Arbitration not an arbitrary process | Daily News

Arbitration not an arbitrary process

The claimant in this appeal to the Supreme Court (Celweera, S.A. V. Malship Bulkfert (Pvt) Ltd. - SLR - 29, Vol 1 of 2003 [2002] LKSC 3; (2003) 1 Sri LR 29 (November 22, 2002)) was in a bagging contract with a shipping company. The contract it seems was not honoured, and as it was prescribed in the contract, the matter was to go before an arbitration tribunal in London.

By the way ‘bagging’ is the process by which some commodity or produce is stocked in bags to be shipped. Any such commodities are called bagged cargo in shipping lingo.

Fortuitously for the appellant the tribunal in London made an arbitration award in favour of the appellant, and of course the award had to be honoured back here in Sri Lanka.

But when the appellant went to High Court here in Sri Lanka to have that job done, the respondent Company came up with preliminary objections in that court, stating that the documentation produced in court by the claimant was not authenticated and that the arbitration contract was not produced in Court in an acceptable form.

The following is the gist of the basic issues that were pertinent, in the subsequent appeal lodged, as taken from the Supreme Court case record:

“This is an appeal against the judgement and order dated 03.10.2000 of the High Court, setting aside an arbitration award on the ground that the claimant-appellant (the appellant) has failed to comply with section 31 (2) (b) of the Arbitration Act, No. 11 of 1995.

The appellant and the respondent entered into a Bagging Contract dated 7th February 1994. A dispute arose and the said dispute was referred to arbitration in London. The arbitration was duly held and an award was made in London. The appellant made an application dated 8th March 2000 to the High Court of Colombo, seeking inter alia, to file the arbitration award dated 10th March 1999, its reasons and the supplementary awards to be duly registered and enforced for judgement and decree accordingly.”

The contentious document that the appellant filed was the so-called bagging contract which was marked as ‘D’ along with documents submitted to the High Court.

The respondents in High Court raised a preliminary objection that a duly certified copy thereof, in terms of section 31 (2) (b) of the Arbitration Act, No. 11 of 1995 was not furnished in Court and that therefore the application for enforcement of the arbitration award should be dismissed.

This is where some hilarity ensues. The petitioner in High Court which is the party to which the bagging contract had been awarded, had furnished a copy of the arbitration certificate duly certified as a true copy by the solicitor in London that represented the party at the arbitration hearing.

However, this solicitor’s certification had also been ‘true copied’ by an Attorney here in Sri Lanka, in effect making the document a true copy of a certification and not a certification, at least as things appear on the surface.

The High Court judge held that a true copy of a certification does not satisfy what’s required in section 31 (2) (b) of the Arbitration Act, No. 11 of 1995. This Section deals with matters of documentation, and how documents should be tendered to enforce an arbitration award.

But somewhat surprisingly it turned out that the ‘true copy’ certification on the original certification by the London Solicitor was by the Attorney of the respondent and not the petitioner. The High Court judge had mistaken the certification of the Attorney of the respondent, for the Attorney for the petitioner.

The Supreme Court ruled that the High Court judge had misdirected himself in this regard both in matters of law and in matters of fact.

This is what the Supreme Court judgement states:

“At the hearing of this appeal the learned President’s Counsel for the respondent submitted that the failure of the appellant to file the original Arbitration Agreement under which the purported awards are alleged to have been made or a duly certified copy thereof, in terms of section 31 (2) of the Arbitration Act, No. 11 of 1995 is fatal to the said application of the appellant”.

The learned High Court judge had held:

“The signatory does not divulge the relationship he has with the arbitration proceedings or the Arbitral Tribunal. As such this court does not consider such certification as being sufficient to satisfy this court as to the document containing the Arbitration Agreement, as envisaged in terms of section 31 (2) (ii) of the Act. Sub-section thereof has no application since the document is not supposed to have been certified by the Arbitral Tribunal or any member thereof.”

The learned High Court judge then went on to state that what had been furnished was only a ‘true copy of a true copy” or words to that effect.

The relevant excerpt from the Judgement states:

“Besides the purported certification by the solicitor in London, the same bears the notation ‘true copy’ under the seal of the attorney-at-law for claimant, and if this is correct this is a true copy of a certified copy only, which is not in compliance of requirement of section 31 (2) (ii). If the document tendered is a certified copy as averred by the claimant there cannot be any need to identify it as a true copy.”

It was clear however that the learned High Court Judge misdirected himself in holding that the notation ‘true copy’ is under the seal of the Attorney-at-Law for the claimant when in fact it was under the seal of the attorney-at-law for the respondent. This was in fact a serious misdirection of fact and of law, the Supreme Court judgement stated without mincing words.

In the High Court the director of the Respondent Company had stated in his affidavit:

“The respondent entered into the Bagging Contract marked ‘D’ with the petitioner above”.

So this was a curious case in which the true copy was not seen as a true copy because it had been true copied again. To make matters worse, the second true copy had been made in fact by the party finding fault with the other party that furnished the purported true copy in the first place, if you are able to follow the drift of this curious case upto now. The Judge however had mistaken the second true copy as a true copy made by the party asking for relief from his court and rejected the true copy because it’s a true copy of a true copy. (Or a true copy of a certification, not the original.)

Eventually the Supreme Court was able to make eminent sense of it all, and the learned Judges stated that the respondents to the appeal once having admitted that document ‘D’ is a copy of the arbitration contract cannot now be heard to submit that the original had not been produced in court, and therefore the arbitration cannot be enforced.

The judgment states:

“It is my view that after having admitted document ‘D’ as a true copy of the agreement the parties entered into, the respondent cannot invite the court to dismiss the application on the basis that the original was not tendered to court.”

The fact was that in their submissions in High Court the respondent shipping Company had indeed, in filing answer with affidavit, stated that the document ‘D’ which they appended having true copied it from the Petitioner’s certified documents, was indeed a copy of the arbitration contract.

In the above circumstances it was held that the learned High Court Judge failed to give full effect to clause (ii) of section 31 (2) of the Arbitration Act, No. 11 of 1995 when there was an admission by the respondent that the agreement marked ‘D’ was a true copy. Therefore the Court upheld the Appeal and set aside the order dated 03.10.2000. The High Court was directed to take steps in compliance with Section 31 (2) (b) of the Arbitration Act, No. 11 of 1995.

The appellant was awarded costs in a sum of Rs.30,000.


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