tribunal found that the BVI Government breached the DBA (portions of which findings, as set out in the Award and in the Reasons for Award, are set out below) but it assessed damages without regard to Global Water's losses in relation to the MOMA. Global Water was never able to earn revenues under the MOMA because the Treatment Plant was never built 5, and hence not made available to Global Water to maintain, operate and manage, all due to the BVI Government's breach of the DBA.
The issue on this appeal is whether the Tribunal committed one or more errors of law on the face of the record by not awarding to Global Water its losses under the MOMA such that under the Ordinance or this Court's inherent jurisdiction, the Award should be remitted to the Tribunal or set aside. 6
This Court agrees with the submission of the BVI Government that this Court should be deferential to and supportive of the Tribunal and the arbitral process. However, this arbitration is under the Ordinance, which has its own public policy and grounds for setting aside or remitting. As Global Water pointed out, if the Award contains an error of law on its face, the Court may grant a remedy.
The relevant paragraphs of the Award are as follows:
- We find that the DBA was breached by the [BVI Government] in failing to provide a prepared site to [Global Water] on which to build the Facility and [Global Water] lawfully terminated this Agreement in accordance with clause 15 thereof. 2. We find that there was no implied term of the MOMA that the [BVI Government] was to deliver a prepared site to [Global Water] on which to build the Facility and there was no breach of this Agreement. 3. We find that an award of damages for breach of the DBA, in the circumstances of these agreements, would be confined to sums due and payable for performance of the works under the DBA7 and would not extend to profits that would have been made for operating the Facility under the MOMA.
There was a difference between the parties throughout this appeal regarding the contents of the record that was before this Court or that should have been before this Court given that the issue is whether there are errors of law on the face of the record.
While it appears that Global Water is correct that the BVI Government is not entitled to rely on "extraneous material" to defeat Global Water's argument that the Award contains errors of law on the face of the record, the issue does not need to be determined as there is nothing in what the BVI Government sought to put before the Court that would lead it to any different conclusions than the
conclusions in this Judgment on whether there are errors of law on the face of the record.The Tribunal found in its Reasons for Award the following facts that describe how the BVI Government, for no explicable reason, breached the DBA, and as a result made it impossible for Global Water to commence to maintain, operate and manage the Treatment Plant, and earn revenues, under the MOMA.
The DBA had not been performed two years after it was made because of delays caused by the BVI Government. 8
Global Water sent to the BVI Government a Notice of Default dated 19 September 2008 pursuant to a provision in the DBA 9 entitling a party to terminate the DBA upon 30 days' written notice calling upon the defaulting party to remedy (effectively, to commence to remedy) its default within the 30 day period. 10
The BVI Government did not send a response to the Notice 11 and "did not either take or state that it had taken, was taking or intended to take any steps by way of remedying the breach of the obligation to deliver a prepared site to Global." 12
The Tribunal found as follows:
13. … In our respectful view the failure to deliver a prepared site, which had operated for just about two years and to which Government simply did not speak in its letter of 1 st October 2008 or otherwise, was a major breach. It is clear that no remedying of that breach had commenced during the 30 day period for which the Notice provided.
14. As a matter of appreciation the failure to deliver a prepared site may well have been both easily and quickly remedied. We make no finding in this regard. Whatever might have been the possibility, the fact remains that Government failed to take the required remedial step to remedy the breach of obligation to deliver a prepared site within the specified 30 day period and Global [Water] was entitled to terminate the DBA when it did so on 27 th October 2008. 13
Global Water advanced two bases upon which it claimed as damages its losses in relation to the MOMA. The Tribunal considered and rejected both bases.
The first basis for its damages including its losses in relation to the MOMA was that "there should be implied into the MOMA a term that Government promised to perform its obligation to deliver a prepared site to Global — which was an express term of the DBA" 14 and that the term was breached by the BVI Government, giving Global Water a claim to its losses in relation to the MOMA.
The second basis of...
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