The Court of Appeal of Trinidad and Tobago has handed down its judgment in National Infrastructure Development Company Limited v Construtora OAS SA (Civil Appeal No. PO18 of 2023), upholding the decision of the High Court of Trinidad and Tobago (Claim No. CV2022-01832) setting aside a US$126m arbitration award made in favour of the Appellant/Defendant (“OAS”).
Hugh Saunders acted for the successful Claimant/Respondent (“NIDCO”), led by Annelise Day KC and Jason Mootoo SC, along with Max Kasriel. The instructing attorney was Marcelle Ferdinand of JD Sellier + Co.
Background
The underlying dispute arises out of a FIDIC Yellow Book contract dated 4 July 2011 (the “Contract”) under which NIDCO engaged OAS to design and construct the Sir Solomon Hochoy Highway Extension to Point Fortin, Trinidad. On 6 July 2016, NIDCO terminated the Contract on the grounds that OAS had abandoned the works or otherwise plainly demonstrated the intention not to continue with performance of its obligations under the Contract. Following termination, NIDCO drew down advance payment, performance and retention securities in the total sum of US$139m.
OAS disputed NIDCO’s right to terminate and to call on the securities. NIDCO’s right to draw down the securities was resolved in England by the High Court (in National Infrastructure Development Co Limited v BNP Paribas [2016] EWHC 2508 (Comm) and the Court of Appeal (in National Infrastructure Development Company Limited v Banco Santander SA [2017] EWCA Civ 27). Hugh Saunders appeared in both cases (led by Ben Patten KC and Anneliese Day KC).
OAS also commenced arbitral proceedings against NIDCO, alleging that the termination was unlawful on the basis that OAS had not abandoned the works because it was purporting to exercise a right to reduce the pace of works as a result of an alleged payment breach by NIDCO. OAS claimed (inter alia) the return of the sums drawn down under the securities. The seat of the arbitration was Port of Spain, Trinidad and Tobago.
The Tribunal (comprised of John Fellas, Adam Constable KC and Andrew White KC) delivered a Partial Award on 16 April 2022, finding in OAS’s favour and ordering that NIDCO pay damages in the sum of US$126m.
NIDCO applied to the High Court of Trinidad and Tobago to set aside the Award on the grounds that it contained: (a) errors of law manifest on the face of the Award, and (b) findings which were unsupportable based on the material before the Tribunal, such that no reasonable arbitrator could have reached them properly applying the law, the evidence and the provisions of the Contract.
By a judgment dated 14 December 2022, the High Court (Mr Justice Seepersad) set aside the Award. OAS appealed against the judgment of the High Court.
The judgment of the Court of Appeal
Justice of Appeal Rajkumar (with whom Justices of Appeal Nolan Bereaux and Mark Mohammed agreed) held that:
- Contrary to OAS’s case, NIDCO was permitted to bring a claim to set aside the Award. A provision in the Contract purporting to oust such a right was null and void and contrary to public policy (in accordance with the principles set out in Czarnikow v Roth, Schmidt and Company [1922] 2 KB 478 and the applicable Trinidad and Tobago legislation).
- The Tribunal erred in law in finding that an interim payment certificate issued by the engineer (“IPC 55”), which had the effect of nullifying NIDCO’s payment default, was void ab initio. IPC 55 was provisionally valid unless or until set aside and NIDCO could therefore rely upon it.
- The Tribunal erred in law in finding that OAS was entitled to continue to slow down or suspend works on the basis of non-payment by NIDCO after IPC 55 had been issued. After that date, NIDCO was not in default of any payment obligation, because IPC 55 remained provisionally valid.
- Further, and in any event, the Tribunal erred in finding that: (a) where OAS exercised its contractual right to suspend or reduce the pace of works, OAS had to remain in a position to recommence the works immediately; but (b) there was no evidence that OAS was in a position to do so. Accordingly, whether or not IPC 55 was void ab initio, there was no contractual justification for OAS’s conduct nor a defence to NIDCO’s notice of termination.
- NIDCO was entitled to issue its notice of termination on the basis that OAS had abandoned the works or otherwise plainly demonstrated the intention not to continue performance of its obligations under the Contract.
The Court of Appeal therefore dismissed the appeal, affirmed the orders of the High Court, and confirmed that the matter should be remitted to the Tribunal for reconsideration in accordance with the findings, conclusions and reasoning of the Court of Appeal.
