ACCRA - A.D 2017

DATE:  27TH APRIL, 2017
SUIT NO:  H1/24/2016


The designation of the parties in the high court will be maintained in this appeal. The Plaintiff sued the Defendant for the recovery of the sum of US$6,146,363.09 being the amount owed them for work done regarding the construction of the latter's factory, interest thereon and an order extending the time for completing the construction of the said factory.


The Defendant denied this claim and counterclaimed for reliefs of its own.


Hearing in the suit commenced but in the course of the evidence of the Plaintiff's representative on 5th May 2015, the Defendant applied for a stay of proceedings and sought a referral of the matter to arbitration. The Plaintiff opposed this but the court granted the application. Being dissatisfied with this, the Plaintiff has filed the present appeal.


Two grounds of appeal were filed but Counsel for the Plaintiff states in his written submissions that only the second ground will be argued. The first ground that the ruling is against the weight of evidence affidavit adduced is therefore deemed abandoned. The remaining ground of appeal is that the Learned Judge erred in law when he granted the application to stay proceedings of the suit and referred the suit to arbitration.


The gist of the submissions of Counsel for the Plaintiff/Appellant is as follows:


Despite the mandatory language of section 7(5) of the Alternative Dispute Resolution Act (to be referred to simply as the Act hereon), in the light of the provisions of section 6(1), an interpretation that the Court shall at any stage of the proceedings refer a suit for arbitration upon discovery that a contract the subject matter of a suit contains an arbitration agreement cannot be correct.


Taking a position contrary to this will lead to the illogical conclusion that the Act was intended to oust the jurisdiction of the courts in disputes involving arbitration clauses


In the light of the fact that the Courts are expected to dispose of cases expeditiously a “common sense” approach in interpreting the sections in question would be the way to achieve this objective and give effect to the intention for the legislator.


Such an approach in interpreting section 7(5) vis a vis section 6(1) of the Act, can only mean that the Court can on its own motion refer a matter to arbitration upon discovery of an arbitration agreement only during the period after entry of appearance by Defendant and their taking any further step in the suit.


Counsel for the Defendant did not file any submissions in this matter.


The provisions of section 6(1) and 7(5) are clear. The only bone of contention is whether the latter section should be read and interpreted as it is or whether it is to be read in the light of section 6(1) using a commonsense approach to achieve the expeditious hearing of the matter.


Section 6(1) provides as follows


Where there is an arbitration agreement and a party commences an action in a court, the other party may on entering appearance, and on notice to the other party who commenced the action in court, apply to the Court to refer the action or a part of the action to which the arbitration agreement relates, to arbitration.


Clearly this section by the use of the word may give a defendant in such an action an option to apply to have the dispute between him and the Plaintiff decided in accordance with their arbitration agreement.


Section 7(5) which deals with the issue of References by the court states as follows


Where in any action before a court the court realizes that the action is the subject of an arbitration agreement, the court shall stay proceedings and refer the parties to arbitration


This section does not call for the involvement of any of the parties in the decision to stay proceedings and refer them to arbitration. Indeed the court itself has no choice in the matter once “…the court realizes that the action is the subject of an arbitration agreement”.


The position of counsel for the Plaintiff is that the provisions of section 6(1) of the Act should affect the interpretation of the mandatory provisions of section 7(5) to mean that


“..the trial court can only on its own motion refer a matter to arbitration when it discovers the presence of an arbitration clause before the Defendant takes any further step after entering appearance to the suit”.


In other words, contrary to the position of the trial court that time was not of the essence, the section if interpreted in accordance with the commonsense approach should limit the court’s power to refer under that section to the period when Defendant enters appearance and before they take any further step after the said entry of appearance. Counsel poses a pertinent question flowing from the trial court’s position that time is not of the essence. He asks whether when a court realizes the existence of an arbitration agreement at the time of judgment, it will be fair, logical and not time wasting to abandon the suit and refer the suit to arbitration?


Is counsel’s position tenable? Will the interpretation he urges on this court make evident the real purpose and intention of the legislator?


The modern trend is to adopt a purposive approach to the interpretation and construction of statutes to achieve the purpose of the said statute. See section 10(4) (d) of the Interpretation Act, Act 2009. What then is the purpose of the Act? It is clearly to enable parties to adopt ways alternative to court trials to resolve their disputes. This was described as “sound business practice” by the Supreme Court in the case of


BMC V Ashanti Goldfields Limited [2005-06] SCGLR 602


The courts are therefore expected to interpret the Act in a way which will allow that purpose to be achieved where parties themselves have seen the need to put an arbitration agreement in their contract.


In the case of The Republic v High Court Tema ex parte My shipping PVT Limited, the Supreme Court interpreted section 40 (1) of the then Arbitration Act, Act 38 to mean bringing an application after appearance had been entered and not before the date fixed for hearing after application for directions had been taken upon close of pleadings. The portion of section 40 (1) which was so interpreted had given the time frame for the bringing of such an application in the following words


‘…may at any time after service of the writ of summons and before the date fixed for hearing…”


Their Lordship’s position was that their interpretation was purposive because in an admiralty case such as they were dealing with, where time was of the essence, such an application should be brought timeously. Not surprisingly counsel for the Plaintiff relies on this case based on the repealed Act 38. It is however to be remembered that the Supreme Court made it clear that in that admiralty case, time was of the essence.


The provisions of the section 7(5) are clear and unambiguous. It is to be noted the whole of section 7 which deals with Reference by the court does not set a time frame for the making of the said reference by the court. Section 7(5) directs the court to do a reference notwithstanding the fact that the parties would have had the opportunity earlier on in the proceedings (ie after entry of appearance) to apply for the same thing by virtue of section 6(1) if they chose to. The legislator must have had a reason for this. Bearing in mind my position that the purpose of the Act is to provide a means for parties to resolve their issues in an agreed manner, it is not surprising that the court on its own, without any input from the parties is required to stay proceedings and make a reference when it realizes there is an arbitration agreement.


Assuming without admitting that interpreting the provisions of section 7 (5) in its ordinary and grammatical meaning will [in the light of section 6 (1)] yield an unjust result (See Republic v High Court Accra; ex parte Yalley [2007-2008] SCGLR 512), it is my considered opinion that not interfering with the courts power to give the parties-at any point in time- an opportunity to use their own agreed means of resolving their issues is in consonance with the purposive approach


It is my further considered opinion that without more, it will not be proper to use the interpretation of the repealed section 40 (1) of Act 38 by the Supreme Court to put a fetter on a power given to the court even though it appears to make sense to have such a fetter. The said Act did not have a provision similar in content as section 75). Like the Supreme court in the ex parte PVT Limited case, I can only say that the circumstances of this case make the reference by the court under section 7 (5) appropriate and not illogical although I agree with counsel that such a reference just before judgment could very well be illogical.


It is clear that the Plaintiff’s Representative and his first witness of the Plaintiff is now testifying. It will not be wrong, to assume, from the pleadings that the case will involve the tendering of several if not many documents even if the Plaintiff does not intend to call other witnesses as intimated by counsel. In the circumstances of this case I do not find that the case is so far gone that applying the provisions of the section 7(5) will lead to any injustice.


I am satisfied that the ground of appeal that that the trial Judge erred in law when he stayed proceedings and made the reference for arbitration has no merit and therefore fails. It is dismissed.


It being the only ground of appeal, its dismissal also sounds the death knell of the entire appeal.