IN THE SUPERIOR COURT OF JUDICATURE
IN THE COURT OF APPEAL
ACCRA - A.D 2018
TIESO GHANA LTD - (Plaintff/ Appellant)
EUROGET DE-INVEST SA - (Defendant/Respondent)
DATE: 15 th NOV. 2018
SUIT NO: H1/179/2018
JUDGES: MARIAMA OWUSU J.A (PRESIDING), AVRIL LOVELACE-JOHNSON J.A, HENRY A. KWOFIE J.A
MR. GEORGE ANKOMAH MENSAH FOR THE PLAINTIFF/APPELLANT
MR. YAW ESHUN FOR THE DEFENDANT/RESPONDENT
HENRY KWOFIE J.A:
This is an appeal against the ruling of the High Court (Commercial Division) dated 31st January 2018. The ruling the subject of the Appeal followed an application by the plaintiff/applicant/appellant for the adoption and signing of final judgment against the defendant/respondent in accordance with a purported arbitral award. The trial judge refused the application.
By a Writ of Summons filed on 13/04/2015, the plaintiff Company claimed against the defendant the following reliefs:
a. A declaration that the purported termination of the contract by the Defendant on the grounds of non-performance or delayed performance per letter dated 2nd April 2015 is unreasonable, procedurally wrong and unjust.
b. A further declaration that the Defendant before writing its letter of termination was in breach of the procedural notice under section 15 of the condition of contract.
c. An order that the Defendant’s behaviour prior to the termination and during the subsistence of the contract was oppressive and unprofessional.
d. An order that Defendant pays general and specific damages to Plaintiff for breach of contract.
e. A further order of injunction restraining the Defendants from taking over the site until an independent assessment of workdone has been carried out at the site and the Plaintiff paid its outstanding contract fees/claims.
f. An order that the Defendant pays Plaintiff for work done at the site after independent valuation/surveying is carried out by valuers appointed by this Honourable Court.
g. Interest on the value of actual workdone at the Wa construction site at the current commercial bank interest rate from 1st August 2014 to the date of final payment.
h. A specific order that all tax exemptions of 31% of the value of materials and equipment due to the Plaintiff under the contract be paid by the Defendant to Plaintiff forthwith.
i. A further order directed at the Defendant from calling upon the advanced payment guarantees and performance bond until the final determination of this suit.
j. Any further orders as this Honourable Court shall deem fit and appropriate.
The trial judge refused the plaintiff/appellant’s application on 31st January 2018. Dissatisfied with the ruling, the plaintiff/appellant mounted this appeal by a Notice of appeal dated the 14th of February 2018 on the following grounds:
i. The learned trial judge erred in law and in equity when she dismissed the application to sign final judgment of the Dispute Adjudication Board hereinafter called (DAB) when all the values of workdone affirmed by the DAB in its final report was by consensus of both parties, the contract terminated and the contract site has been taken over by a new contractor.
ii. The learned judge’s misapprehension of the rules governing arbitration led her to make a reference to international arbitration under paragraph 20 of the FIDIC contract when there was no such basis and the said reference amounted to a reference for “its own sake” occasioning injustice to the Plaintiff/Appellant/Applicant.
iii. The learned judge further erred when she refused to give weight to the fact that Respondent’s “notice of dissatisfaction” did not conform to the definition of a valid notice of dissatisfaction by demonstrating “serious irregularity” and has been so ruled by a ruling of the same Court dated 14th July, 2017.
IV. The ruling by the High Court to the effect that international arbitration was a matter of course (since it is set out in paragraph 20 of the contract) is a misinterpretation of the law and rules governing arbitration, especially where there was no basis from the peculiar circumstances of the case for such reference.
v. The High Court’s definition of an “arbitral award” to exclude the DAB report dated 31st January, 2018 was wrong in law and has occasioned a miscarriage of justice to Appellant.
VI. The High Court in its ruling ignored the clear and unambiguous interpretation of FIDIC clause 20.6 which stated that only decisions of the DAB which have “not become final and binding” shall be settled by international arbitration.
VII. The ruling of the High Court dated 31st January, 2018 is against the weight of the evidence.
VIII. Additional grounds of appeal shall be filed upon receipt of the Ruling.
It is placed on record that no additional grounds of appeal were filed by the plaintiff/appellant. The ruling appealed from is found at pages 1515 to 1521 of volume 3 of the Record of Appeal and the Notice of appeal is found at pages 1522 to 1524 of volume 3 of the Record of Appeal.
The reliefs sought from this Court are:
i) To set aside the whole ruling of the High Court dated 31st January 2018 and order the signing of final judgment in favour of plaintiff/appellant based on the DAB report.
In this judgment the plaintiff/applicant/appellant shall be referred to as the plaintiff whilst the defendant/respondent/respondent shall be referred to as the defendant.
Before dealing with the arguments canvassed in support and against this appeal, I will give a brief background of the case. The plaintiff’s case is that they were sub-contractors of the defendant/respondents for the construction of a 160 bed Regional Hospital at Wa in the Upper West Region. The defendant owed the plaintiff for work done which was to be paid in tranches after the phase of work done and invoices had been submitted.
The plaintiff says that the defendant as employers woefully failed to provide the necessary back up documentation and data requisite and agreed upon in the general conditions for the implementation of the contract as agreed the particulars of which breach were set out in the statement of claim. As a result of the defendant’s failure to provide the necessary and relevant support documentation, its construction works were severely affected and several reminders and complaint sent to the defendant to remedy the default fell on deaf ears. Plaintiff say that despite the constraints imposed by the defendant’s non-adherence, failures and breaches, the plaintiff persisted and has substantially performed the contract to date. It is the further case of the plaintiff that the defendant had now written a letter of termination terminating the contract and has followed up with letters and emails giving the plaintiff one week to hand over the site of the construction without proper inventory and valuation of work done in lieu of the outstanding invoices raised as well as additional works carried out even after the raising of the outstanding invoices. Attempts to reason with the defendant has failed and it appears that the defendant is bent on unreasonably entering the site without observing internationally accepted standard procedures for re-entry.
The case of the defendant is that it a Company registered in Egypt and doing business in Ghana and is the main contractor to the Ministry of Health of the Republic of Ghana for the construction of a 160 bed Wa Regional Hospital of which the plaintiff was engaged as a sub-contractor. The contract between the plaintiff and the defendant which is governed by the FIDIC Rules was subsequently terminated as a result of which the plaintiff sued the defendant at the Commercial Division of the High Court. It is the case of the defendant that the action of the plaintiff is an abuse of the processes of the Court because the plaintiff knew or should have known that there is a specified dispute resolution mechanism provided for under the FIDIC Rules on contract which governed the contract between the parties.
The respondents therefore challenged the jurisdiction of the Court and applied for the suit to be struck out. The learned judge stayed proceedings and referred the matter to the Dispute Adjudication Board (herein referred to as DAB) in line with the dispute resolution mechanism under the FIDIC Rules.
After the reference to the DAB, the DAB came out with its decision on 28th April 2017. The defendant after receipt of the DAB decision issued and served
a Notice of Dissatisfaction on the plaintiff on 9th May 2017 and its intention to exhaust all the dispute resolution avenues stipulated in Rule 20 of the FIDIC Rules which governed the contractual relationship between the parties. The defendant’s case is that the dispute between the parties should go to international arbitration proceedings in line with the FIDIC Rules.
Counsel for the plaintiff in arguing the appeal, argued grounds i, vi, ii and iv together and then grounds iii, v and vii
Arguing ground 1 of the appeal, counsel for the plaintiff submitted that after the Dispute Adjudication Board (DAB) award was filed before the Court, the plaintiff after 21days in line with the terms of the contract filed the application to sign final judgment under Order 64 of C.I.47. He submitted that the trial High Court ordered the amount of workdone at the construction site to be valued by both parties prior to the reference to DAB and both parties quantity surveyors agreed to the figures on the value of workdone by the plaintiff and filed a joint valuation/measurement report before the Court.
After the DAB report was finalised and submitted, the defendant filed Notice of dissatisfaction, disputing the DAB report. Counsel then posed the question, if the facts especially the value of workdone is not in dispute then what was the basis of the notice of dissatisfaction? He submitted that a look at the DAB Report shows that the figure for workdone agreed on by the parties in the quantity surveyors report was the same figure picked by the DAB Report i.e. (US$1,521,533.16) It is therefore inequitable and unjust for the trial judge to dismiss the application to sign final judgment on the value of workdone by the plaintiff/appellant at the construction site.
In respect of ground iv) counsel for the plaintiff argued that the full contract between the plaintiff and the defendant was partly lifted from the suite of FIDIC contracts governing construction worldwide.
Referring to clause 20.6 of the FIDIC contracts, Counsel submitted that since the DAB had been concluded, if the Court finds that the value of workdone by the plaintiff/appellant is final and conclusive, then no such reference to international arbitration could be made as the trial judge did.
Counsel further asserted that international arbitration can only be resorted to if the claims adjudicated on by the DAB is not final and binding. Counsel conceded that under Clause 20.6, a party has a right to resort to international arbitration after giving a Notice of dissatisfaction under clause 20.4 after the DAB decision but contended that this right is conditional and not absolute, that is if the Court finds that the value of workdone captured by the joint valuation is “final and binding”, then there cannot be an argument for reference to international arbitration under clause 20.6. He said the Court’s definition of arbitral award to exclude the DAB report in the ruling dated 31st January 2018 was wrong in law and has occasioned a miscarriage of justice to the appellant. Counsel argued that it is clear that the trial judge’s definition seems to disregard the DAB Report as an arbitral award. He asserted that due to the limitation placed on the DAB report, it is therefore not strange that the trial judge misapplied the law on arbitral awards and directed that the matter be referred to international arbitration.
Arguing ground vii) which was the omnibus ground that the judgment was against the weight of evidence, counsel for the plaintiff/appellant asserted that consideration should have been given to the fact that this was a local contract and not an international one in reaching the conclusion that the matter should be referred to international arbitration.
This fact coupled with the peculiar facts of the instant case should have weighed on the mind of the trial Court before the said reference was made.
Responding to these submissions made by counsel for the plaintiff/appellant, counsel for the respondent in respect of ground 1 submitted that the FIDIC Rules which govern the contractual relationship between the parties here clearly spells out the avenue and procedure for resolving any dispute.
Counsel referred to the column of the FIDIC rules dealing with obtaining Dispute Adjudication Board decision which shows that for the DAB to make its determination, all relevant documents including various values placed on the work done were to be made available to the DAB as well as Valuation report and all other relevant documents. He asserted that in line with FIDIC rules, any party who is dissatisfied with the decision of the DAB may within 21 days from the date of the decision issue a Notice of Dissatisfaction. This is exactly what the respondent did on 9th May 2017 and by reason of this, the learned judge could not have granted the application by the appellant to adopt the decision of the DAB as final and binding as this would have been contrary to the FIDIC Rules and also contrary to the clear intentions of the parties herein at the time the contract was executed.
Responding to the submission in respect of ground iv), counsel for the defendant submitted that as the procedure for determining any dispute between the parties have been clearly laid down under the FIDIC Rules, the parties herein cannot derogate from their agreed mode of dispute resolution and should be made to abide by same.
In respect of ground V), counsel for the respondent contended that there has been no arbitration and therefore there can be no arbitral award as canvassed by the plaintiff. The appellant knew or ought to have known that the DAB report and findings could not in any way constitute an arbitral award. He asserted that it is clear that the FIDIC Rules envisaged that since the DAB’s decision was not final, either party could notify the other of its dissatisfaction with the DAB report so long as this was done within the stipulated time which in this instance is 21days. This is what the respondent did when it issued a Notice of Dissatisfaction 11 days after the DAB report came out.
Finally, in respect of ground Vi), counsel for the defendant referred to the earlier submissions and asserted that the DAB decision cannot become final and binding because it is one of the processes which the parties have to go through before the current dispute goes for international arbitration.
The authorities are replete on the principle that where an appellant appeals on the omnibus ground that the judgment is against the weight of evidence, the Court is to consider comprehensively the entire evidence on record before coming to a conclusion on the matter In Tuakwa Vs Bosom (2001-2002) SCGLR 61 it was held that:
“an appeal is by way of re-hearing, particularly where the appellant alleges in his notice of appeal that the decision of the trial Court is against the weight of evidence.
In such a case although it is not the function of the appellate court to evaluate the veracity or otherwise of any witness, it is incumbent upon an appellate court, in a civil case, to analyse the entire record of appeal, take into account the testimonies and all documentary evidence adduced at the trial before arriving at its decision, so as to satisfy itself that, on a preponderance of the probabilities, the conclusions of the trial judge are reasonably or amply supported by the evidence…….”
An appeal is therefore in the nature of a rehearing within the limits set out by the authorities or case law.
The trial judge in her ruling referred to the contract entered into by the parties and found as follows at page 1520 of Vol 3 of the Record of Appeal thus: “From the FIDIC Rules which govern the contract between the parties, the Court finds that there were certain steps to be taken in dispute resolution. These are:
i) Resolution through friendly dialogue and negotiations. Where this fails then
ii) Referral to a Dispute Adjudication Board and where there was a Notice of dissatisfaction by another party then,
iii) There would be attempts to settle amicably before onset of arbitration, then
iv) International Arbitration
The parties submitted themselves to a Dispute Adjudication Board which came out with a decision. The respondent has filed a notice of dissatisfaction with the said decision. This decision was not an arbitral award. In view of this, there is no arbitration award properly so called which is capable of being adopted and entered by this Court as final judgment within the meaning of Order 64 of C.I.47. The application for the adoption and signing of final judgement in accordance with the arbitral award filed on the 5th day of July 2017 is hereby dismissed”
From the written submission of both parties and the copious documents on record, it is not in dispute that the construction contract between the parties was governed by the FIDIC Rules governing construction worldwide.
ii) It is not also in dispute that following disagreements between the parties the High Court on 7th February 2016 ordered the parties to resort to a Dispute Adjudication Board (DAB).
iii) It is also not in dispute that Dispute Adjudication Board (DAB) adjudicated upon the dispute between the parties and gave its decision on 28th April 2017.
iv) It is also not disputed that on the 9th May 2017 the defendant served a Notice of Dissatisfaction of the Dispute Adjudication Board decision (see page 1486 of Vol 3 of the Record of Appeal).
It is also not in dispute that it was after the defendant had given notice of dissatisfaction of this DAB decision that the plaintiff/appellant filed the application pursuant to Order 64 of the High Court (Civil Procedure) Rules 2004, C.I.47 praying for an order for the adoption and the signing of final judgment in accordance with the arbitral award. This application was vehemently opposed by the defendant and it is the ruling of the High Court, dismissing the plaintiff’s application for the adoption and signing of the final judgment that has culminated in this appeal. Whereas the plaintiff contends that the decision of the Dispute Adjudication Board (DAB) was final and binding upon both parties, the defendant contends that what transpired between the parties was not an arbitration but rather a dispute adjudication which never resulted in an award being handed down. The fundamental issue that arises in this appeal in my view is whether the decision of the DAB is final and binding upon the parties and whether the decision of the DAB is capable of being adopted as final judgment.
It is necessary to look at the FIDIC Rules which governs the contract between the parties to determine this issue for, in the case of P.Y. Atta & Sons Ltd Vrs. Kingsman Enterprise Ltd (2007-2008) 2 SCGLR 946 it was held that:
“In considering every agreement, the paramount consideration was what the parties themselves intended or desired to be contained in that agreement. Their intentions should prevail at all times. The general rule was that a document should be given its ordinary meaning, if the terms used therein were clear and unambiguous”
Clause 20 of the FIDIC Rules deals with Claims, Disputes and Arbitration and for the avoidance of doubt I set out the relevant provisions of the said clause 20 particularly clause 20 (1), (2), (4), (5) and 6
“Claims, Disputes and Arbitration
20.1 Contractor’s Claim
If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or any additional payment, under any Clause of these Conditions or otherwise in connection with the Contract, the Contractor shall give notice to the Employer, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable, and not later than 28 days after the Contractor became aware, or should have become aware, of the event or circumstance………………...”
“20.2 Appointment of the
Dispute Adjudication Board
In cases of disagreements between the parties: They shall attempt to resolve their disagreement through friendly, direct dialogue and negotiations. Failure to do that at the end of 30 days from the date when the disagreement arose, either party shall give notice to each other of its wish to resort to a DAB and the disagreement shall formally become dispute.
Disputes shall be adjudicated by a DAB in accordance with Sub-Clause 20.4 [Obtaining Dispute Adjudication Board’s Decision]. The parties shall jointly appoint a DAB by the date 28 days after a Party gives notice to the other Party of its intention to refer a dispute to a DAB in accordance with Sub-Clause 20.4
The DAB shall comprise, as stated in the Particular Conditions, either one or three suitably qualified persons (“the members”) If the number is not so stated and the Parties do not agree otherwise, the DAB shall comprise three persons……………………..
20.4 Obtaining Dispute Adjudication Board’s Decision
If a dispute (of any kind whatsoever) arises between the Parties in connection with, or arising out of, the Contract or the execution of the Works, including any dispute as to any certificate, determination, instruction, opinion or valuation of the Employer, then after a DAB has been appointed pursuant to Sub-Clauses 20.2 [Appointment of the Dispute Adjudication Board] and 20.3 [Failure to Agree Dispute Adjudication Board], either party may refer the dispute in writing to the DAB for its decision, with a copy to the other Party. Such reference shall state that it is given under this Sub-Clause.
For a DAB of three person, the DAB shall be deemed to have received such reference on the date when it is received by the chairman of the DAB.
Both Parties shall promptly make available to the DAB all information, access to the Site, and appropriate facilities, as the DAB may require for the purposes of making a decision on such dispute. The DAB shall be deemed to be not acting as arbitrator(s). (emphasis mine)
If either Party is dissatisfied with the DAB’s decision, then either Party may, within 21 days after receiving the decision, give notice to the other Party of its dissatisfaction. If the DAB fails to give its decision within the period of 42 days (or as otherwise approved) after receiving such reference or such payment, then either Party may, within 14 days after this period has expired, give notice to the other Party of its dissatisfaction.
In either event, this notice of dissatisfaction shall state that it is given under this Sub-Clause, and shall set out the matter in dispute and the reason(s) for dissatisfaction Except as stated in Sub-Clause 20.7 [Failure to Comply with Dispute Adjudication Board’s Decision] and Sub-Clause 20.8 [Expiry of Dispute Adjudication Board’s Appointment], neither Party shall be entitled to commence arbitration of a dispute unless a notice of dissatisfaction has been given in accordance with this Sub-Clause.
If the DAB has given its decision as to a matter in dispute to both Parties, and no notice of dissatisfaction has been given by either Party within 21 days after it received the DAB’s decision, then the decision shall become final and binding upon both Parties.
20.5 Amicable Settlement
Where notice of dissatisfaction has been given under Sub-Clause 20.4 above, both Parties shall attempt to settle the dispute amicably before the commencement of arbitration. However, unless both Parties agree otherwise, arbitration may be commenced on or after the 30th day after the day on which notice of dissatisfaction was given, even if no attempt at amicable settlement has been made.
Unless settled amicably, any dispute in respect of which the DAB’s decision (if any) has not become final and binding shall be finally settled by international arbitration Unless otherwise agreed by both Parties.
The dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce,
The dispute shall be settled by three arbitrators appointed in accordance with these Rules, and
The arbitration shall be conducted in the language for communications defined in Sub-Clause 1.4 [Law and language]
The arbitrator(s) shall have full power to open up, review and revise any certificate, determination, instruction, opinion or valuation of (or on behalf of) the Employer, and any decision of the DAB, relevant to the dispute.
Neither Party shall be limited in the proceedings before the arbitrator(s) to the evidence or arguments previously put before the DAB to obtain its decision, or to the reasons for dissatisfaction given in its notice of dissatisfaction. Any decision of the DAB shall be admissible in evidence in the arbitration.
Arbitration may be commenced prior to or after completion of the Works. The obligations of the Parties and the DAB shall not be altered by reason of any arbitration being conducted during the progress of the Works”.
As the trial judge rightly found, from the FIDIC rules which govern the contract between the parties particularly clause 20 there were certain steps to be taken in dispute resolution:
i) If the contractor considers himself entitled to a claim he must give notice of the claim within 28 days after becoming aware of the claim.
ii) Where there is disagreement, there should be a resolution through friendly dialogue and negotiations.
iii) If the parties fail to resolve the dispute through friendly dialogue and negotiations within 30 days, then one of the parties shall give notice of its wish to resort to a Dispute Adjudication Board.
Under the FIDIC Rules it is only where either party has given notice of its wish to resort to DAB that the disagreement between them formally becomes a dispute.
iv)The Dispute Adjudication Board (DAB) as constituted shall give its decision.
v) After the decision of the DAB, if either party is dissatisfied with the decision it shall within 21 days after receiving the decision given notice of dissatisfaction setting out the reason for the dissatisfaction.
vi) Where no notice of dissatisfaction is given by either party within 21 days after receipt of the DAB decision, then the decision shall become final and binding
vii) After notice of dissatisfaction has been given, the parties shall attempt to settle the matter amicably.
viii) Where the amicable settlement fails after the notice of dissatisfaction, the dispute shall be finally settled by international arbitration
Indeed, under clause 20(4) of the FIDIC Rules the DAB shall be deemed not to be acting as arbitrators. The rules have therefore provided for a step by step approach to dispute resolutions starting from friendly dialogue and negotiations, referral to Dispute Adjudication Board and where a Notice of dissatisfaction is given by either party, then there would be attempts to settle amicably and where that fails then international arbitration.
Again, the decision of the DAB becomes final and binding where no notice of dissatisfaction is given by either party within 21 days after the DAB decision. Where notice of dissatisfaction is given by either party, the DAB decision cannot be final and binding on the parties.
In this case, the record show’s that the parties submitted to a Dispute Adjudication Board which came out with its decision on 28th April 2017. The record also shows that eleven days after the DAB decision specifically on 9th May 2017, the defendant gave Notice of dissatisfaction with the DAB decision (see page 1486) and stated the reasons for its dissatisfaction. It is my view that with the defendant having given the Notice of dissatisfaction within the time stipulated by the FIDIC rules the decision of the DAB cannot become final and binding on both parties.
The next step is for the parties to go to international arbitration. On the whole the trial judge was right in dismissing the application for the adoption and signing of final judgment.
Accordingly, the appeal fails and is dismissed.
HENRY A. KWOFIE
(JUSTICE OF THE COURT OF APPEAL)
I Agree MARIAMA OWUSU
(JUSTICE OF THE COURT OF APPEAL)
I Also Agree SGD
(JUSTICE OF THE COURT OF APPEAL)