Flashbird Ltd v Compagnie de Sécurité Privée et Industrielle SARL
| Jurisdiction | UK Non-devolved |
| Judge | Lord Hamblen |
| Judgment Date | 13 December 2021 |
| Neutral Citation | [2021] UKPC 32 |
| Docket Number | Privy Council Appeal No 0106 of 2019 |
| Year | 2021 |
| Court | Privy Council |
[2021] UKPC 32
Privy Council
Michaelmas Term
From the Supreme Court of Mauritius
Lord Briggs
Lady Arden
Lord Hamblen
Lord Leggatt
Lady Rose
Privy Council Appeal No 0106 of 2019
Appellant
Paul Chong Leung
(Instructed by Richard Slade and Company)
Respondent
Jamsheed Peeroo
(Instructed by Sheridans)
Heard on 21 October 2021
This is an appeal as of right from the decision of the Supreme Court of Mauritius to dismiss the application of the appellant, Flashbird Ltd, to set aside an arbitration award under section 39(2)(a)(iv) of the International Arbitration Act 2008 (“the Act”).
The dispute referred to arbitration arose out of a consultancy contract entered into in March/April 2013 under which the appellant was to assist the respondent, Compagnie de Sécurité Privée et Industrielle SARL, in obtaining a contract for the management and development of security and safety services at international airports in the Republic of Madagascar.
On 24 August 2016 the respondent filed a request for arbitration with the Secretariat of the Arbitration and Mediation Center (“MARC”) of the Mauritius Chamber of Commerce and Industry. The request sought judicial termination of the consultancy contract due to the appellant's alleged non-performance of its contractual obligations, the refund of payments made by the respondent and damages.
On 28 October 2016 MARC designated Dr Jalal El Ahdab as sole arbitrator to determine the dispute. The appellant objected to the appointment of a sole arbitrator and on 13 December 2016 applied to the Permanent Court of Arbitration at the Hague (“PCA”) under section 12 of the Act to seek the appointment of a tribunal of three arbitrators. This application was rejected by the PCA as set out in a letter from its legal counsellor of 21 December 2016.
The arbitration proceeded without the participation of the appellant. On 24 October 2017 the arbitrator issued a final arbitral award terminating the contract and awarding the respondent repayment of EUR80,000 and USD15,000, damages of €24,000 and arbitration and legal costs.
By a notice of motion dated 18 December 2017 the appellant applied to the Supreme Court to set aside the award pursuant to section 39(2)(a)(iv) of the Act on the grounds that the arbitral procedure was not in accordance with the agreement of the parties. The appellant contended that on the proper interpretation of the arbitration agreement the arbitral procedure, and in particular the constitution of the tribunal, should have been in accordance with the rules of the International Court of Arbitration of the International Chamber of Commerce (“ICC”) rather than the rules of MARC.
In its judgment dated 30 November 2018 the Supreme Court dismissed the appellant's application.
The arbitration clause in the contract was in the following terms:
“14. Loi applicable et règlement des litiges
Maurice possède une Cour permanente d'arbitrage à la Chambre de commerce et d'industrie (http://www.jurisint.org/fr/ctr/75.html).
Tous différends découlant du présent Contrat cadre ou en relation avec celui-ci, tel le cas des avenants, seront tranchés définitivement suivant le Règlement d'arbitrage de la Chambre de commerce internationale par un ou plusieurs arbitres nommés conformément à ce Règlement.
Le droit applicable sera le droit malagasy.
L'arbitrage se déroulera à Port Louis, Maurice.”
The clause may be translated as follows:
“14. The law applicable and the settlement of disputes
Mauritius has a permanent Court of arbitration at the Chamber of commerce and industry (http://www.jurisint.org/fr/ctr/75.html).
All disputes arising out of this Contract or in connection with it, such as with regard to additional clauses, shall be finally determined according to the arbitration Rules of the international Chamber of commerce by one or more arbitrators appointed in accordance with those Rules.
The applicable law shall be malagasy law.
The arbitration shall be held at Port Louis, Mauritius.”
The parties were agreed that the “Règlement d'arbitrage” referred to in the second paragraph of the clause were the Rules of Arbitration of the ICC. If so, the arbitration clause raises what the arbitrator described as a “clash or a contradiction” between the chosen arbitration institution (MARC) and the chosen arbitration rules (ICC Rules). This tension is heightened by the fact that the MARC rules provide that by nominating MARC as the arbitration institution the parties are bound by the MARC rules (article 1.2), whereas the ICC Rules (2012 version) provide that the International Court of Arbitration of the ICC is the only organisation authorised to administer arbitrations under the ICC Rules (article 1.2).
The arbitrator resolved this “contradiction” by holding that the first paragraph of the clause and the choice there made of MARC should prevail, that the mention of “international” in the second paragraph was in error and is properly to be interpreted as being a reference to the Mauritius Chamber of Commerce and to MARC and its “Règlement d'arbitrage”. He stated as follows at para 156 of the award:
“What interpretation — and therefore which paragraph — must here prevail? An initial reading and interpretation of the Arbitration Clause could legitimately conclude the first paragraph to have precedence over the second one. The Arbitration Tribunal cannot disregard the order of the Arbitration Clause. In fact, it appears that the Parties, while drawing up the Arbitration Clause are also parties to the hypothesis that the arbitration centre of Mauritius should be competent to determine the arbitration, even going up to reproducing an hypertext relation which refers, it is supposed, to the page to what was the predecessor of MARC: the permanent court of arbitration of the Chamber of Commerce and Industry of Mauritius. It appears more logical and reasonable to the Arbitration Tribunal that the resolution of the uncertainty resulting from the reading of the Arbitration Clause favours the first paragraph. It appears in fact reasonable to consider that the mention international has been through error substituted to the mention and industry in the second paragraph, as has been raised by the applicant in its answers of 18 August 2017. The connection to an arbitration centre physically located in Mauritius is also reinforced by the designation of the seat at Port Louis, Mauritius. This explanation seems to be the only one to give a useful effect to the Arbitration Clause in application of article 1157 of the Mauritian Civil Code.”
It is the appellant's case that this interpretation is wrong and that the clause is a “hybrid” arbitration clause under which MARC was to administer the arbitration, but the arbitration was to be conducted in accordance with ICC Rules. It pointed out that there are a number of decisions in which the validity of such clauses has been upheld — see, for example, lnsigma Technology Co Ltd v Alstom Technology Ltd [2009] SGCA 24 (Singapore International Arbitration Centre (“SIAC”) arbitration under ICC Rules); IM Badprim SRL v The Government of the Russian Federation (Case No T-2454/14) (Arbitration Institute of the Stockholm Chamber of Commerce arbitration under ICC Rules) and Top Gains Minerals Macao Commercial Offshore Ltd v TL Resources Pte Ltd (2015) HCMP 1622/2015 (SIAC arbitration under ICC Rules). The arbitral procedure, and in particular the constitution of the tribunal, should accordingly have been conducted in accordance with ICC Rules rather than MARC rules.
In these circumstances the appellant contends that the award should have been set aside pursuant to section 39(2)(a)(iv) of the Act which provides:
“ 39. Exclusive recourse against award
(1) Any recourse against an arbitral award under this Act may be made only by an application to the Supreme Court for setting aside in accordance with this section.
(2) An arbitral award may be set aside by the Supreme Court only where —
(a) the party making the application furnishes proof that —
…
(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with this Act; …”
The Supreme Court noted that the appellant's case was that “the material difference between the ICC and MARC rules pertain to the constitution of the arbitral...
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