Arbitration and Alternate Dispute Resolution

Hibberd v Eden Island Village Management (MA 55 of 2022) [2022] SCSC 611 (01 July 2022);

Franzisca Mitterer — Mon, 29 Aug 2022 06:47:57 +0000

Hibberd v Eden Island Village Management (MA 55 of 2022) [2022] SCSC 611 (01 July 2022);

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Franzisca Mitterer Mon, 08/29/2022 - 06:47

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The Defendant in case CS46/2021, Petitioner in this motion MA55/2022, moved this Court for an order that this matter be referred to arbitration and for the reasons set forth in the attached affidavit of the Petitioner Stuart Leslie Hibberd. The affidavit contains the following averments:

“I Stuart Leslie Hibberd, of Eden Island make oath and say as follows:

1. 1. 1. I am the deponent above-named.
    2. I am Defendant in suit Eden Island Village Management Association v Stuart Leslie Hibberd Cs 46 of 2021.
    3. I have been advised by the attorney to my case and I verily believe same to be true that:
Clause 30 of the constitution of the Eden Island Village Management Association provides that “in the event of any breach of this constitution by any person in any owner’s household or its employees, invitees or lessees, such breach shall be deemed to have been committed by owner itself; provided that the association shall be entitled, but not obliged, in addition to any other rights which it may have or remedies which it may have or remedies which may be available to it, to take such steps against the person actually committing the breach, with or without proceeding against the owner”. It has been shown to me and is attached herewith a copy of the said constitution marked as A1.
Article 113 of the Commercial Code Act provides “the Court seized of a dispute which is the subject of an arbitration agreement shall, at the request of either party, declare that it has no jurisdiction, unless, insofar as the dispute is concerned, the agreement is not valid or has been terminated.”
1. 1. 1. The agreement (the constitution) is still vaid and has not been terminated.
    2. Based on the matters mentioned in paragraph 3 and 4 above I am requesting that the court declares that it has no jurisdiction in this matter and that the matter is referred to arbitration.
    3. I state that all the averments as contained herein are true to the best of my information knowledge and belief.
    4. I pray accordingly.”

The Plaintiff in CS46/2021 and now Respondent to this motion MA55/2022 objects to the Petition and in an affidavit in reply averred the following:

“I Mr. Chales De Clarisse, of Eden Island makes oath and state as follows:

1. 1. 1. That I am the General Manager of the Eden Island Village Management Association (the “VMA”) who is the Respondent in this case (and Plaintiff in the main case) and authorised to swear to this affidavit.
    2. I confirm that where the matters to which I depose are within my knowledge, they are true. Where the matters are not within my knowledge, the information is based upon the sources referred to herein and is true to the best of my knowledge and belief.

1. 1. 1. That the VMA is a duly registered association with a constitution and rules which I am legally advised pursuant to Cap 201 Registration of Associations Act Section 11 that “the rules for the time being of any registered association shall bind the association and every member thereof”

1. 1. 1. That pursuant to Stuart Leslie Hibberd’s [“Hibberd”] purchase a maison on Eden Island he by virtue of clause A.2 of his title deed agrees to become amember of the VMA and is therefore subject to its Constitution and the rules made thereunder.

1. 1. 1. That on or about the 24^th May 2021 the VMA filed a plaint seeking the recovery of the sum of USD 77,053.72 with interst and costs which was registered with case registration number CS 46 of 2021.

1. 1. 1. That on the 17^th March 2022, Hibberd filed a motion seeking “… for this matter to be referred to arbitration for the reasons set forth in the attached affidavit”.

1. 1. 1. When reading the affidavit of Hibberd comprised of seven (7) pargraphs:

I can see that it contains information to the effect that Hibberd is the deponent of his affidavit and defendant in the case registered as CS 46 of 2021 as paragraphs one (1) and two (2);
Paragraph three (3) is a mere copy paste of the clause 30 of the Constitution and Article 113 of the Commercial Code with no further averments as to their relevance nor validity nor binding nature;

Paragraph four (4) is a mere statement to the effect that “The agreement [constitution] is still valid and has not been terminated”;

Paragraph five (5) relies on paragraphs three (3) and four (4) to “request that the court declares that it has no jurisdiction in this matter and that the matter is referred to arbitration.”

Paragraph six (6) is his statement of truth and seven (7) his prayer.

1. 1. 1. I am legally advised that the criteria required for this Honourable Court to decline its jurisdiction to hear the matter is set out in the case of Emerald Cove v Intour S.R.L. Civil Appeal 9 of 2000 in which the criteria is set out as follows:

a. A Seychelles Court should not decline jurisdiction unless it is sure that the agreement to arbitrate is valid and subsisting; therefore Hibberds affidavit must prove that the arbitration agreement is valid and applicable to this particular dispute, in other words that this dispute is one which falls under the arbitration clause and that the arbitration clause is one that completely ousts the jurisdiction of the Court; and

b. That the party requesting the court to decline jurisdiction must show readiness to submit to arbitration.

1. 1. 1. Taking the second criteria first, that the party requesting the court to decline jurisdiction must show readiness to submit to arbitration. The affidavit of Hiberrd contains no averment whatsoever to the effect that he is ready and willing to submit to arbitration.

1. 1. 1. I am legally advised by my counsel that this is a key condition that ought to have been set out in Hibberds affidavit which has not been met and on this ground alone this Honourable Court should decline jurisdiction.

1. 1. 1. I am also advised that the case of Bajrang Builders (Pty) Limited v Harini & Company (Pty) Limited [2017] SCSC 470 is one where the LD Judge Govinden J (at the time) restated the criteria to decline jurisdiction and in this case refused to decline jurisdiction on the basis that the parties failed to satisfy the court that they were ready and willing to submit to arbitration.

1. 1. 1. Given that there is no such averment to that effect in the affavit of Hibberd, there is therefore no evidence whatsoever that he is ready and willing to submit to arbitration. As such Hibberd has failed to meet part of the criteria required for this Honourable Court to decline jurisdiction and as such I would invite this Honourable Court to dismiss the request on this basis.

1. 1. 1. On the first criteria, that the arbitration agreement is vaid. There is only the averment to the effect that “The agreement [constitution] is still valid and has not been terminated”. It is humbly averred that this is not a statement as to the validity of the arbitration agreement it is only a statement as to the validity of the constitution. There is no averment whatsoever as to the validity or binding nature of the arbitration clause under Seychelles law. As such it is humbly submitted that there is no proof as to the validity of the arbitration clause and the VMA humbly invites this honourable court to find that Hibberd has failed to meet the first criteria required for a court to decline jurisdiction.

1. 1. 1. Similarly, it is averred that nowhere in Hibberds affidavit does he prove let alone state that this dispute is one that falls within the arbitration clause nor is there any proof that this arbitration clause is one that completely ousts the jurisdiction of this court.

1. 1. 1. I am legally advised by my counsel that the court must be certain that the arbitration clause is drafted such that the parties intend to completely oust the jurisdiction of the court before being able to deny any litigant their constitutional right to appear before and litigate before it.

1. 1. 1. Without touching on the validity of the arbitration clause whatsoever, I aver that the arbitration clause in the Constitution starts with “30.1 Subject to any specific provisions to the contrary in this CONSTITUTION, …”. As such iti s not an exclusive arbitration clause and in fact there are instances where a dispute is not one that is contemplated under this arbitration clause. At clause 29.3 of the Constitution sets out;

a. “Nothing in this 29 shall derogate from, or in any way diminish, the right of the ASSOCIATION to institute proceedings in any court of competent jurisdiction for recovery of any money due by any MEMBER arising from any cause of action whatsoever, for the enforcement of any other obligation of a MEMBER in terms of this CONSTITUTION, or for any other relief.”

17. The case before this honourable court, CS 46 of 2021 is one in which the association [VMA] is claiming the recovery of money due to it from a member [Hibberd]. This claim falls squarely within that contemplated by Rule 29.3 of the constitution which deals entirely with the recovery of money due by a member. This clause gives the right to the association [VMA] to institute proceedings in any court of competent jurisdiction and it is humbly submitted that the Supreme Court of Seychelles is a court of competent jurisdiction and that the VMA has the discretion under this clause to institute proceedings before the Supreme Court which it has done.

18. I am legally advised that Rule 29.3 is a carve out exception to the arbitration Rule at 30 of the Constitution.

19. I am legally advised by my counsel that this situation is similar to that of Bajrang Builders (Pty) Limited v Harini & Company (Pty) Limited [2017] SCSC 470 which also did not have an exlcusive jurisdiction clause for arbitration and had carve out exceptions in its contract similar to that of the VMA. The Ld Judge in the case of Barjang Builders did not decline jurisdiction finding that the Supreme Court did have jurisdiction to hear the case beased on the fact that the arbitration clause was not an exclusive one and therefore did not completely oust the jurisdiction of the Supreme Court.

20. As such not only is this NOT an exclusive jurisdiction arbitration clause but that the VMA constitution provides exceptions to arbitration and this case falls squarely within the exception provided at Rule 29.3 of the Constitution.

21. As such Hibberd failed to prove that the arbitration agreement is valid, he failed to prove that it is substisting, he failed to prove that the nature of the dispute is one that falls within that contemplated by the arbitration clause and failed to prove that the arbitration clause is an exclusive one completely ousting this honourable courts jurisdiction.

22. Additionally Hibberd failed to set out in his affidavit that he is ready and willing to submit to arbitration.

23. Over and above that the VMA in this affidavit has shown without going into its validity, that the arbitration clause is not an exclusive one and that this particular case falls squarely within the exception provided in the VMA Constitution.

24. I aver and verily believe that the filin of the motion to request the court to decline jurisdiction filed on eve of the hearing itself is a mere attempt to delay the progression of the case and ultimate repayment of the debts owed to the VMA.

25. Wherefore the VMA prays this honourable court to:

a. Dismiss the motion filed by Hibberd requesting the court to decline jurisdiction, and

b. grant costs to the Respondent.”

The only issue before this Court in this miscellaneous application is whether this Court should decline jurisdiction to hear the plaint and in terms of Article 113.1 of the Commercial Code of Seychelles in view of the provisions for arbitration contained in paragraph 30 of the Village Management Association.

Paragraphs 29.1 to 29.4 and 30.1 and 30.2 provide as follows:

“29. BREACH

29.1 If any MEMBER fails in the observance of any of the provisions of this CONSTITUTION, or any rules and/or regulations made in terms hereof, and/of fails to comply with the provisions of the DESIGN GUIDELINES, and/or fails to observe any applicable laws, by-laws or any other regulations imposed by any relevant authority in relation to EDEN ISLAND (or any part thereof), the BOARD may, on behalf of the ASSOCIATION, serve notice on such MEMBER calling upon him to remedy such breach within a time specified in such notice and, failing timeous compliance –

29.1.1 enter upon the MEMBER’S PARCEL to take such action as may be reasonably required to remedy the breach, and the MEMBER concerned shall be liable to the ASSOCIATION for all costs so incurred, which costs shall be due and payable upon demand; or

29.1.2 call upon such MEMBER in writing to remove or alter any building, or other structure, or other IMPROVEMENTS erected or effected contrary to this CONSTITUTION, and/or any rules and/or regulations made in terms of this CONSTITUTION; or

29.1.3 institute proceedings, subject to 30 in any court of competent jurisdiction for such relief as the BOARD may consider necessary, and such MEMBER shall be liable for and shall pay all costs of such proceedings on the scale as between attorney and own client as well as all other expenses and charges incurred in obtaining relief; and/or

29.1.4 impose a daily financial penalty, the amount of which shall be determined from time to time by the BOARD, on notice to the MEMBER.

29.2 In addition, if any MEMBER fails to make payment on the due date of LEVIES or other amounts payable by such MEMBER, the BOARD may give notice to such MEMBER requiring him to remedy such breach within 5 business days, and should he fail to timeously remedy his breach, the BOARD may, on behalf of the ASSOCIATION, institute legal proceedings against such MEMBER without further notice, and such MEMBER will be liable for an shall pay all legal costs on the scale as between attorney and own client together with collection commission and any other expenses incurred by the ASSOCIATION in obtaining recovery of the amounts due to it. [Emphasis mine].

29.3 Nothin in this 29 shall derogate from, or in any way diminish, the right of the ASSOCIATION to institute proceedings in any court of competent jurisdiction for recovery of any money due by any MEMBER arising from any cause of action whatsoever, for the enforcement of any other obligation of a MEMBER in terms of this CONSTITUTION, or for any other relief. [Emphasis mine].

29.4 In the event of any breach of this CONSTITUTION by any person in any OWNERS’ household or its employees, invitees or lessees, such breach shall be deemed to have been committed by the OWNER itself; provided that the ASSOCIATION shall be entitled, but not obliged, in addition to any other rights whci it may have or remedies which may be available to it, to take such steps agains the person actually committing the breach, with or without proceeding against the OWNER.

30. ARBITRATION

30.1 Subject to any specific provisions to the contrary in this CONSTITUTION, in the event of any nature whatsoever arising between the ASSOCIATION and/or the MEMBERS and/or the DEVELOPER, or any one of them, on any matter provided for in, or arising out of this CONSTITUTION, that dispute shall be referred to and be determined in accordance with this 30.

30.2 The provisions of this 30 shall, however, not preclude any party from obtaining interim relief on an urgent basis from a court of competent jurisdiction.”

Article 113 (1) of the Commercial Code allows the court to decline jurisdiction at the request of a party to proceedings. The article provides:

“The Court seized of a dispute which is the subject of an arbitration agreement shall, at the request of either party, declare that it has no jurisdiction, unless, insofar as the dispute is concerned, the agreement is not valid or has terminated.”

The Defendant/Applicant has complied with that first requirement by filing this MA which is now before the court. I also find that this agreement between the Petitioner and Respondent in terms of the provisions of the Association remains valid and has not been terminated.

The Respondent contends that despite such procedural compliance, paragraph 29 provide for exception to invoking arbitration. I find that Paragraphs 29.2 and 29.3 refer specifically to payments of levies and recovery of money deemed due. Both paragraphs refer to initiating legal proceedings in court for the recovery of the monies deemed due. This supports the Respondent’s contention that the Plaintiff is not precluded from initiating legal proceedings.
It must be noted that the court can decline jurisdiction only where the agreement is valid and has not been terminated in addition to there being no other option in the agreement for settling the issue other than by arbitration. The latter becomes more pronounced where the agreement clearly makes legal proceedings an exception to arbitration.
Paragraph 30.1 provides for arbitration in the event of there occurring an event of any nature between the Association and the member but is subject to any other provision of the Constitution. Hence from the strict interpretation of paragraphs 29.2, 29.3, 30.1 and 30.2, whilst arbitration can be invoked for a dispute in respect of payment of levies for services as claimed in CS46/2021, the constitution allows for legal proceedings to be taken against the defaulting member. The choice therefore is for the Plaintiff now Respondent Association to decide in this specific circumstance which line of action to take.
Consequently, I find that the Plaintiff, now Respondent can initiate and maintain legal proceedings against the Petitioner and that arbitration is not mandatory in the circumstances. This Court rtherefore finds no reason to decline jurisdiction in this case. This Petition is therefore dismissed.
Costs of this proceeding is awarded to the Respondent.

Signed, dated and delivered at Ile du Port, Victoria on 01^st day of July 2022

____________

C G Dodin

Judge

The Defendant in case CS46/2021, Petitioner in this motion MA55/2022, moved this Court for an order that this matter be referred to arbitration and for the reasons set forth in the attached affidavit of the Petitioner Stuart Leslie Hibberd. The affidavit contains the following averments:

“I Stuart Leslie Hibberd, of Eden Island make oath and say as follows:

1. 1. 1. I am the deponent above-named.
    2. I am Defendant in suit Eden Island Village Management Association v Stuart Leslie Hibberd Cs 46 of 2021.
    3. I have been advised by the attorney to my case and I verily believe same to be true that:
Clause 30 of the constitution of the Eden Island Village Management Association provides that “in the event of any breach of this constitution by any person in any owner’s household or its employees, invitees or lessees, such breach shall be deemed to have been committed by owner itself; provided that the association shall be entitled, but not obliged, in addition to any other rights which it may have or remedies which it may have or remedies which may be available to it, to take such steps against the person actually committing the breach, with or without proceeding against the owner”. It has been shown to me and is attached herewith a copy of the said constitution marked as A1.
Article 113 of the Commercial Code Act provides “the Court seized of a dispute which is the subject of an arbitration agreement shall, at the request of either party, declare that it has no jurisdiction, unless, insofar as the dispute is concerned, the agreement is not valid or has been terminated.”
1. 1. 1. The agreement (the constitution) is still vaid and has not been terminated.
    2. Based on the matters mentioned in paragraph 3 and 4 above I am requesting that the court declares that it has no jurisdiction in this matter and that the matter is referred to arbitration.
    3. I state that all the averments as contained herein are true to the best of my information knowledge and belief.
    4. I pray accordingly.”

The Plaintiff in CS46/2021 and now Respondent to this motion MA55/2022 objects to the Petition and in an affidavit in reply averred the following:

“I Mr. Chales De Clarisse, of Eden Island makes oath and state as follows:

1. 1. 1. That I am the General Manager of the Eden Island Village Management Association (the “VMA”) who is the Respondent in this case (and Plaintiff in the main case) and authorised to swear to this affidavit.
    2. I confirm that where the matters to which I depose are within my knowledge, they are true. Where the matters are not within my knowledge, the information is based upon the sources referred to herein and is true to the best of my knowledge and belief.

1. 1. 1. That the VMA is a duly registered association with a constitution and rules which I am legally advised pursuant to Cap 201 Registration of Associations Act Section 11 that “the rules for the time being of any registered association shall bind the association and every member thereof”

1. 1. 1. That pursuant to Stuart Leslie Hibberd’s [“Hibberd”] purchase a maison on Eden Island he by virtue of clause A.2 of his title deed agrees to become amember of the VMA and is therefore subject to its Constitution and the rules made thereunder.

1. 1. 1. That on or about the 24^th May 2021 the VMA filed a plaint seeking the recovery of the sum of USD 77,053.72 with interst and costs which was registered with case registration number CS 46 of 2021.

1. 1. 1. That on the 17^th March 2022, Hibberd filed a motion seeking “… for this matter to be referred to arbitration for the reasons set forth in the attached affidavit”.

1. 1. 1. When reading the affidavit of Hibberd comprised of seven (7) pargraphs:

I can see that it contains information to the effect that Hibberd is the deponent of his affidavit and defendant in the case registered as CS 46 of 2021 as paragraphs one (1) and two (2);
Paragraph three (3) is a mere copy paste of the clause 30 of the Constitution and Article 113 of the Commercial Code with no further averments as to their relevance nor validity nor binding nature;

Paragraph four (4) is a mere statement to the effect that “The agreement [constitution] is still valid and has not been terminated”;

Paragraph five (5) relies on paragraphs three (3) and four (4) to “request that the court declares that it has no jurisdiction in this matter and that the matter is referred to arbitration.”

Paragraph six (6) is his statement of truth and seven (7) his prayer.

1. 1. 1. I am legally advised that the criteria required for this Honourable Court to decline its jurisdiction to hear the matter is set out in the case of Emerald Cove v Intour S.R.L. Civil Appeal 9 of 2000 in which the criteria is set out as follows:

b. That the party requesting the court to decline jurisdiction must show readiness to submit to arbitration.

1. 1. 1. Taking the second criteria first, that the party requesting the court to decline jurisdiction must show readiness to submit to arbitration. The affidavit of Hiberrd contains no averment whatsoever to the effect that he is ready and willing to submit to arbitration.

1. 1. 1. I am legally advised by my counsel that this is a key condition that ought to have been set out in Hibberds affidavit which has not been met and on this ground alone this Honourable Court should decline jurisdiction.

1. 1. 1. I am also advised that the case of Bajrang Builders (Pty) Limited v Harini & Company (Pty) Limited [2017] SCSC 470 is one where the LD Judge Govinden J (at the time) restated the criteria to decline jurisdiction and in this case refused to decline jurisdiction on the basis that the parties failed to satisfy the court that they were ready and willing to submit to arbitration.

1. 1. 1. Given that there is no such averment to that effect in the affavit of Hibberd, there is therefore no evidence whatsoever that he is ready and willing to submit to arbitration. As such Hibberd has failed to meet part of the criteria required for this Honourable Court to decline jurisdiction and as such I would invite this Honourable Court to dismiss the request on this basis.

1. 1. 1. On the first criteria, that the arbitration agreement is vaid. There is only the averment to the effect that “The agreement [constitution] is still valid and has not been terminated”. It is humbly averred that this is not a statement as to the validity of the arbitration agreement it is only a statement as to the validity of the constitution. There is no averment whatsoever as to the validity or binding nature of the arbitration clause under Seychelles law. As such it is humbly submitted that there is no proof as to the validity of the arbitration clause and the VMA humbly invites this honourable court to find that Hibberd has failed to meet the first criteria required for a court to decline jurisdiction.

1. 1. 1. Similarly, it is averred that nowhere in Hibberds affidavit does he prove let alone state that this dispute is one that falls within the arbitration clause nor is there any proof that this arbitration clause is one that completely ousts the jurisdiction of this court.

1. 1. 1. I am legally advised by my counsel that the court must be certain that the arbitration clause is drafted such that the parties intend to completely oust the jurisdiction of the court before being able to deny any litigant their constitutional right to appear before and litigate before it.

1. 1. 1. Without touching on the validity of the arbitration clause whatsoever, I aver that the arbitration clause in the Constitution starts with “30.1 Subject to any specific provisions to the contrary in this CONSTITUTION, …”. As such iti s not an exclusive arbitration clause and in fact there are instances where a dispute is not one that is contemplated under this arbitration clause. At clause 29.3 of the Constitution sets out;

18. I am legally advised that Rule 29.3 is a carve out exception to the arbitration Rule at 30 of the Constitution.

22. Additionally Hibberd failed to set out in his affidavit that he is ready and willing to submit to arbitration.

25. Wherefore the VMA prays this honourable court to:

a. Dismiss the motion filed by Hibberd requesting the court to decline jurisdiction, and

b. grant costs to the Respondent.”

The only issue before this Court in this miscellaneous application is whether this Court should decline jurisdiction to hear the plaint and in terms of Article 113.1 of the Commercial Code of Seychelles in view of the provisions for arbitration contained in paragraph 30 of the Village Management Association.

Paragraphs 29.1 to 29.4 and 30.1 and 30.2 provide as follows:

“29. BREACH

29.1.4 impose a daily financial penalty, the amount of which shall be determined from time to time by the BOARD, on notice to the MEMBER.

30. ARBITRATION

30.2 The provisions of this 30 shall, however, not preclude any party from obtaining interim relief on an urgent basis from a court of competent jurisdiction.”

Article 113 (1) of the Commercial Code allows the court to decline jurisdiction at the request of a party to proceedings. The article provides:

The Respondent contends that despite such procedural compliance, paragraph 29 provide for exception to invoking arbitration. I find that Paragraphs 29.2 and 29.3 refer specifically to payments of levies and recovery of money deemed due. Both paragraphs refer to initiating legal proceedings in court for the recovery of the monies deemed due. This supports the Respondent’s contention that the Plaintiff is not precluded from initiating legal proceedings.
It must be noted that the court can decline jurisdiction only where the agreement is valid and has not been terminated in addition to there being no other option in the agreement for settling the issue other than by arbitration. The latter becomes more pronounced where the agreement clearly makes legal proceedings an exception to arbitration.
Paragraph 30.1 provides for arbitration in the event of there occurring an event of any nature between the Association and the member but is subject to any other provision of the Constitution. Hence from the strict interpretation of paragraphs 29.2, 29.3, 30.1 and 30.2, whilst arbitration can be invoked for a dispute in respect of payment of levies for services as claimed in CS46/2021, the constitution allows for legal proceedings to be taken against the defaulting member. The choice therefore is for the Plaintiff now Respondent Association to decide in this specific circumstance which line of action to take.
Consequently, I find that the Plaintiff, now Respondent can initiate and maintain legal proceedings against the Petitioner and that arbitration is not mandatory in the circumstances. This Court rtherefore finds no reason to decline jurisdiction in this case. This Petition is therefore dismissed.
Costs of this proceeding is awarded to the Respondent.

Signed, dated and delivered at Ile du Port, Victoria on 01^st day of July 2022

____________

C G Dodin

Judge

Civil Construction Co.Ltd V Vijay Constuction (Pty) Ltd. (SCA 39 of 2018) [2021] SCCA 23 (11 June 2021);

Anonymous — Thu, 23 Jun 2022 08:05:49 +0000

Civil Construction Co.Ltd V Vijay Constuction (Pty) Ltd. (SCA 39 of 2018) [2021] SCCA 23 (11 June 2021);

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Arbitration and Alternate Dispute Resolution

Anonymous (not verified) Thu, 06/23/2022 - 08:05

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Arbitral awards- Essentiality of cogent reasons in arbitral decisions

Headnote and holding

Having carefully studied the arbitral award, Court finds that the arbitrator gave cogent reasons for each of the contested items. In reaching the final award, the arbitrator systematically dealt with each item of the claim according to the parties’ agreements.

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IN THE COURT OF APPEAL OF SEYCHELLES

Reportable
[2021] SCCA 23
SCA 39/2018
(Appeal from Civil Side MA 321 of 2015 [arising in MC 36/2014])

In the matter between

CIVIL CONSTRUCTION COMPANY LIMITED Appellant
(Rep. by Edith Wong)

and

VIJAY CONSTRUCTION (PROPRIETARY) LIMITED Respondent
(Rep. by Bernard Georges)

Neutral Citation: Civil Construction Company Ltd. v Vijay Construction (Proprietary) Ltd. (SCA 39/2018) [2021] SCCA 23 11 June 2021
Before:                   Fernando President, Tibatemwa-Ekirikubinza; Dingake, JJA.
Summary:             Arbitral awards- Essentiality of cogent reasons in arbitral decisions.
Heard:                   26 May 2021.

Delivered: 11 June 2021

ORDER

Having carefully studied the arbitral award, Court finds that the arbitrator gave cogent reasons for each of the contested items. In reaching the final award, the arbitrator systematically dealt with each item of the claim according to the parties’ agreements.

JUDGMENT

TIBATEMWA-EKIRIKUBINZA, JA
Brief facts

The Appellant, Civil Construction Company Limited (hereinafter ‘Civil Construction’), is a company registered in Seychelles. Its objects include carrying on business as a quarry owner and a supplier of quarry construction materials. On the other hand, the Respondent, Vijay Construction (Proprietary) Limited (hereinafter ‘Vijay’), is a building contractor.

In 2008, Civil Construction and Vijay entered into two agreements: “the Agreement” and “the Finance Agreement”, both of which were drafted by Vijay. Pursuant to those agreements, Vijay took over the operations of the quarry for approximately three years. Both agreements contained a clause which stated that in case of any disputes, the parties would resolve their differences through an arbitrator.

In an email dated 3 April 2013, Vijay submitted an account to Civil Construction in which it claimed USD 1,499,615 for quarry machinery and equipment. In July 2013, Vijay also returned the quarry to Civil Construction.

In its response, Civil Construction claimed that it was in fact Vijay which owed it USD 663,933. This difference in positions is what occasioned the dispute between the parties.

In April 2014, Vijay applied to the Supreme Court for the appointment of an arbitrator. In October, the Court appointed Mr. Joe Pool as arbitrator.

In June 2015, the arbitrator delivered an award in favour of Vijay for the sum of USD 1,438,185. In September 2015, the arbitrator also accepted a claim by Vijay for interest on this sum.

Dissatisfied by the arbitral award, Civil Construction lodged an application in the Supreme Court before Judge Fiona Robinson challenging the award. In particular, Civil Construction argued that the arbitrator failed to state their reasons for considering that the agreements executed by the parties were not legally binding documents and were instead guidelines as to an arrangement between friends.

In its judgment, the Supreme Court stated that arbitral awards should not be vitiated on the basis of fine points and that, ‘the modern approach is in favour of sustaining awards where that can be done fairly rather than destroying them.’ Robinson J. then read the entire award as a whole and concluded that:

The arbitrator did not treat the agreements as not legally binding;
The arbitrator did provide reasons for his award.

Robinson J. found that Civil Construction had failed to make out a proper case for the setting aside of the arbitral award and therefore dismissed Civil Construction’s application with costs.

Dissatisfied with the decision, Civil Construction appealed to this Court on 6 grounds which I have set down verbatim:

The trial Judge erred when she found at paragraph 23 of her judgment that the arbitrator “did not treat the Agreement and the Financial agreement as not legally binding documents.” Moreover, it is noteworthy that Joe Pool did not state in the Award that the Agreement and the Financial agreement are not legal documents. This court accepts the submission of counsel for Vijay that the finding of Joe Pool was a perfectly reasonable finding in the circumstances and context of the arbitration” and then went on to say that “in addition Joe Pool gave as a reason for his finding that this was clear from reading the Agreement and the Finance Agreement.”

The learned trial Judge erred in her finding in paragraph 26 line 1 to 4 on page 14 of her judgment after the Arbitrator had failed to give reason for rejecting the figures supplied by CCCL which had the necessary expertise and experience in the field of blasting rocks.

The learned trial Judge erred when she failed to apply the principle she quoted with approval from paragraph 63 of the judgment in the New Zealand case of Ngati Hurungaterangi [2017] to the effect that the reasons that “are not coherent and do not comply an elementary level of logic of adequate substance to enable the parties to understand how and why the arbitrator moved in the particular circumstances from the beginning to the end points … are not reasons.” when she considered, on page 15 and 16 of her judgment, the last findings, paragraphs 24 to 29, of the arbitrator.

The learned trial Judge erred in paragraph 32 of her judgment when she dismissed the Appellants grounds for challenging the arbitrator’s decision on the ground that ‘they are devoid of merit and do not fall under the category of Article 134 of the Commercial Code and all findings which are in the province of Joe Pool who was asked to give a ruling on the dispute.’

The learned trial Judge erred when despite accepting the principles set out in the Ngati case went on to consider the grounds on which CCCL had applied to the Supreme Court under a totally different light that of the “modern approach” “in favour of sustaining the awards where it can be done fairly and as a whole rather than destroying them.”

Prayer

That the whole judgment, and the award made against the appellant be set aside, with costs.

Appellant’s submissions

The appellant elected to argue the grounds of appeal under two issues:

The law that the learned trial Judge applied; and
The lack of reasons for the arbitral award made.

The appellant submitted on grounds 3 and 5 under issue (i) above as follows:

The Appellant sought to have the arbitral award set aside under Article 134 of the Commercial Code which provides inter alia that:
“1. An arbitral award may be attacked before a court only by way of an application to set aside and may be set aside only in the cases mentioned in this article.
2. An arbitral award may be set aside:
(i) if the reasons for the award have not been stated.”

Counsel for the appellant stated that setting aside an arbitral award is not an exercise that the courts in Seychelles have regularly undergone. She therefore submitted that it would be proper to look at persuasive authorities in other jurisdictions when doing so. Counsel relied on the Australian case of Westport Insurance Corporation vs. Gordon Runoff Ltd[1] wherein it was stated that, “arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly, why in the light of what happened, they have reached their decision and what that decision is.”

Counsel also relied on the New Zealand case of Ngati Hurungaterangi vs. Nahai Wahiao[2] which underscores the importance of an arbitrator providing reasons which must be cogent and logical. Counsel submitted that although the learned trial Judge relied on the Ngati case in her judgment, she erroneously stated that “… the modern approach is in favour of sustaining awards where that can be done fairly rather than destroying them.”

Counsel submitted that the foregoing statement was not what the Ngati case stated and therefore the Judge incorrectly applied the principles espoused in the said case.

In Counsel’s view, the Judges in the Ngati case faulted the arbitrators for not providing reasons as to why they had discounted some of the witnesses’ evidence. That this was the same issue being contested in the present appeal- that the Arbitrator did not give reasons as to why he did not consider Civil Construction’s figures for the blasting costs and instead accepted those of the Respondents (Vijay construction). That the Arbitrator ought to have given an explanation as to why the Civil Construction’s figures were not accurate. That the Arbitrator simply stated the sum claimed as being generous which explanation was not cogent in any form.Similarly, counsel also submitted that the Arbitrator did not give any reasons why clause 6 of the Finance Agreement was not applicable to the materials from the quarry.

In light of the above, counsel argued that had the learned trial Judge applied the principles in the Ngati case, she would not have come to the conclusion that reasons were given. Furthermore, that the learned trial Judge would also not have come to the conclusion that she was satisfied that the parties had engaged the Arbitrator on the different values which were properly evaluated.

Grounds 1, 2 and 4 of the Notice of Appeal were addressed under issue (ii) above as follows:

Although the Learned trial Judge correctly came to the conclusion that an award may be set aside for lack of reasons, she did not address her mind to the same in the present case. That the learned Judge stated at paragraph 23 that the Arbitrator gave a reason as to why the agreements were not legally binding and that is because they were not drafted as legal documents but rather guidelines to an arrangement between friends. Counsel argued that the foregoing statement does not help a reader know the reason which led to the Arbitrator to state the aforementioned words. Counsel therefore submitted that the learned trial Judge erred in stating the Arbitrator had given reasons. Counsel relied on the same argument for contesting the blasting costs made by the Arbitrator.

Respondent’s submissions

The respondent made his submissions under the following two headings:

The nature of the arbitration did not require detailed reasoning on every issue.
Sufficient reasons were given by the arbitrator for his decisions.

Under the first heading, the respondent submitted that the mode of settling the dispute was agreed upon by both parties. That it was purely opportunistic of the appellant to seek to complain about the procedure to which it voluntarily agreed to. That the appellant was therefore estopped from complaining about the manner in which the dispute was resolved.

Under the second heading, the respondent submitted that the Arbitrator gave reasons for his decision. In respect to the contested blasting costs, the respondent argued that the Arbitrator was a civil engineer acquainted with the subject matter at hand and the costs involved. That where the Arbitrator rejected the figures supplied by the appellant, reasons had been given. Counsel further submitted that in the mandate of the arbitrator as an amiable compositor on the principle of ex aequo et bono, he does not consider himself as bound by the law but to do what is fair and just between the parties. That indeed the arbitrator used similar phrasing calling it a just and final account.

Regarding the sum awarded by the Arbitrator, counsel submitted that the arbitrator gave reason for preferring the figures presented by the respondent. That it made no sense for the respondent to equip and rehabilitate the quarry, operate it and then on top of that pay a royalty to the appellant for the material which itself produced with its own equipment and labour. That such an interpretation would render the agreements an absurdity. Furthermore, that the trial Judge accepted as a fact that no claim for the materials was ever made during the three years of operation of the quarry. That the first time the appellant made a claim was when the present dispute arose and this was due to the fact that the Arbitrator directed the appellant to pay the respondent. Counsel therefore argued that raising the claim for cost of material at that late stage was an attempt at clawing back the payment due to the respondent by inventing an interpretation which run counter to the common intention of the parties at the time they entered into the agreements.

In respect to the award of interest, the respondent submitted that interest at the rate of 12% had been claimed in the statement of claim. However, after the arbitration process only 5% interest was awarded.

Court’s Determination

As stated above, the appellant elected to argue the grounds of appeal under two issues:

The law that the learned trial Judge applied; and
The lack of reasons for the arbitral award made.

The law that the learned trial Judge applied

At the beginning of analysis of the case, the trial judge stated that: “This court has considered all documents on file. The role of this court is not in the nature of a qualitative analysis of a particular reason or reasons in the way an appellate court would determine an appeal.” The judge then cited Article 134 of the Commercial Code and then followed it by stating that: “In considering and determining the grounds of challenge, the following case law is used as persuasive authority by this court.” The judge then went on to analyse at length the case of Ngati Hurungaterangi vs. Nahai Wahiao (Supra) and the legal principles enunciated in that authority. The judge then reproduced what in her view were the salient provisions of the agreements between the parties. What then followed was a statement in these words: “This court interposes to state that it agrees with the case law. The modern approach is in favour of sustaining awards that can be done fairly rather than destroying them. In consideration of this ground of challenge concerning (the Arbitrator’s) failure to give reasons, this court is of the opinion that the Award should be read fairly and as a whole.”
It was thereafter that the judge went on to make findings regarding the two main issues raised by CCCL.
The appellant contends that although the learned trial Judge relied on the Ngati case in her judgment, she erroneously stated that “… the modern approach is in favour of sustaining awards where that can be done fairly rather than destroying them.” It was counsel’s submission that the foregoing statement was not what the Ngati case stated and therefore the Judge incorrectly applied the principles espoused in the said case.

A reading of the judgment of the Supreme Court clearly shows that the judge was guided by/adopted the Ngati principles in arriving at her decision to dismiss the appellant’s application to have the award set aside and more specifically in arriving at her finding that the Arbitrator’s findings were reasonable in the circumstances and context of arbitration.
Be that as it may and as submitted by Counsel for the appellant, the Ngati case does not espouse the principle that “the modern approach is in favour of sustaining awards where that can be done fairly rather than destroying them.” Nevertheless it must be noted that the Trial Judge did not categorically state that the principle in issue is derived from the Ngati case. But what is even more important is that indeed persuasive authority exists to the effect that the modern approach is in favour of sustaining awards where that can be done fairly rather than destroying them.” For example in Islamic Republic of Pakistan vs. The National Accountability Bureau[3], an application to challenge part of an arbitral award made by a tribunal was brought before the England and Wales Commercial Court. The Court had to determine the following three issues:

Can “inadequate reasons” found a challenge under the S.68 of the Arbitration Act?
Were “adequate” reasons given?
If “inadequate reasons” were given, does this amount to a serious irregularity and a substantial injustice?

In dismissing the case, the Court inter alia held that:

“The importance of upholding arbitration awards has been repeatedly stressed: … as a matter of general approach, the courts strive to uphold arbitration awards. They do not approach them with a meticulous legal eye endeavoring to pick holes, inconsistencies and faults on awards with the objective of upsetting or frustrating the process of arbitration. Far from it. The approach is to read an arbitration award in a reasonable and commercial way expecting, as is usually the case, that there will be no substantial fault that can be found with it.”
I am persuaded by the principle that courts must strive to uphold arbitration awards if they result into fair outcomes.
The lack of reasons for the arbitral award made.

32. Challenging an arbitral award is governed by Article 134 of the Commercial Code of Seychelles. The relevant part of the provision is to the effect that a court may set aside an award if the reasons for the award have not been stated. The appellant contended that the arbitrator failed to provide reasons for his award and where reasons were given they were not cogent. In calling for cogent reasons, the appellant relied on the Ngati case (Supra).
The need to provide reasons for an arbitral decision is so that the resulting decision is soundly based on evidence presented. In the Ngati case, the New Zealand Court of Appeal stated the rationale as follows:
“… the reasons explain how the adjudicator progressed from a particular state of affairs to a particular result. The reasons are the articulation of the logical process employed by a person whose particular skills, expertise or qualification the parties have chosen to decide their dispute. The reasons expose to the parties the disciplined thought pattern of the specialist adjudicator, thereby dispelling any suggestion of arbitrariness. A requirement to give reasons concentrates the mind; if it is fulfilled, the resulting decision is much more likely to be soundly based on the evidence than if it is not.”

Furthermore court noted that the standard of providing reasons for an arbitral award partly depends on the context. This context involves a consideration of the circumstances, including the subject matter being arbitrated, its significance to the parties and the interests at stake. There is no singular and universal standard for the extent to which an arbitrator should provide reasons for a decision. There is no quantitative measure of adequacy. However, the reasons given should be able to lead to a logical conclusion of the decision or award made.

From the persuasive case law above, the pertinent question to be addressed therefore is whether the arbitrator in the present matter not only gave reasons but that the reasons for his decision were logical.

The appellant contended that the Arbitrator did not provide reasons in the following three aspects of decision:

That the agreements were not intended to be legally binding
Rejection of the blasting figures provided by the appellant (CCCL).
Rejection of the daily rate for the blaster and lump sum award of SR 25,000.

I will determine the first aspect. The appellant contended that the Arbitrator considered the agreements as a guideline to an arrangement and were therefore not legally binding documents but did not provide any reasons for this conclusion. The complaint is based on a statement in the award document to wit: “In compiling this ruling I have taken into consideration the spirit of the initial agreement. Looking at text of the agreement it is obvious that these were not drafted as legal documents but rather as guidelines to an arrangement between friends whereby each would benefit whilst not profiting on the other.”

In spite of the above statement in the Arbitrator’s ruling, I am in agreement with the Learned Trial Judge that the Arbitrator did not treat the agreements as not legally binding. As a matter of fact the arbitrator’s decisions were based on interpretation of the clauses contained in the two agreements. In reaching the final award, the arbitrator systematically dealt with each item of the claim according to the parties’ agreements. As pointed out by the Trial Judge, the Arbitrator discussed each party’s claims with them “in light of the Agreement and the Finance Agreement …” Consequently, since there is no evidence that the statement which is the subject of contention was acted upon by the Arbitrator, it cannot be a basis for setting aside the Award.

My decision is also in line with the principle that courts should in examining applications or motions challenging arbitral awards deal with them with a less stringent legal lens. The court should not subject the award to evaluation as if it were dealing with evidence in any ordinary civil or criminal matter. Furthermore, the Arbitrator justified his opinion by indicating that he was interested in a just and fair settlement of the dispute and removing any profit element included in the claims on either side.

I now move on to discuss the two items over which the appellant and the respondent failed to reach agreement and which the Arbitrator made decisions: the blasting costs and the meaning or relevance of Clause 6 of the Finance Agreement.

The blasting costs.

In the court below the appellant contended that the Arbitrator failed to explain clearly his calculations as to the blasting costs. In his ruling the Arbitrator justified his adopting the rates by Vijay (the respondent) “as these rates are substantially more generous than that being claimed by CCCL.” In specific reference to the cost of the Blaster, the appellant had claimed a monthly rate of Rs. 30,000 – a daily rate of approximately 1,000 Rs. On the other hand, Vijay was prepared to accept a daily rate of Rs. 2000. For the Blaster’s Assistant, the appellant claimed Rs. 16,000 per month – approximately at Rs. 1,300 daily. On the other hand the respondent offered a daily rate or Rs.1000. On the whole, the respondent indeed offered more generous rates. For the security escort as well as for the explosives used the Arbitrator accepted what CCCL submitted as the costs. For the cost of food and transport the Arbitrator again accepted figures presented by Vijay because he “found them to be generous”.

Following from the above detailed analysis I find no reason to depart from the finding of the trial judge that Arbitrator engaged at length with the parties’ competing claims. I also find that he gave cogent reasons for his decisions. The appellant has not made out a case for setting aside the Arbitrator’s decision on this particular item.

Interpretation of Clause 6 of the Finance Agreement.

The appellant contended that the Arbitrator did not give any reasons for his interpretation of clause 6 of the Finance Agreement as not being applicable to the materials from the quarry during the period that the quarry was under the control of the respondent. Several clauses in the “Agreement” are essential for resolving this dispute. Under Clause 3 CCCL agreed to let Vijay operate the quarry for a period of 3 years. Under clause 7 of the “Agreement”, Vijay would pay a price of RS 15.00 per ton of stone crushed (and used by Vijay). Vijay would also pay CCCL 5% of the invoice value of stones sold to the public (Clause 8). Clause 6 of the Finance Agreement provided that CCCL will agree to a favourable price at which to supply quarry products to Vijay taking into account the assistance given to CCCL by Vijay. Examples of assistance by Vijay was that Vijay would arrange finance up to $ 2 million to enable CCCL to procure machinery and equipment to upgrade the quarry; Vijay would not charge any interest for finances up to 2 million USD.
In a claim letter to the Arbitrator, CCCL sought to recover a price for materials from the quarry during the period the quarry was in the control of Vijay. The claim was based on Clause 6 of the Finance Agreement cited above. This would be in addition to the RS 15.00 per ton of stone crushed (and used by Vijay – Clause 7) and the 5% of the invoice value of stones sold to the public (Clause 8). The claim was disputed by Vijay. The Arbitrator ruled in favour of Vijay. The Arbitrator came to the conclusion that the meaning of the clause in issue was to the effect that, if after the quarry was handed back to CCCL, Vijay wanted to purchase quarry products, in light of the assistance rendered to CCCL by Vijay during the lease of the quarry, it would be at a favourable price.
In considering the claim the Arbitrator stated as follows:

“This item first became a claim in a letter from CCCL to Vijay Construction dated 20th September 2013. It was as a result of the interpretation of the Agreement and the Finance Agreement both of which was drafted by Vijay Construction and in particular to clause 6 of the Finance Agreement. The purpose of this clause according to Vijay Construction was to aide CCCL with the repayment of the investment by allowing CCCL to stretch payment over a longer period of time and by sales of quarry products to Vijay if they chose to. For which privilege, Vijay Construction would be expected to pay an agreed favourable price for the materials. CCCL claims that this is not the case and that Vijay should have to pay for the materials taken under this clause.”

In rejecting CCCL’s claim the Arbitrator observed as follows:

“It is worth noting that this claim was first presented many months after the quarry had been handed over to CCCL. For the three plus previous years there had not been any mention of this sum owed to CCCL. Furthermore, I do not believe that any rate was discussed or agreed … I believe that clause 6 of the Finance Agreement could not be considered applicable to materials from the Praslin quarry during the period that the quarry had effectively been ceded to Vijay Construction under clause 3 of the Agreement. Looking at the dispute in the spirit of fairness and mutual benefit, I find it very difficult to believe that one party should be asked to finance an interest free loan, operate the quarry, pay royalty or levy and later sell the machinery and equipment to the other party at a depreciated rate of 10% over three years and still be asked to pay for the materials taken during the time that the quarry was under their control. This just too one sided. I cannot therefore in all fairness, entertain this claim and therefore rule it to be invalid.” (My emphasis)

It is clear from the above excerpt that the Arbitrator’s interpretation of the two agreements was on the premise of fairness. Further reliance was on the fact that the said price had never been agreed upon by the parties during the three years and that this claim was brought many months after Vijay had ceded the quarry to CCCL.
I find the above reasons and explanations plausible as to why the Arbitrator declined to grant CCCL’s claim.
Regarding the issue of interest, the appellant contended that the award of interest at a rate of 5 % by the arbitrator was an afterthought.
The Arbitrator stated that in calculating the rate of interest due, he took into consideration the spirit of the initial agreement. Therefore, no consideration was made for commissions and fees due. That however, when he made enquiries from two commercial banks regarding interest rates on a foreign exchange loan, both offered a rate of 5% excluding commissions and processing fees.
It should be noted that the Vijay had made a claim of interest on the amount due at a commercial rate of 12%. However, the Arbitrator kept hindsight of the fact that both the appellant and the respondent did not take advantage of each other in the dispute by presenting figures which would lead to either party making a profit and reduced the rate to 5%. This was in line with the Chartered Institute of Arbitrators practice guideline 13 which gives guidance on how Arbitrators should approach an award of interest. The guideline inter alia provides that, an award of interest should be compensatory and not penal in purpose. The best approach is to attempt to assess the commercial rate of interest that someone in the position of the claimant would have had to pay to borrow the money which is to be awarded to him as a debt or damages. Furthermore, that Interest may be awarded for the period up to the award and also for the period between the issue of the award and payment.
I therefore find no fault with the rate of 5% commercial interest awarded by the Arbitrator.

Conclusion

Having carefully studied the award, I find that for each of the contested points, the arbitrator gave cogent reasons premised on the parties’ agreements as to what rates were applicable in reaching the arbitral award. The arbitrator systematically dealt with each item of the claim.

Orders

Consequently, this appeal is dismissed with the following orders:

The arbitral award and the lower court’s judgment affirming it are upheld.
The appellant is ordered to pay to the respondent the arbitral sum together with interest from the date of the award to the date of this judgment.
Since costs follow the event, the respondent is awarded costs of this suit.

Dated and signed on this 11th day of June, 2021.

Tibatemwa-Ekirikubinza, JA.

________________________ __________________________
Fernando President Dingake JA

[1] (2011) HCA 37, High Court of Australia.

[2] CA 415/2016, C54/2017 [2017] NZCA 429.

[3] [2019] EWHC 1832 (Comm)

IN THE COURT OF APPEAL OF SEYCHELLES

Delivered: 11 June 2021

JUDGMENT

TIBATEMWA-EKIRIKUBINZA, JA
Brief facts

In its response, Civil Construction claimed that it was in fact Vijay which owed it USD 663,933. This difference in positions is what occasioned the dispute between the parties.

In April 2014, Vijay applied to the Supreme Court for the appointment of an arbitrator. In October, the Court appointed Mr. Joe Pool as arbitrator.

In June 2015, the arbitrator delivered an award in favour of Vijay for the sum of USD 1,438,185. In September 2015, the arbitrator also accepted a claim by Vijay for interest on this sum.

The arbitrator did not treat the agreements as not legally binding;
The arbitrator did provide reasons for his award.

Robinson J. found that Civil Construction had failed to make out a proper case for the setting aside of the arbitral award and therefore dismissed Civil Construction’s application with costs.

Dissatisfied with the decision, Civil Construction appealed to this Court on 6 grounds which I have set down verbatim:

Prayer

That the whole judgment, and the award made against the appellant be set aside, with costs.

Appellant’s submissions

The appellant elected to argue the grounds of appeal under two issues:

The law that the learned trial Judge applied; and
The lack of reasons for the arbitral award made.

The appellant submitted on grounds 3 and 5 under issue (i) above as follows:

Counsel submitted that the foregoing statement was not what the Ngati case stated and therefore the Judge incorrectly applied the principles espoused in the said case.

Grounds 1, 2 and 4 of the Notice of Appeal were addressed under issue (ii) above as follows:

The respondent made his submissions under the following two headings:

The nature of the arbitration did not require detailed reasoning on every issue.
Sufficient reasons were given by the arbitrator for his decisions.

Court’s Determination

As stated above, the appellant elected to argue the grounds of appeal under two issues:

The law that the learned trial Judge applied; and
The lack of reasons for the arbitral award made.

The law that the learned trial Judge applied

In dismissing the case, the Court inter alia held that:

The appellant contended that the Arbitrator did not provide reasons in the following three aspects of decision:

The blasting costs.

Interpretation of Clause 6 of the Finance Agreement.

In rejecting CCCL’s claim the Arbitrator observed as follows:

Conclusion

Orders

Consequently, this appeal is dismissed with the following orders:

Dated and signed on this 11th day of June, 2021.

Tibatemwa-Ekirikubinza, JA.

________________________ __________________________
Fernando President Dingake JA

[1] (2011) HCA 37, High Court of Australia.

[2] CA 415/2016, C54/2017 [2017] NZCA 429.

[3] [2019] EWHC 1832 (Comm)

DF Project Properties (Pty) Ltd v Fregate Island Pvt Limited (SCA 56 of 2018, 63 of 2018) [2021] SCCA 28 (21 July 2021);

Anonymous — Thu, 23 Jun 2022 08:05:09 +0000

DF Project Properties (Pty) Ltd v Fregate Island Pvt Limited (SCA 56 of 2018, 63 of 2018) [2021] SCCA 28 (21 July 2021);

Flynote

Arbitration and Alternate Dispute Resolution

Civil Procedure

Constitutional Law

Anonymous (not verified) Thu, 06/23/2022 - 08:05

Search summary

enforcement of foreign judgment, section 227 of the Seychelles Code of Civil Procedure, conditions to be fulfilled for enforcement of foreign judgment

Headnote and holding

Appeal is dismissed

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2021-scca-28.pdf

2021-scca-28.docx

IN THE SEYCHELLES COURT OF APPEAL

Reportable
[2021] SCCA 28        20 July 2021
SCA 56/2018 and SCA 63/2018
Appeal from CC 29/2014

In the matter between
DF PROJECT PROPERTIES (PROPRIETARY) LTD    Appellant
(rep. by Basil Hoareau)

and

FREGATE ISLAND PRIVATE LIMITED                                    Respondent
(rep. by Divino Sabino and Conrad Lablache SC)

Neutral Citation: DF Project Properties (Proprietary) Ltd v Fregate Island Private Limited (SCA 56/2018 and SCA 63/2018 Appeal from CC 29/2014) [2021] SCCA 28     (20 July 2021)
Before:                   Fernando PCA, Twomey, JA and André JA
Summary:             enforcement of foreign judgment, section 227 of the Seychelles Code of Civil Procedure, conditions to be fulfilled for enforcement of foreign judgment
Heard:                   24 June 2021

Delivered: 20 July 2021

JUDGMENT
______________________________________________________________________________
TWOMEY JA
Introduction

In the case of Ablyazov v Outen & Ors,[1] this court stated:

“With respect to assuming competence, courts of unlimited jurisdictions have invoked their inherent jurisdiction functions to assume competence to recognise orders made by foreign courts to the extent that the assets may be traced in their own jurisdictions, irrespective of whether there exist a formal law between democratic nations to co-operate and collaborate in judicial matters within the limits of their territorial jurisdictions presumably as a modern application of lex mercatoria.”

The above statement recognises the fact that in general, the recognition, enforcement and execution of foreign judgments although governed by domestic law are subject to the principles of comity, conflicts of laws and reciprocity. In Seychelles, the provisions of section 11 of the Courts Act recognises the extraterritorial jurisdiction of the Supreme Court, namely:

“The jurisdiction of the Supreme Court in all its functions shall extend throughout Seychelles:
Provided that this section shall not be construed as diminishing any jurisdiction of the Supreme Court relating to persons being, or to matters arising, outside Seychelles.”(emphasis added)

In addition, a foreign judgment can be registered and executed under the Foreign Judgments (Reciprocal Enforcement) Act (FJREA) if there is reciprocity between Seychelles and the foreign jurisdiction; the Reciprocal Enforcement of British Judgments Act (REBJA) if the foreign judgment is a British judgment; and under section 227 of the Seychelles Code of Civil Procedure (SCCP) for judgments from a country with whom Seychelles has no treaty or formal agreement.
The appeal before this court concerns the execution in Seychelles of three Orders of the German Dusseldorf Higher Regional Court, specifically a First Court Order declaring a German arbitration award enforceable, a Second Order declaring the Cost Order concerning the First Order proceedings enforceable, and a Third Order declaring the Costs in relation to the arbitration award enforceable.
For the first time in this jurisdiction, the enforcement of such Orders was sought not under the statutory and established procedures as set out above but rather through the application of Article 125 (1) of the Constitution,[2] sections 4-6, 11 and 17 of the Courts Act[3]; and the decisions in Finesse v Banane[4] and Ablyazov v Outen & Ors[5] which established that the Supreme Court of Seychelles has the same powers as the High Court of England and Wales and therefore that if the High Court of England would have jurisdiction to enforce the German Orders, applying the provisions cited above, so would the Supreme Court of Seychelles. In the circumstances, it was submitted that the Supreme Court should follow Rules 200(2) and 190 of the English Rules on the Conflicts of Laws[6] in the enforcement of a foreign order.

Background to the present appeal and cross-appeal

DF Project Properties (Proprietary) Ltd (hereinafter DF) entered into a written agreement with Fregate Island Private Limited (hereinafter Fregate) to build a 5-star holiday resort on Fregate Island, Seychelles. The Agreement provided that if any dispute arose from or with the agreement, the same would be resolved by arbitration rules (of the Wirtschaftsvereinigung Bauindustrie e. V. North Rhine Westphalia) in Germany.
A dispute arose and was arbitrated in Germany and the Arbitral Tribunal issued an award in favour of DF on 9 July 2009 for US$ 1,941,669.13 plus interest together with two-thirds of the costs incurred in the arbitration proceedings.
Fregate appealed to the Dusseldorf Higher Regional Court to revoke the award of the Arbitration Tribunal but later withdrew the application for revocation. After obtaining the three German Court Orders, DF unsuccessfully sought their enforcement and execution in the Supreme Court of Seychelles.
It must be noted with regret, that the execution of the judgment in a commercial case begun in 2014 took more than four years to complete in the Supreme Court and it has taken another three years for the appeal to be heard in this court. I take this opportunity on behalf of the Court to apologise to the parties for this inordinate delay which caused personal hardship to both sides as is reflected in the transcribed proceedings (that is provisional seizure of moveable assets including sea vessels, attachment of funds in bank accounts of a going concern impacting on its day to day business).
The Supreme Court ultimately decided that section 227 of the SCCP concerning the enforcement of foreign judgments as qualified by the case of Privatbanken Aktieselkab v Bantele[7] was only applicable to a judgment of a foreign court, and “not an enforcement order, under an arbitral award” (paragraph 82 of the judgment of the court a quo).
Accordingly, it found that Privatbanken was reserved to the facts as presented in that case and, therefore, not applicable to the present situation.
The Court also found that Rule 200 (2) of the English Private International Law Rules is common law based; and that the applicability of the said Rule in Seychelles has neither been excluded by statute nor is it contrary to the Constitution. The Court found that the Rule is therefore applicable in Seychelles under section 4 of the Courts Act which vests powers of the High Court of England in the Supreme Court of Seychelles in addition to its other powers as conferred by the Constitution and other legislation.
At the hearing both Dr Michael Dimanski, the expert witness for DF and Professor Stefan Leupertz, the expert witness for the Fregate, stated that the First and the Third German Court Orders were enforcement orders. Both experts explained that in Germany in order to enforce an arbitral award one must go before the Higher Regional Court to obtain the declaration/order of enforcement and that this is a mandatory procedure.
Dr Dimanski was of the view that the First and the Third Orders (enforcement of the award and enforcement of the cost arbitration award) superseded the award and the decision of the Arbitration Tribunal. He stated that a party who wished to enforce the award would need to rely on the German Court Orders, not upon the award (pages 117-119 of Volume III of the Court of Appeal case bundles; paras 30-38 of the Supreme Court judgment).
Professor Leupertz was of the view that the Orders were not judgments on merits and did not supersede the award. He stated that the Orders were enforceable only in Germany and were not subject to enforceability abroad. He further stated that the award did not merge with the Court Order and Germany does not permit a double exequatur of an arbitration award in cases where a foreign court has already confirmed the foreign arbitral award (paras 49-59 of the Supreme Court judgment).
DF in the present case sought to enforce in Seychelles, not the German arbitration award but rather, the three Orders of the Higher Regional Court as foreign judgments as contained in its prayer in the Plaint dated 31 July 2014, namely by the Court “declaring the […] foreign judgments of the Regional High Court of Dussedldorf enforceable and executory in the Republic of Seychelles according to the Law of Seychelles…”
The Court preferred the testimony and legal opinion of Professor Leupertz citing his reasons in paragraph 2.2.2 of the Legal Opinion:

“[104] . . . As stated in D4 the declaration of enforceability by the state court contains no further independent decision on the merits and does not therefore replace the arbitration award in a way that could allow an exequatur in Seychelles. Professor Leupertz also explained that an application before the Regional High Court to enforce an arbitration award is not an appeal.. . .”

Ultimately, the Court agreed that the English Rules on the Conflicts of Laws should apply. However, it held that certain conditions under the rules were not satisfied, namely that, (relying on Nouvion v Freeman[8]) it was not satisfied that the Orders were final and conclusive judgments in terms of Rules 200 and 190 and were not binding on the rights and liabilities of the parties settling the existence of the debt to become res judicata between them.

The grounds of appeal and cross-appeal

DF has appealed the decision of the Supreme Court on the following grounds:

The learned trial judge erred in law in failing to properly apply Rule 200(2) of the English rules of private international law in relation to the order of the Regional Court of Dusseldorf (the High Court) delivered on 8 May 2010 (the First Court Order) and the order of the High Court delivered on 11 November 2010 (the Third Court Order).

The learned trial judge erred in law and on the evidence in relying on the evidence and the written legal opinion – exhibited as P4 – of Professor Leupertz in determining that the First Court Order and the Third Court Order were not foreign judgments within the meaning and context of Rule 200(2) of the Rules.

The learned trial judge erred in law in holding the First and Third Court Orders were not final and conclusive judgments within the meaning of Rules (200 (2) and 190.

The decision of the learned trial judge that the First Court Order and the Third Court Orders are not judgments within the natural meaning and context of Rule 200(2) of the rules is unreasonable and cannot be supported by the evidence.

The learned trial judge erred in law in holding that the order – delivered by the High Court on 20 August 2010 – was not a foreign judgment under section 227 of the Seychelles Code of Civil Procedure.

Fregate has cross-appealed on the following grounds:

The judge ought to have determined the enforceability of the orders of the Regional High Court of Dusseldorf, Germany (collectively the “German Court Orders”) on the basis of section 227 of the Seychelles Code of Civil Procedure rather than the English private international law rules.

The judge erred in her finding that the English private international rules applied to this case in both procedural and substantive respects.

Given her finding that the First and Third German Orders were not exequaturs (ie enforcement orders) the learned judge ought to have concluded, on that basis alone that those German court orders did not satisfy the requirements for enforceability in Seychelles.

The learned judge did not appreciate that the appellant was bound by the admission of its counsel in the proceedings of 27 May 2015 that it would not be relying on the arbitral awards in this case. That being so, the learned judge erred in her finding that the existence of the arbitral awards was established on a balance of probabilities and in applying the English private international law rules (to the extent they apply at all ) to such findings.

Given the uncontroverted evidence that the appellant, an overseas company, contravened section 309 of the Companies Act 1972 and other mandatory requirements in performing disputed agreements underlying the German court orders and consequently evaded taxes after revenue, the learned judge ought to have concluded that all the German court orders were against the fundamental rules of public policy and thus unenforceable in Seychelles.

The issues raised in the grounds of the appeal and cross-appeal boil down to the following:

Whether the Supreme Court erred in relying on the Constitution and the Courts Act to enforce a foreign arbitral award/judgment in Seychelles?

Whether the German Court Orders were enforceable in Seychelles?

Before I turn to the issues raised in this appeal, the following has to be stated with respect to private international law and conflicts of law issues in this jurisdiction: Early Seychelles jurisprudence concluded that French rules of private international law are to be followed in Seychelles: Rose v Mondon [9]; Morgan v Morgan[10]; Pillay v Pillay[11]; Pillay v Pillay[12].
A more modern approach was adopted in the case of Intelvision Network Ltd v Intelvision Ltd Civil Appeal.[13] The Court of Appeal noted:

[15] Rose decided that the judgment of the Court of Appeal of Seychelles in Augustin v Bailey (1962) MR 115 had conclusively laid down the rules of private international law to be followed in Seychelles. In Augustin, the Court of Appeal of Seychelles in Mauritius stated:

“Since the rules of private international law in any country must necessarily have their foundations in the internal laws of that country, those which are applicable must be based substantially on the provisions of our laws regarding civil rights and obligations. These laws are basically and almost entirely French so that, subject to any exceptions which may arise through litigation we must be guided by the French Rules of private international laws.”
[16] In 1975, we enacted our own Civil Code and although it is substantially based on the Code Civil of France, logically it is our Code and the Seychellois jurisprudence emanating from it that must now guide us on the question of private international law. In this sense, the Appellants are correct to say that it is Seychellois law that should apply when deciding on the proper law of the contract in this case.

It is thus clear that it is Seychellois law that applies to determine the proper law to apply in private international law matters and whether foreign judgments should be executed to bind an individual or his property.
Further, in the present case in deciding how to resolve the legal dispute between the parties by reference to the laws of Germany, (the lex causae) it must be noted that although the lex fori govern procedural matters, with regard to remedies in particular, as pointed out by George Panagopoulos[14] inasmuch as they form part of the substance of the claim since they affect “the existence, extent or enforceability of the rights or duties of the parties …[they] should be characterised as substantive”. Panagopoulos further notes that remedies are not rules governing the mode of conduct of the court's proceedings and thus should not be seen as issues of procedure.[15] The execution of a judgment is therefore not a matter of procedure but a matter of substance. I will return to this issue later in the judgment.

The first issue: whether the Supreme Court erred in relying on the Constitution and the Courts Act to enforce a foreign arbitral award/judgment in Seychelles?

Fregate submitted both in the court below and this court that the Appellant's claim was based on section 227 of the SCCP and that it is, therefore, French jurisprudence that should determine the issue of jurisdiction. In French law, “the request for the exequatur of a foreign judgment who in turn granted the exaquatur to another foreign judgment rendered in a third-state would be inadmissible; it is the original judgment that should be scrutinised by the French exequatur judge.”[16] Fregate further submitted that the Supreme Court does not have jurisdiction to declare enforceable or executory the German judgments as these were not delivered as a result of a hearing on the merits of the dispute between the parties. The German court orders were merely declaring executory the arbitration Orders and that the maxim exequatur sur exequatur ne vaut would apply with respect to Seychelles’ courts executing the German court orders.
DF has submitted on the other hand that the Supreme Court of Seychelles has jurisdiction to render enforceable or executory the German orders on the basis of the constitutional and legal provisions of the Courts Act as mentioned above, that the Supreme Court of Seychelles has the same powers as the High Court of England and since the High Court of England would have jurisdiction to enforce the judgment so would Seychelles. DF then relied on Rule 200 of the English Rules of Conflict of Laws and the authority of International Alltex Corporation v Lawler Creations Limited[17] (an Irish High Court case, which Counsel for DF and the Supreme Court both mistakenly referred to as a case of the High Court of England) for the proposition that courts can grant the option to enforce a foreign judgment instead of the award since the two are on the same footing.
I am unable to follow the reasoning of DF as adopted by the Supreme Court with regard to why Rule 200 of the English Rules of Conflict of Laws should apply. To my mind, the provisions of section 17 of the Courts Act would preclude the application of the English Rules. The provisions of section 17 bear repeating:

“In civil matters whenever the laws and rules of procedure applicable to the Supreme Court are silent, the procedure, rules, and practice of the High Court of Justice in England shall be followed as far as practicable.” (emphasis added)

Our laws are not silent on the matter of enforcement of foreign judgments. When FJREA and REBJA have no application as in this case, it is section 227 of the SCCP that applies. Section 227 as interpreted in Privatbanken;[18] Green v Green;[19] Baldini & Ano v State Assurance Company of Seychelles (SACOS);[20] is to the effect that foreign judgments can only be enforced in Seychelles if they are declared executory by the Supreme Court of Seychelles unless an act or a treaty provides otherwise. The conditions for a foreign judgment to be declared executory are also specified by Privatbanken.
The foreign judgment in Privatbanken was a decision on the merits of the dispute, while the German Orders in the present case do not go into the merits of the arbitration dispute. The Supreme Court decided on this basis alone that Privatbanken did not apply to the present situation given this distinction.
I respectfully disagree with this view simply because judgments in this jurisdiction and generally refer to both judgments and orders. My view is strengthened by the provisions of section 227 and other provisions of our law concerning the enforcement of judgments. Section 227 provides that :

“Foreign judgments and deeds drawn up in foreign countries can only be enforced in the cases provided for by articles 2123 and 2128 of the Civil Code and agreeably with the provisions of the aforesaid articles.”

Further, the word judgment is not defined in the SCCP but “judgment creditor” and “judgment debtor” are both defined as a party to a cause or matter in whose favour or against whom, respectively, “a judgment or order of the court has been given”. Similarly, both FJREA and REBJA, in specifically providing for the recognition of foreign judgments define judgment as “any judgment or order given or made by a court in any civil proceedings”.

The Supreme Court’s distinction between judgment and order is even more surprising given that this Court in Ablyazov,[21] a case which concerned not the enforcement of a foreign judgment but rather a receivership order, made it clear that section 227 and the principles in Privatbanken[22] were equally applicable to court orders. Similarly, the Court of Appeal upheld the Supreme Court’s finding on much the same point in a case concerning the enforcement of an arbitration order in the case of Vijay Construction (Pty) Ltd v Eastern European Engineering Limited.[23] Vijay was in respect of an enforcement order under REBJA which had similar provisions to section 227 and designed to achieve similar results. The Court of Appeal held that that the provisions of REBJA relating to “judgement” were meant to be interpreted broadly to include any judgment made in civil proceedings or any judgment for payment or similar Order.
The Supreme Court in the present case also appears to have been swayed by the expert testimony of Professor Leupertz that the German Orders were only enforceable and did not merge with the Court Order as Germany does not permit a double exequatur of an arbitration award in cases where a foreign court has already confirmed the foreign arbitral award. What must be remembered is that Professor Leupertz and for that matter, Dr Dimansky and Professor Jarrosson (as cited by Fregate in their closing submissions) were experts in German and or French law but not Seychellois law. The enforcement of foreign orders in Seychelles is not a subject that is within their expertise.
As explained in Vijay, exequatur sur exequatur ne vaut does not apply within the context of the present case. The doctrine is procedural as it prohibits ‘the enforcement of a judgment for enforcement’. The issue before this court is different – it is solely about the enforcement of a foreign judgment.
I am therefore of the view with respect to the first issue, that is, whether the Supreme Court erred in relying on the Constitution and the Courts Act to enforce a foreign arbitral award/judgment in Seychelles, that it did indeed. Seychelles has legislated for the enforcement of awards and judgments and therefore section 4 of the Courts Act has no application to the present case. Nor, it must be said that French jurisprudence has any bearing on this matter either. We have our own legislation and jurisprudence in this respect as I have pointed out above.
All the grounds of appeal regarding this issue, to make enforceable the German Orders under section 4, therefore, fail in their entirety. However, the fifth ground of appeal in relation to whether the learned trial judge erred in law in holding that the order – delivered by the High Court on 20 August 2010 – was not a foreign judgment under section 227 of the Seychelles Code of Civil Procedure succeeds. Similarly, the first two grounds of the cross-appeal concerning the same issue succeed.

The second issue: whether the German Court Orders were enforceable in Seychelles?

Having found that section 227 of the SCCP and the conditions of Privatbanken apply to foreign court orders, it is now necessary to determine whether these were fulfilled in the present case to render the three German Orders enforceable in Seychelles.
The conditions for a foreign judgment to be declared executory under Privatbanken are that :

“(1) The foreign judgment must be capable of execution in the country where it was delivered;
(2) The foreign Court must have had jurisdiction to deal with the matter submitted to it;
(3) The foreign Court must have applied the correct law (“la loi compétente”) to the case in accordance with the rules of the Seychelles private international law;
(4) The rights of the defence must have been respected;
(5) The foreign judgment must not be contrary to any fundamental rules of public policy; and
(6) There must be absence of fraud.”
Condition 1 – execution in Germany

In respect of the first condition, it is not disputed that the German orders are capable of execution in Germany. Their execution did not take place as presumably, Fregate has no assets against which the court orders could be executed in Germany.

Condition 2 – Jurisdiction of the foreign court to deal with the issue

As for the second condition, that the foreign court must have had jurisdiction to deal with the matter submitted to it, is noted that Sauzier J in Privabanken held that,

“… the trial Court must have jurisdiction in the international sense and also local jurisdiction. The first must be determined in the light of Seychelles’ private international law whereas the second in the light of the law of the country of the trial Court”.

With regard to Seychelles’ private international law Sauzier J further held:

“As far as the jurisdiction of the Supreme Court of Seychelles is concerned, it is now almost entirely governed by English law or by law based on English law. Since the rules of private international law must necessarily have their foundation in the internal law, therefore those rules dealing with the jurisdiction of foreign courts in the international sense must be based substantially on the provisions of our law regarding the jurisdiction of Seychelles Courts, more particularly the jurisdiction of the Supreme Court of Seychelles. In this respect therefore we should be guided by English rules of private international law…”

Sauzier J went on to hold that the criterion for the jurisdiction of the foreign court in terms of our law under the rules of private international law is either “residence or presence in, or submission or agreement to submit to the foreign jurisdiction”. In the present case, both parties submitted to the arbitration in Germany. Furthermore, the agreement between the parties was subject to the substantive law of the Federal Republic of Germany.
Both expert witnesses, Doctor Dimanski and Professor Leupertz stated that for the German award to be enforceable, a party must apply to the German Court for a declaration of enforceability. As pointed out by Professor Leupertz in his Legal Opinion:

“[A]wards cannot be enforced in Germany without further legitimation regardless of their binding effect… [and] the executory title required for the enforcement of the arbitration award is the enforcement decision of the Higher Regional Court, not the award itself. . .”

In my view, therefore, this is sufficient to establish the jurisdiction of German courts in the international and the local sense. Therefore, the Higher Regional Court of Dusseldorf had jurisdiction to decide on the enforceability of the German Arbitration Award and Costs.

Condition 3 – the application of the correct law by the foreign court

In respect of the third condition, namely that the foreign Court must have applied the correct law (“la loi compétente”) to the case in accordance with the rules of Seychelles private international law, Sauzier J in Privatbanken pointed out that this rule has been asserted by the French decision of Munzer c. dame Jacoby-Munzer.[24] The decision reversed the earlier jurisprudence that a foreign judgment has to be revised on merits and laid down new rules relating to the enforcement of foreign judgments. Thomas E. Carbonneau[25] highlights the conditions set out by the Munzer decision and the restriction which prohibits the judge from reviewing the foreign judgment’s merits in much the same terms as Privatbanken.
Carbonneau clarified the third condition, stating that the Munzer decision:

“demands that the merits of the foreign litigation have been decided according to the law designated as the governing law by the choice of law rules under French private international law”.[26]
He further pointed out that:
“such requirement will result in the denial of an exequatur to those foreign judgments in which the foreign choice of law rules designate a law other than the one required by French rules as the law governing the merits of the litigation”.
Carbonneau stated that there were two developments in the jurisprudence that reduced the potential inequities that would exist in the case of the literal application of the requirement:
“First, the notion of equivalence has been applied to cases in which the foreign tribunal applied a different law than that designated by French choice of law rules. Accordingly, the exequatur judge may render a foreign judgment enforceable despite the "erroneous" selection of the governing law by a foreign court, provided the outcome of the decision conforms to the result that would have been reached under the law designated by French choices of law rules.
Second, since the pouvoir de revision of the exequatur judge has been eliminated, the severity with which this choice of law requirement was applied has been lessened considerably. In fact, it will be applied only in a case presenting a blatant misconstruction of the substance of the governing law[27]” (emphasis added)

In Privatbanken, Sauzier J had to consider the findings of the German court on the applicable law (Danish or West German). He held that:

“the principles which I have to apply are to be found in the rules of French private international law as was pointed out in the case of Austin v Bailey (1962) MR 113”
The court concluded that no evidence was brought before the German court that Danish law was dissimilar to West German law on issues decided by that court and according to Seychelles’ rules of evidence and that therefore
“unless there is proof to the contrary, foreign law is to be presumed to be the same as the law of the forum”.
In the circumstances, it was held that the German court applied the correct law (German law) and the condition was satisfied.

In Dhanjee v Dhanjee,[28] the Court also analysed the requirement of the application of the correct law in accordance with the rules of Seychelles’ private international law. Dhanjee involved a foreign judgment related to the custody of a minor child and the Court considered the principles in the Austin v Bailey[29] and Pillay v Pillay[30] that French rules of private international law should apply. It was held that the Matrimonial Causes Act 1992 (Seychelles) is based on the UK statute and this constituted an exception to the Austin v Bailey principle which arises through certain different statutory enactments. Dhanjee held that the Seychelles’ court was guided by the English rules of private international law:

“The issue before the court concerned the custody of the minor child. In Pillay v Pillay (1973) MR 179 and (1973) SLR 307, the Court of Civil Appeal approved of the following passage from Austin v Bailey (1962) MR 113:

Since the rule of private international law of any country must necessarily have their foundation in the internal law of that country, those which are applicable must be based substantially on the provisions of our laws regarding civil rights and obligations. These laws are basically and almost entirely French, so that subject to any exception which may arise through certain different statutory enactments and treaty obligations, we must be guided by the French rules of private international law...
The Matrimonial Causes Act 1992 (Seychelles) is based on the Matrimonial Causes Act 1973 of the United Kingdom and the Domicile and Matrimonial Proceedings Act 1973. This constitutes "an exception which arises through certain different statutory enactments" and we are guided by the English rules of private international law. In the United Kingdom, the personal and proprietary relationship between members of a family are governed by the law of the domicile - vide: Conflict of Laws (J.C. Morris 1988) page 14. In the case of a minor child the domicile is that of dependency. Section 4(1) and (2) of the Domicile and Matrimonial Proceedings Act (1973) (UK) provide that the domicile of a dependent child whose parents are alive but living apart shall be that of the mother - vide: Conflict of Laws, supra, page 29. Accordingly, the law of domicile applied by the foreign court was "la loi compétente".
In the present case, the Court in Seychelles need not go into merits of the German Court Orders but needs to consider whether the German Court applied the correct law to the case in accordance with the rules of Seychelles’ private international law. The law governing the contract between the parties was German Law with a German Arbitration Clause. The German Court applied German Law to the enforceability of the German arbitration award in accordance with the procedure described by Professor Leupertz in paragraph 2.1.1 of his legal opinion. The law applied is therefore the correct law.
Condition 4 – respect for the rights of the defence

With respect to whether the rights of the defence have been respected, this point is not disputed by the parties and requires no further comment.

Condition 5 – the foreign judgment must not be contrary to any fundamental rules of public policy

The fifth condition that the foreign judgment must not be contrary to any fundamental rules of public policy has been the subject of much discussion. Fregate submitted that the German Orders should not be enforced in Seychelles as they are contrary to rules of public policy. Several contraventions of the law were claimed in the Supreme Court: Orders were made without a full-scale hearing; Orders relate to matters prescribed under Seychellois law (enforcement of foreign arbitral award); and that the Appellant Company, being an overseas company contravened section 309 of the Companies Act 1972[31] (and consequently evaded paying taxes). In their grounds of Cross-Appeal, Fregate expressly refers to only the last contravention. It is this aspect of illegality that concerns this Court.
DF provided extensive submissions on the issue of public policy. With regards to the contravention of section 309 (2)(a) and (c), DF submitted that Fregate failed to prove on the balance of probabilities that DF was conducting business in Seychelles as, in brief, the two contracts Fregate claims DF entered into are the main contract with Fregate and the Addendum to it and do not constitute two contracts as envisaged by section 309 of the Companies Act; that the workers were not the employees of DF; and materials were not purchased by DF (paragraphs 4.37(xviii) – (xxviii) of Appellant’s Written Submissions).
DF also submitted that what is sought to be executed is not the contract between the parties but rather the judgement of the German court which in effect has superseded the contract and even if this Court would not have enforced the contract it was duty-bound to enforce the foreign judgment. It relied for this proposition on the case of Nordske Atlas Insurance Co. Ltd[32] emphasising that it is German contract law that applies, the law freely chosen by the parties to govern their Agreement.
DF also submitted, relying on East India Trading Co. Inc v Carmel Exporters and Importers LD,[33] that a foreign judgment is considered different to the original cause of action and so it was immaterial that a ground of public policy would have rendered the contract void in Seychelles.
DF further relied on the principle of equitable estoppel to preclude the application of public policy to vitiate the Agreement between the parties. It submitted that Fregate ought to have raised the issue either before the Arbitration Tribunal or in the High Court of Dusseldorf.
The Supreme Court made no finding on this issue although it was pleaded, ventilated in the trial and evidence adduced in relation to it. The issue is raised as one of Fregate’s grounds of appeal and must be addressed by this Court.
I have looked at the Agreement submitted by the parties and I am satisfied that it comprises more than one agreement as they relate to different matters with different considerations although arising from a first Agreement. The conveniently called “Addendum to Main Contract” provides for “certain further matters” which include inter alia additional villas, swimming pools, and furniture.[34] Of interest to this issue is the inclusion of a clause that labour, gainful occupation permits and materials are to be invoiced by DF to Fregate. The fact that DF employed persons to work in Seychelles is also apparent as a clause provides that these workers must be “unobtrusive, neatly attired” etc. How this fact escaped the scrutiny of the government is concerning. In any case, it is clear that the government was not paid taxes by a business concern that had not been exempted from the payment of taxes, social security and other benefits under Seychellois laws. While both parties to the Agreement benefitted from this illegal conduct, and it is being relied on by Fregare as a defence to DF’s claim, the fact remains that the contracts were contrary to fundamental rules of public policy.
Why should Fregate benefit from this illegality? I must confess that this matter has given me much anxious thought. With regard to England, the case of Mirza v Patel[35] put paid to the notion of ex turpi causa (the illegality doctrine or the illegality defence) in its traditional application to defeat a civil claim. In considering the maxim, the court in Mirza explained the policy reasons behind it first, a person should not be allowed to profit from his own wrongdoing. And secondly, the law should be coherent and not self-defeating, condoning illegality by giving with the left hand what it takes with the right hand. The court referred to the Canadian case of Hall v Hebert[36] which established that the doctrine rests on the principle that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system. On this basis, the Supreme Court in Mirza established a three-stage test to determine whether the public interest would be harmed in that way, by considering first, the underlying purpose of the prohibition which had been contravened and whether that purpose would be enhanced by the denial of the claim, secondly, any other relevant public policy on which the denial of the claim may have an impact, and thirdly, whether denial of the claim would be a proportionate response to the illegality. On the evidence in Mirza, it found that the claimant’s deposit of money used to place bets on a bank’s share prices with the benefit of insider information should be returned to him. Lord Sumption[37] concluded that there is no inconsistency in the law in permitting a party to an illegal arrangement to recover any sum paid under it, so long as restitution is possible as the order for restitution simply returns the parties to the position in which they would and should have been, had no such illegal arrangement been made.
While Mirza specifically concerned unjust enrichment, it is agreed that the case applies to private law in general. However, its application to arbitration law is more problematic. It must be noted first that under the English Arbitration Act,[38] an English court will not give effect to a foreign judgment given in breach of English public policy considerations. Mirza came after the case of Les Laboratoires Servier v Apotex Inc[39] in which the Supreme Court had ruled that the infringement of a foreign patent did not constitute relevant or sufficient turpitude for the purpose of the illegality defence. Les Laboratoires concerned foreign illegality and it is uncertain whether Mirza qualified the finding in that case.
Where does that leave us in terms of its application to this jurisdiction or with respect to Seychellois law on turpitude in the enforcement of foreign judgments? Well, although common law maxims may apply to our law of procedure, it is the substantive law of Seychelles that apply to the law of contract or to remedies based on a contract in Seychelles. While I accept the submission of DF that this court is not charged with examining the merits of the case, our laws concerning the enforcement of foreign judgments enjoin the Court to make sure that any foreign judgment sought to be enforced is not contrary to any fundamental rules of public policy. The foreign judgment and its execution in this jurisdiction cannot be divorced. The corollary is that this Court cannot endorse the enforcement of a decision on a contract which had as one of its ‘causes’ the avoidance of the payment of taxes and other dues in Seychelles.
In this respect, note is taken of our own Civil Code which stipulates that there are four conditions for a valid contract including “that it should not be against the law or against public policy.”[40] Further, Article 1134 of the Civil Code provides

“Agreements lawfully concluded shall have the force of law for those who have entered into them.
They shall not be revoked except by mutual consent or for causes which the law authorise.
They shall be performed in good faith.”
Most importantly, Article 6 of the Civil Code provides:
“It shall be forbidden to exclude the rules of public policy by private agreement. Rules of public policy need not be expressly stated.

In defining the concept of “public policy”, Sauzier J in Jacobs and anor v Devoud[41] stated that where the cause in the contract is against the law or against public policy, the obligation is invalid under article 1108. In Monthy v Buron,[42] this Court expressed the view that the concept of public policy denotes a principle of what is for the public good or in the public interest. In Jean Claude Lecoq v Mahe Charters Limited,[43] I expressed the view that it is settled jurisprudence that an agreement, whose object is contrary to law or public policy, would be invalid and its breaches would not be justiciable (relying on Avalon (Proprietary) Limited & Ors v Berlouis[44]; La Gigolette Ltd v Durup[45]; Maesching v Colling[46]; and Marcelon v Lawrence[47].
Our law is categorical in relation to breaches of public policy; it does not provide for a balancing test to be carried out to examine the underlying purpose of the prohibition which had been contravened and whether that purpose would be enhanced by the denial of the claim or whether the denial of the claim would be a proportionate response to the illegality.

Decision

The fifth condition under section 227 of the SCCP as laid down in the case of Privatbanken has not been met. The fifth ground of the cross-appeal therefore succeeds.
In the circumstances, DF’s appeal is dismissed. Given the particular circumstances of this case, I make no order as to costs.

_________________
Dr. Mathilda Twomey JA

FERNANDO, PRESIDENT

I agree with the conclusion of Justice Twomey that the appeal should be dismissed but wish to make the following pronouncements. I adopt the facts pertaining to the background to this case as stated by Justice Twomey in her judgment.

At the hearing before us Counsel representing the Appellant and the Respondent agreed (pages 99-100 of the proceedings at the sitting of 24 June 2021) that the Issues to be determined by this Court on the basis of the Notice of Appeal and Cross-Appeal are as follows:

Is enforceability of the German Court Orders determined on the basis of Rule 200(2) of the English Rules of Private International Law brought in through section 4 of the Courts Act or section 227 of Seychelles Code of Civil Procedure (SCCP)?
Could the German Court Orders be considered as judgments or mere enforcement orders?
Could the Appellant maintain this action against the Respondent since it was not registered as an overseas company under section 309 of the Companies Act?

Learned Counsel for the Appellant at the hearing before us placed reliance on and confined his arguments to section 4 of the Courts Act to import the principles of English Rules of Private International Law in relation to the enforceability of the First and Third Orders. He did not place reliance on section 227 of the SCCP despite being questioned by Court in that regard. Neither did he pursue his ground of appeal in relation to the Second Order. It was the position of the Respondent at the hearing, that although the principles of English Rules of Private International Law, could be made applicable under section 227 of the SCCP, in the instant case it could not, as the necessary pre-conditions for enforceability of a foreign judgment in Seychelles in accordance with section 227 of the SCCP were not satisfied. I am of the view that if we hold that section 4 of the Courts Act has no application to the First and Third Orders that would amount to the dismissal of the appeal, since the Respondent in cross appealing has moved for the dismissal of the Appellant’s appeal.

I wish to state at the outset that the plaint filed in this case before the Trial Court was defective and thus should have been struck out at the outset. There is no reference in the plaint to the contents of the Arbitration Award, from which the Court Orders emanate nor the Regulations of the Rules of Arbitration of the Wirtschaftsvereinigung Bauindustrie eV. Noth-Rhine Westphalia, have been annexed to the plaint in accordance with section 74 of the Seychelles Code of Civil Procedure. Section 74 states: “If the plaintiff sues upon a document other than a document transcribed in the Mortgage Office of Seychelles, he shall annex a copy thereof to the plaint. If he relies on any other documents (whether in possession or power or not) as evidence in support of his claim, he shall annex a list thereof to his plaint and shall state where the same may be seen a reasonable time before the hearing.” (emphasis by me) The proceedings of 27th May 2015 clearly show that the Arbitration award was not produced and the Appellant was not going to rely on it. The Appellant’s Counsel had in his Written Submissions filed before this Court quoted from the Court Record where he had said: “If I do not rely on documents, I do not need to produce it”, in reference to the arbitration award. The application to the Dusseldorf Court has not been annexed to the plaint in accordance with section 74 of the SCCP. It is not clear from the plaint how three separate Court Orders came to be made on different dates in connection with the Arbitration Award.

The Dusseldorf Court Orders do not state that the said orders are enforceable and executory in the Seychelles and there is nothing to indicate that in the application filed by the Appellant before the Dusseldorf Court there was any reference to the Seychelles. The averment at paragraphs 8.1.1 and 8.1.2 of the plaint indicate that it was possible for the Respondent to pay the claims in Germany. There is no specific averment that the Respondent had no assets in Germany. There is no specific averment that the Dusseldorf Court had the jurisdiction to make the orders enforceable in Seychelles, although it had jurisdiction to do so in Germany and to make the orders it made as averred at paragraph 8.2 of the plaint. This in my view was a circumstance constituting the cause of action and a material fact necessary to sustain the action.

Although in the prayer seeking relief, it is stated that the Dusseldorf Court Orders are enforceable and executory in the Seychelles according to the law of Seychelles, there is no averment in the plaint, to the Seychelles law under which they are enforceable and how they become enforceable.

The mere fact that there was an agreement, a breach of that agreement and an award declared enforceable by the Regional High Court of Dusseldorf; without specifying where the said orders could be enforced and under which law they could be enforced, do not satisfy the mandatory requirements of section 71 (d) of the Seychelles Code of Civil Procedure as to what a plaint must contain, namely: “…a plain and concise statement of the circumstances constituting the cause of action and where and when it arose and of the material facts which are necessary to sustain the action;…”. I am of the view that the plaint should have been struck out at the very outset, on the ground that it discloses no reasonable cause of action under section 92 of the Seychelles Code of Civil Procedure. Section 92 states: “The court may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer, and in such case, or in case of the action or defence being shown by the pleading to be frivolous or vexatious, the court may order the action to be stayed or dismissed, or may give judgment, on such terms as may be just.”

I am of the view that in cases of this nature where a foreign order, is sought to be enforced outside the existing specific statutory provisions under which foreign judgments may be enforced in Seychelles, namely the Foreign Judgments (Reciprocal) Enforcements Act [hereinafter referred to as FJREA], or the Reciprocal Enforcement of British Judgments Act [hereinafter referred to as REBJA]; it was incumbent on the Appellant to have averred in the plaint the provisions of the English law it was seeking to rely upon, to base its action. In a case of this nature, it becomes an essential part of the circumstances constituting the cause of action necessary to sustain the action and is germane to the decision the Court has to make.

There is no reference in the plaint to Rule 200(2), what the English law on the matter is, and where it can be found. For that matter Rule 200(2) had been referred to by the Appellant only at the stage of written submissions before the Trial Court and that by reference to a book by Dicey and Morris on The Conflict of Laws, Tenth edition [1980], of which this Court is not obliged to take judicial notice. It is also not clear when this rule came into existence. At paragraph 18/84 of the Supreme Court Practice 1979 it is stated that: “Where foreign law is pleaded in support of, or as a defence to, an action, certain particulars should be given. Foreign law must be adequately pleaded…” It was held by this Court in the case of La Serenissima V Boldrini [2000-2001] p 225 at p 234-235 that “The judge should have applied the established principle of the law of Seychelles that foreign law must be pleaded and proved by evidence and that unless there is proof to the contrary, foreign law is presumed to be the same as the law of the country concerned (see Green v Green (1973) SLR 295 at p 300 and Privatabaken Aktieselshab v Bantlee (1978) SLR 226 at p 239. The principles which guide courts in this jurisdiction, in this regard, are the same as in England, a clear statement of which is contained in Halsbury’s laws of England (4th ed, vol 8 (1) para 1093, thus – Subject to certain exceptions, foreign law is a question of fact which must be especially pleaded by the party relying upon it, and must be proved to the court. The English court cannot generally take judicial notice of foreign law, and it presumes that this is the same as English law unless the contrary is proved. Thus, the onus of proof of foreign law lies on the party relying on it…The English court will not, in general, make its own researches into foreign law. Foreign law must be proved by properly qualified witnesses.”

Proof of German law by witnesses, as was in this case, not sufficient for it was English law that was sought to be made applicable by the Appellant, under section 4 of the Courts Act. There was no proof of Rule 200(2) of the English Rules of Private International Law, save by reference to a book by Dicey and Morris on The Conflict of Laws, Tenth edition [1980] as stated earlier. In relation to references to textbooks in trials before the court, Phipson on Evidence 14th Edition paragraph 32-16 states: “An expert may refer to textbooks to refresh his memory, or to correct or confirm his opinion: e.g. a doctor to medical treaties, a valuer to price lists, a foreign lawyer to codes, text-writers and reports. Such books are not evidence per se. (Concha v Murieta (1889) 40 Ch.D 543), though if he describe particular passages as accurately representing his views, they may be read as part of his own testimony. (Nelson v Bridport, 8 Beav. 527). However, the judge may not form an opinion based upon a part of the book not referred to. (Collier v Simpson (1831) 5.C. & P. 73). Still less may counsel read out particular passages as part of his address. (R. v Crouch, 1 Cox 94; R v Taylor, 13 Cox 77). It was held in The Sussex Peerage, 1 C. & F. 85,114; and R. V Governor of Brixton Prison, exp. Shutter [1960] 2 QB 89 that foreign law, must be proved as a fact by skilled witnesses, and not, by the production of the books in which it is contained, for the court is not competent to interpret such authorities. See Phipson on Evidence 14th Edition 32-46. At paragraph 10-69 of Archbold 2012 it is stated “The law of a foreign country must be proved by the testimony of witnesses of competent skill; and foreign written law cannot be proved by the production of the written law itself, or of an authenticated copy, but must be proved by some skilled witness who describes the law”.

The subject matter of this case as argued by the Appellant, is to enforce in the Seychelles orders made by a Regional High Court of Germany. This necessarily raises the question of Sovereignty of Seychelles. Article 1 of the Constitution of the Republic of Seychelles specifically states: “Seychelles is a sovereign democratic Republic.” Sovereignty necessarily implies not being subject to or dependant to another power of a State. The judicial power of Seychelles, derived from the people of Seychelles, is vested in the Judiciary consisting of the Court of Appeal of Seychelles, the Supreme Court of Seychelles, and such other subordinate courts or tribunals established pursuant to article 137 of the Constitution.

The Appellant in this case has made an attempt to enforce the orders of the German High Court by placing reliance on Rule 200(2) of the English Rules of Private International Law brought in through section 4 of the Courts Act and read with article 125(d) of the Constitution.

Article 125 of the Constitution makes reference to the establishment and jurisdiction of the Supreme Court of Seychelles thus:

“125. (1) There shall be a Supreme Court which shall, in addition to the jurisdiction and powers conferred by this Constitution, have -
(a) original jurisdiction in matters relating to the application, contravention, enforcement or interpretation of this Constitution;
(b) original jurisdiction in civil and criminal matters;
(c) supervisory jurisdiction over subordinate courts, tribunals and adjudicating authority and, in this connection, shall have power to issue injunctions, directions, orders or writs including writs or orders in the nature of habeas corpus, certiorari, mandamus, prohibition and quo warranto as may be appropriate for the purpose of enforcing or securing the enforcement of its supervisory jurisdiction; and
(d) such other original, appellate and other jurisdiction as may be conferred on it by or under an Act.

Section 4 of the Courts Act, 1964 states:

“General jurisdiction
4. The Supreme Court shall be a Superior Court of Record and, in addition to any other jurisdiction conferred by this Act or any other law, shall have and may exercise the powers, authorities and jurisdiction possessed and exercised by the High Court of Justice in England.”
Section 4 cannot be read in isolation but along with sections 5, 6, 7, 8, 9, 10, 11 and 17 of the Courts Act.
Jurisdiction in civil matter
          5. The Supreme Court shall continue to have, and is hereby invested with full original jurisdiction to hear and determine all suits, actions, causes, and matters under all laws for the time being in force in Seychelles relating to wills and execution of wills, interdiction or appointment of a Curator, guardianship of minors, adoption, insolvency, bankruptcy, matrimonial causes and generally to hear and determine all civil suits, actions, causes and matters that may be the nature of such suits, actions, causes or matters, and, in exercising such jurisdiction, the Supreme Court shall have, and is hereby invested with, all the powers, privileges, authority, and jurisdiction which is vested in, or capable of being exercised by the High Court of Justice in England.
             Equitable powers
6. The Supreme Court shall continue to be a Court of Equity and is hereby invested with powers, authority, and jurisdiction to administer justice and to do all acts for the due execution of such equitable jurisdiction in all cases where no sufficient legal remedy is provided by the law of Seychelles.
      Admiralty jurisdiction
7. (1) The Supreme Court shall have the Admiralty jurisdiction of the High Court of Justice in England as stated in section 1 of the Administration of Justice Act, 1956 of the United Kingdom Parliament (hereinafter in this section called “the Act”).
   (2) Subject to subsection (3), the Act shall have force and effect in Seychelles.
(3) The Chief Justice may make rules modifying and adapting the Act to such an extent as may appear to him to be necessary to allow the Act to have effect in Seychelles.

Jurisdiction in disciplinary matters
8.  The Supreme Court shall continue to have, and is hereby invested with full jurisdiction to hear and determine all cases of breach of duty or misconduct committed by any barrister or advocate, attorney, notary, land surveyor or other ministerial officer and in such cases to suspend any such person provisionally or permanently from practicing within Seychelles.

Jurisdiction in criminal matters
9. The Supreme Court shall continue to have, and is hereby invested with full original jurisdiction, to hear, try, determine, pass sentence and make orders in all prosecutions for offences of whatever nature and in exercising such criminal jurisdiction the Supreme Court shall have and exercise all the powers and shall enjoy all the privileges vested in the High Court of Justice in England.

Appellate jurisdiction
10. (1) The Supreme Court shall have power to hear and decide appeals from all other courts and shall exercise general powers of supervision over such courts and may at any time call for and inspect their records.
(2) The Supreme Court shall also have power to hear and decide appeals from any other bodies and persons as provided by any law now in force or to be enacted.
Extent of jurisdiction of the Supreme Court
11. The jurisdiction of the Supreme Court in all its functions shall extend throughout Seychelles:
Provided that this section shall not be construed as diminishing any jurisdiction of the Supreme Court relating to persons being, or to matters arising, outside Seychelles.
Practice and procedure of the High Court of Justice of England when to apply
17.   In civil matters whenever the laws and rules of procedure applicable to the Supreme Court are silent, the procedure, rules, and practice of the High Court of Justice in England shall be followed as far as practicable.”

13. I am of the view that sections 5, 6, 7, 8, 9 and 10 of the Courts Act which make reference to the types of civil, criminal, appellate, admiralty, equitable and disciplinary jurisdiction, that could be exercised by the Supreme Court, explains and qualifies section 4. It is difficult to conceive that section 4 is an open door to bring in any type of jurisdiction that is possessed and exercised by the High Court of Justice in England. This would create uncertainty as to what laws a citizen may be subject to at any given point and would be in conflict with article 85 of the Constitution which states that “The legislative power of Seychelles is vested in the National Assembly.” Thus, in my view it is not possible for the Supreme Court of Seychelles to exercise, through section 4 of the Courts Act, the jurisdiction of the High Court of Justice in England in relation to English Rules of Private International Law in the enforcement of foreign judgments. It is also clear that section 5 of the Courts Act has no application to the instant case in view of the subject matter of this case. The instant case commenced with a plaint and is essentially a civil matter. It does not fall under section 5 which deals with jurisdiction in civil matters and which is restricted to wills, interdiction, guardianship of minors, adoption, insolvency, bankruptcy and matrimonial causes. If the Legislature so wished it would have provided for enforcement of foreign judgments and arbitral awards in the Courts Act, as it has done in relation to admiralty jurisdiction at section 7. At section 7, it has given the Supreme Court the Admiralty jurisdiction of the High Court of Justice in England as stated in section 1 of the Administration of Justice Act, 1956 of the United Kingdom.
14. The reference in section 4 of the Courts Act, is to powers, authorities and jurisdiction ‘possessed and exercised’ by the High Court of Justice by virtue of it being a superior court and not any powers, authorities or jurisdiction to deal with matters given to the High Court of Justice of England by various Statutes or Rules. It is a reference to the inherent jurisdiction of the High Court and the procedural laws of the High Court and not the substantive law. This is made clear by section 12 which provides that in civil matters whenever the laws and rules of procedure applicable to the Supreme Court are silent, the procedure, rules, and practice of the High Court of Justice in England shall be followed as far as practicable.
15. In the case of Ocean Conversion V Attorney General of Virgin Islands (BVI HC V2008/0192), the court examining section 7 of the West Indies Associated States Supreme Court (Virgin Islands) Act, a provision similar to section 4 of the Courts Act, stated that such provision was not a reference to specific powers conferred on the High Court under particular statutes. The Court felt that such powers were not vested in the High Court but were made available by legislation to the High court for that purpose.
16. In Panacom International Inc. v Sunset Investment Ltd. and Another (1994) 47 WIR 139, the Court of Appeal of the Eastern Caribbean had in considering the scope of section 11 of the Supreme Court Act of Saint Vincent and the Grenadines, which is similar to section 4 of the Courts Act, made two crucial points: Firstly, it held that section 11 relates solely to the manner of the exercise of a pre-existing jurisdiction and was intrinsically a procedural provision, and secondly, the words “law” and “practice” were “evidently intended to be references to procedural (as distinct from) substantive law”.
17. In the case of Veda Doyle V Agnes Deane of Eastern Caribbean HCVAP 2011/020 the Eastern Caribbean Court of Appeal deciding on an issue as to whether the Judgment Act 1838 of England, could be imported into the law of the Grenadines in the absence of a local law, relied on legislative intention to conclude, that what was not intended was the importation of English law generally to fill in a lacuna, however desirable filling the gap may seem. To emphasize the point, the Learned Judge in that case said that such a construction would leave much to be desired in any sovereign State and would create uncertainty as to what laws a citizen may be subject to at any given point without regards to its own parliament which is constitutionally mandated to enact laws for the State as it may deem necessary for the State’s good governance. The Court however determined that what was intended to be imported by section 11 of the Supreme Court Act of Saint Vincent and the Grenadines was the procedural law administered in the High Court of Justice in England and not English statute nor English procedural law which is adjectival and purely ancillary to English substantive law.
18. The Seychelles Supreme Court has previously addressed the scope of section 4 of the Courts Act and the applicability of English law in Seychelles. In Sultan Gemma Finesse V Marie Leopold Banane [1981] SLR 103, Judge Sauzier, held that section 4 (formerly section 3A) of the Courts Act, vests in the Supreme Court powers, authority and jurisdiction of the High Court of Justice of England and that these include both the inherent powers and jurisdiction and powers under statutory laws of England, provided that they predate 22 June 1976. Having found these English statutes applicable, Judge Sauzier applied the provisions of the Matrimonial Procedure and Property Act 1970 of the United Kingdom in the Seychelles. In so doing, Judge Sauzier chose not to follow the Mauritian Supreme Court case of Koo Poo Sang v Koo Poo Seng 1957 MR 104, which held that section 15 of the Mauritian Courts Ordinance (CAP 150), which is nearly in the same terms as that of section 4 of the Act, did not give to the Supreme Court of Mauritius the jurisdiction which the High Court in England had under section 18(1) of the Matrimonial Causes Act 1950. The Learned Judge in the Koo Poo Seng’s case based himself on the Mauritian Supreme Court precedents of Michel v Colonial Government 1896 MR 54 and B v Attorney General 1914 MR 94. These two cases being authorities for the principle that section 15 of the Mauritian Courts Ordinance vested the Supreme Court of Mauritius with only inherent powers of the High Court of England and not jurisdiction granted by statutes.
19. I wish not to follow in its entirety the Supreme Court decision in Finesse V Banane, decided soon after Seychelles ceasing to be a British Colony, having been one, for almost 176 years and 12 years prior to the Third Republican Constitution of Seychelles. This is to the extent that section 4 of the Courts Act only vested in the Supreme Court powers, authority and jurisdiction of the High Court of Justice of England which included only the inherent powers and procedural laws of England and not the jurisdiction and powers under statutory laws of England and that too, provided that they predate 22 June 1976.
20. In interpreting section 4 of the Courts Act we have to consider articles 1 and 2 of the Civil Code of Seychelles Act which states: “Law is a solemn and public expression of legislative will. Laws are promulgated in accordance with the Constitutional provisions in force in Seychelles.” and “All laws shall be published and take effect in the manner laid down in such Constitutional provisions as are applicable from time to time”.
21. In the case of Vijay Construction (Propietary) Limited v Eastern European Engineering Limited – Civil Appeal SCA 15 & 18/2017, decided on 13th December 2017 this Court said: “the reference to English jurisprudence should not be misconstrued as a license to graft or introduce new laws to the legislation(s) already in place in the Seychelles. To do so would amount to a violation of the separation of powers between the National Assembly and the Judiciary, and -- in some cases – of the Executive. Article 85 of the Constitution clearly indicates that legislative power is vested in the National Assembly; this power cannot be delegated to a foreign legislative making body. Sub-article 125(1) (d) was therefore meant to cover a new jurisdiction, not one already existing in sub-article 125 (1) (a) to (c); and it was meant to cover a new jurisdiction which had its basis in domestic law, not a foreign statute. With the advent of the 1993 Constitution of Seychelles, our reference point should be articles of the Constitution. The Supreme Court had jurisdiction expressly conferred by the Constitution. The court was sitting as the Supreme Court in its original civil jurisdiction under article 125 (1) (b) of the Constitution and was deciding a case based on a Plaint. We note that there is an ever increasing tendency on the part of courts in the Seychelles to be very quick in resorting to the power, authority and jurisdiction of the English High Court in attempts to do justice in a case by using the reception provisions of the Courts Act. Such practice though is doubtful when the law is unambiguously clear as in this case. In our view, Article 125(1)(d) grants to the Supreme Court jurisdictions other than civil, criminal, constitutional and supervisory jurisdiction over other bodies, as those are already provided in sub article 125(1)(a) to (c). This interpretation is more in line with Article 1 of the Constitution and the legislative supremacy of our National Assembly to enact laws, pursuant to Article 85 of the Constitution, and an ever-increasing amount of foreign case laws that limit the extra-territorial application of colonial reception laws. It is to be noted, however, that Article 125(1) of the Constitution would not take away the power of the Supreme Court to seek inspiration from the common law of the United Kingdom as an aid to interpretation of statutes inspired by the common law or that from the rules, practice and precedents of the English High Court, which in the case of common law would not be of a binding nature. It would also not take away the inherent powers of the Supreme Court as received by the High Court.” (emphasis added)
22. Another important issue that has to be necessarily addressed in this case is can we overlook and ignore the specific provisions of our Foreign Judgments (Reciprocal Enforcement) Act (FJRE); dealing specifically with the enforcement of foreign judgments; in making an attempt to place reliance on the English Rules of Private International Law to enforce foreign judgments, under section 4 of the Courts Act. The simple question to be asked is whether the people of Seychelles from whom the judicial power of Seychelles is derived intended German High Court judgments to be enforced here without reciprocity. The entire basis of FJRE is one of reciprocity. The Courts Act being a general statute cannot override the FJRE, which is the specific statute dealing with enforcement of foreign judgments. This necessitates a perusal of the relevant provisions of the Foreign Judgments (Reciprocal Enforcement) Act, 1961.
23. “PART I - REGISTRATION OF FOREIGN JUDGMENTS
Power to extend Part I to foreign countries giving reciprocal treatment
3. (1) The President, if he is satisfied that, in the event of the benefits conferred by this part being extended to judgments given in the superior courts of any foreign country, substantial reciprocity of treatment will be assured as respects the enforcement in that foreign country of judgments given in the Supreme Court, may by order published in the Gazette direct
(a) that this part shall extend to that foreign country; and
(b) that such courts of that foreign country as are specified in the order shall be deemed superior courts of that country for the purposes of this Act.
(2) Any judgment of a superior court of a foreign country to which this part extends, other than a judgment of such a court given on appeal from a court which is not a superior court, shall be a judgment to which this part applies, if
(a) it is final and conclusive as between the parties thereto; and
(b) there is payable thereunder a sum of money, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty; and
(c) it is given after the coming into operation of the order directing that this part shall extend to that foreign country.
(3) …
(4 ) The President may by a subsequent order published in the Gazette vary or revoke any order previously made under this section.
Power to make foreign judgments unenforceable in Seychelles if no reciprocity
12. (1) If it appears to the President that the treatment in respect of recognition and enforcement accorded by the courts of any foreign country to judgments given in the Supreme Court substantially less favourable than that accorded by the Supreme Court to judgments of the superior courts of that country, the President may by order published in the Gazette apply this section to that country.
(2) Except in so far as the President may by order published in the Gazette under this section otherwise direct, no proceedings shall be entertained in any court in Seychelles for the recovery of any sum alleged to be payable under a judgment given in a court of a country to which this section applies.
(3) The President may by a subsequent order published in the Gazette revoke any order previously made under this section.” (emphasis by me)
"judgment" in FJREA has been defined as a “judgment or order given or made by a court in any civil proceedings, for the payment of a sum of money in respect of compensation or damages to an injured party;
24. It will be contrary to our sovereignty as a Nation, contradictory of the Constitution, a usurpation of the functions of the National Assembly and the President and an insult to the people of Seychelles and to our Judiciary, if an order of the Regional High Court of Germany based on an Arbitration Award were to be enforced here without any reciprocity in relation to judgments of our Supreme Court been enforced in Germany. Reciprocity should be the sine qua non for registration of foreign judgments under the FJREA and REBJA. Section 3 (1) of the FJREA referred to above states, that substantial reciprocity of treatment shall be assured as respects the enforcement in that foreign country of judgments given in the Supreme Court of Seychelles before a judgment of that foreign country is registered in the Seychelles. At the moment the FJREA has been extended to only judgments of the Supreme Court of Australia and Kenya. It is clear from sections 3(4) and 12 of the FJREA referred to above, that the President may revoke an earlier order granting registration of foreign judgments if there is no reciprocity. Further it is clear that under section 3(2) of the FJREA, it is only an original judgment given by a superior court of that foreign country that can be registered in the Seychelles and not a judgment of such a court given on appeal from a court which is not a superior court. In the instant case what is sought to be enforced are Orders of the Regional High Court of Germany based on an arbitration award.
25. For the reasons stated above I have no hesitation in dismissing the appeal of the Appellant.
26. What is left to be determined is whether the First, Second and Third Orders could be enforced under section 227 of the Seychelles Code of Civil Procedure (SCCP). It was the position of the Respondent at the hearing, that although the principles of English Rules of Private International Law, could be made applicable under section 227 of the SCCP, in the instant case it could not, as the necessary pre-conditions for enforceability of a foreign judgment in Seychelles in accordance with section 227 of the SCCP were not satisfied. In this regard I wish to reiterate what I have said earlier about the defective plaint, and the failure to prove the principles of English Rules of Private International Law in accordance with the law. It is subject to that; I shall examine the Respondent’s submissions.
27. There must be a judgment to be enforced if section 227 of the SCCP is to apply. There is in my view a difference between a ‘judgment’ or ‘award’ rendered after a trial or proceedings held between parties to a suit and merely making of an order to ‘enforce’ an arbitration award. A judgment according to Black’s Law Dictionary is “the official and authentic decision of a court of justice upon the respective rights and claims of the parties to an action or suit therein litigated and sub- mitted to its determination.” It is clear that the First, Second and Third Orders sought to be enforced certainly do not meet the said requirement as there is nothing to indicate that they arose from a determination litigated upon the respective rights and claims of the parties to an action or suit or the merits of the Arbitral Award, but only an examination as to the procedural correctness of that award.
28. Even judgments to be made enforceable under section 227 of the SCCP must satisfy the test of reciprocity and should not affect the sovereignty of Seychelles as stated earlier.
29. I agree with the Justice Twomey that since the Appellant was not registered as an overseas company under section 309 of the Companies Act, the German Court Orders were unenforceable in Seychelles as they were against the fundamental rules of public policy.
30. For the reasons stated above I hold that that the Orders of the German High Court cannot be enforced in the Seychelles.
31. I dismiss the appeal but do not make any order as to costs.

_____________________
Fernando, President

ANDRE JA

I agree that the appeal should be dismissed and I endorse the views of the President, having scrutinized both judgments.

______________________
Andre JA

Signed, dated and delivered at Ile du Port on 20 July 2021.

[1] (SCA 56/2011 & 08/2013) [2015] SCCA 23 (28 August 2015).

[2] Section 125 of the Constitution provides in relevant part “ (1) There shall be a Supreme Court which shall, in addition to the jurisdiction and powers conferred by this Constitution, have -
(a) original jurisdiction in matters relating to the application, contravention, enforcement or interpretation of this Constitution;
(b) original jurisdiction in civil and criminal matters;
(c) supervisory jurisdiction over subordinate courts, tribunals and adjudicating authority and, in this connection, shall have power to issue injunctions, directions, orders or writs including writs or orders in the nature of habeas corpus, certiorari, mandamus, prohibition and quo warranto as may be appropriate for the purpose of enforcing or securing the enforcement of its supervisory jurisdiction; and
(d) such other original, appellate and other jurisdiction as may be conferred on it by or under an Act.

[3] Section 4 provides: “The Supreme Court shall be a Superior Court of Record and, in addition to any other jurisdiction conferred by this Act or any other law, shall have and may exercise the powers, authorities and jurisdiction possessed and exercised by the High Court of Justice in England.”
Section 5 provides: “The Supreme Court shall continue to have, and is hereby invested with full original jurisdiction to hear and determine all suits, actions, causes, and matters under all laws for the time being in force in Seychelles relating to wills and execution of wills, interdiction or appointment of a Curator, guardianship of minors, adoption, insolvency, bankruptcy, matrimonial causes and generally to hear and determine all civil suits, actions, causes and matters that may be the nature of such suits, actions, causes or matters, and, in exercising such jurisdiction, the Supreme Court shall have, and is hereby invested with, all the powers, privileges, authority, and jurisdiction which is vested in, or capable of being exercised by the High Court of Justice in England.”
Section 6 provides: “The Supreme Court shall continue to be a Court of Equity and is hereby invested with powers, authority, and jurisdiction to administer justice and to do all acts for the due execution of such equitable jurisdiction in all cases where no sufficient legal remedy is provided by the law of Seychelles.”
Section 11 provides: “The jurisdiction of the Supreme Court in all its functions shall extend throughout Seychelles: Provided that this section shall not be construed as diminishing any jurisdiction of the Supreme Court relating to persons being, or to matters arising, outside Seychelles.”
Section 17 provides: “In civil matters whenever the laws and rules of procedure applicable to the Supreme Court are silent, the procedure, rules, and practice of the High Court of Justice in England shall be followed as far as practicable.”

[4] (1981) SLR 103.

[5] Above, fn 1.

[6] “Rule 200. – . . .(2) If a party obtains a foreign judgment by which a foreign arbitration award is made enforceable, the party may enforce the judgment in England in accordance with Rule 190, 191, 192 or 193.”
"Rule 190. – Subject to the Exceptions hereinafter mentioned, a foreign judgment in personam which is not impeachable under any of Rules 186 to 189 may be enforced by an action or counterclaim for the amount due under it if the judgment is
(1) for a debt, or definite sum of money (not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty);
(2) final and conclusive, but not otherwise
Provided that a foreign judgment may be final and conclusive, though it is subject to an appeal, and though an appeal against it is actually pending in the foreign country where it was given."

[7] (1978) SLR 226.

[8] (1889) 15 App Cas 1.

[9] (1964) SLR 134.

[10] (1972) SLR 79.

[11] (1973) SLR 307.

[12] (1978) SLR 217.

[13] SCA 31/2014, appeal from Supreme Court decision 17/2013, [2015] SCCA 31.

[14] George Panagopoulos, “Substance and Procedure in Private International Law”, Journal of Private International Law, 2005, 77-78.

[15] Ibid.

[16] H. Batiffol et P. Lagarde, Drot international privé vol II, 7 edn, 1983, no 723, p 575.

[17] [1965] IR 264.

[18] Above, fn 6.

[19] (1973) SLR 295.

[20] (CS 5/2011) [2018] SCSC 864 (26 September 2018).

[21] SCA 56/2011 & 08/2013) [2015] SCCA 23 (28 August 2015).

[22] Above, fn 7.

[23] (SCA28/2020) SCCA 22 (02 October 2020).

[24] La Semaine Juridique [1964] J.C.P. II No. 13590, Jurisprudence (Cass. civ. lre 7 Jan. 1964).

[25] Thomas E. Carbonneau, “The French Exequatur Proceeding: The Exorbitant Jurisdictional Rules of Articles 14 and 15 (Code Civil) as Obstacles to the Enforcement of Foreign Judgments in France”, 2 Hastings Int'l & Comp. L. Rev. (1979) 3073,11.

[26] Ibid, 327.

[27] Batiffol & P. Lagarde, Droit International Prive Pt. III, ch. III (16th ed. 1976), at § 726.

[28] (CS 65/2000) [2000] SCSC 9 (03 July 2000).

[29] (1962) MR 113.

[30] Above, fn 11.

[31] Section 309 of the Companies Act:
(2) An overseas company shall be considered as carrying on business in Seychelles if it
(a) enters into two or more contracts with persons resident there, or with companies formed or in¬corporated there, being contracts which (i) are entered into in connection with the business or objects which the overseas company carries on or pursues; and (ii) by their express or implied terms are to be wholly or substantially performed in Seychelles, or may be so performed at the option of any party thereto; or
. . .
(c) owns, possesses or uses assets situate in Seychelles for the purpose of carrying on or pursuing its business or objects, if it obtains or seeks to obtain from those assets directly or indirectly, any revenue, profit or gain, whether realised in Seychelles or not; . . .

[32] [1927] 43 T.L.R., 28 LIL Rep. 104, 43 T.L.R. 541.

[33] [1952] 2 Q.B 439.

[34] See clause 2 of the Pramambe to the Addendum to Main contract as ocntined in Exhibt D2.

[35] [2016] UKSC 42.

[36] [1993] 3 RCS 159.

[37] At para 250, 253.

[38] Section 103, Arbitration Act 1996.

[39] [2014] UKSC 55.

[40] Article 1108, Civil Code of Seychelles.

[41] (1978) SLR 164.

[42] (SCA 06/2013) [2015] SCCA 15 (17 April 2015).

[43] (Civil Appeal SCA 11/2017) [2019] SCCA 22 (23 August 2019).

[44] (SCA 25/2002) [2003] SCCA 4 (05 December 2003).

[45] (1978) SLR 101.

[46] 25 November 2005) SCA, Civil Slide 11 of 2005 (unreported).

[47] (1990) SLR 210.