THE SUPREME COURT
[Appeal No. 352/2013]
Clarke J.
MacMenamin J.
Dunne J.
BETWEEN
GRASSLAND FERTILIZERS
PLAINTIFF/RESPONDENT
AND
FLINTER SHIPPING BV AND AMLIN FRANCE
DEFENDANTS/APPELLANTS
Judgment of Ms. Justice Dunne delivered on 8th April, 2014
The plaintiff/respondent herein (Grassland) is a company involved in the manufacture, supply and Blending of fertiliser products at facilities in Cork, Limerick and Slane. It agreed to purchase 4,000 metric tonnes of granular urea (the goods) from Heliopotasse SA for a sum of US$1,472,000. The goods were to be shipped from Turkey to Drogheda. Heliopotasse was to and did arrange insurance in respect of the goods with the second named defendant herein, Amlin France.
It appears from the pleadings herein that an inspection of the goods was carried out prior to and during the loading of the goods on the 2nd September, 2010. The goods were to be shipped on a vessel owned by the first named defendant/appellant (Flinter). A bill of lading in respect of the goods signed by the ship’s Master on their behalf acknowledged receipt of the goods in good order and condition. The ship sailed to Drogheda and berthed there on the 16th September, 2010. On arrival, it is alleged that the goods were “very lumpy and contained various grain and foreign matter such as plastic and newspapers”. A further inspection on the 23rd September, 2010 noted that “rice and/or grain was throughout the goods”.
It is contended by Grassland that it was unable to sell the goods as prime product and had to sell the same at a discounted price because of the contamination. The particulars of loss are said to be in the region of €310,000 but this may not be the final figure. Amlin has declined to provide an indemnity to Grassland on the basis that there was no damage to the goods and therefore no insurable loss.
The plenary summons herein was issued on the 21st February, 2011. A conditional appearance was entered on the 18th March, 2011 by Flinter and a statement of claim was delivered on 1st April, 2011.
Flinter issued a notice of motion on the 3rd June, 2011 returnable for the 18th July, 2011 seeking an order pursuant to Article 8 of the Model Law as incorporated by the Arbitration Act 2010 and Order 56, rule 3 of the Rules of the Superior Courts as amended, staying the proceedings herein and referring the proceedings to arbitration.
Clause 36 of the Charter Party which was incorporated into the bill of lading of the 3rd September, 2010 provides:
“This Charter Party shall be governed and constructed with English law and any disputes arising under this Charter Party shall be referred to arbitration in London in accordance with English law.”
An order was made on the 17th October, 2011 (Quirke J.) staying the proceedings in order to refer the matter to arbitration in respect of the dispute between Grassland and Flinter. The proceedings against Amlin are not affected by that order. Subsequently, a notice of motion was issued on behalf of Grassland returnable for the 19th November, 2012 seeking an order vacating the order of the 17th October, 2011 and lifting the stay granted in favour of Flinter. A number of affidavits were exchanged between the parties in respect of the motion which ultimately came on for hearing on the 15th July, 2013 before the President of the High Court.
The note of the judgment of the High Court is short and to the point and it would be useful to refer to it in full:
“This application relates to a stay of proceedings for a straightforward claim of contaminated cargo being carried to the port of Dundalk (sic), Ireland. Not surprisingly the plaintiff has sought compensation in respect of same.
There is separately a policy of insurance for ‘all risks’ with Amlin France, which is also a defendant.
An application was made before Judge Quirke, who acceded a request to stay proceedings against the first named defendant pursuant to Article 8 of the Model Law. It then transpired when the arbitration wheels ground into action, and in response to the arbitration appointment, the first defendant said it would raise a defence that the arbitration proceedings were out of time. It is in these circumstances that the plaintiff has applied to lift the stay.
In the circumstances I am prepared to lift the stay as the plaintiff was misled or misunderstood or not alerted to time bar point in the arbitration and the fact that this was going to be raised against them.
There are also other defendants in this jurisdiction who are not raising the time bar.
While I have been urged not to review a colleague of the High Court, I am satisfied that if Quirke J. was aware of the time bar issue he would not have imposed the stay.
I gave the first named defendant the opportunity to take instructions to not raise the time bar in the U.K. and having not consented to doing that, I am satisfied that I can discharge the stay and therefore permit the plaintiff to go ahead with the proceedings in Ireland.”
Flinter has appealed from the judgment and order of the High Court lifting the stay on the proceedings.
The motion seeking to vacate the order of the High Court of the 17th October, 2011 which resulted in the judgment and order of the High Court of the 15th July, 2013 lifting the stay was grounded on an affidavit of Peter Woodcock, solicitor for Grassland, sworn on the 24th July, 2012 in which complaint was made that the plaintiff when it initially sought to have the matter arbitrated in London and wrote the Flinter in that respect by letters dated the 6th October, 2010, 20th October, 2010 and 11th February, 2011, received no response to its request to arbitrate from Flinter. In those circumstances, it issued proceedings. Subsequently, following the order of 17th October, 2011, Mr. Woodcock by letter dated 21st March, 2012 wrote to Flinter’s solicitors enclosing a notice of commencement of arbitration. A response was received by English solicitors on behalf of Flinter of the 4th April, 2012 objecting to the reference to arbitration and stating that any arbitration was invalid as the same was time-barred not being an arbitration referred with the one year period provided for in the Charter Party. In those circumstances Mr. Woodcock contended that it would be manifestly unjust if Flinter was permitted to fail to respond to correspondence requesting arbitration, issue a motion seeking a stay pending arbitration and then obtain an order for such a stay in circumstances where it was then going to raise a time bar issue in respect of the arbitration.
An affidavit was also sworn on behalf of Flinter by John David Flaherty, Partner at Clyde & Co. LLP, the solicitors for Flinter, in which it was pointed out that under s. 12 of the Arbitration Act 1996, the English court has power to extend time for the commencement of arbitral proceedings. It was stated that:
“In order for the claimant to make an application under s. 12 of the Arbitration Act they would first have to properly commence arbitration proceedings in London. Should the arbitrators then rule that the claim is time barred, the claimant would have the opportunity to apply to the English court under s. 12 of the Arbitration Act to be granted an extension of time to commence arbitration proceedings.”
It was added that the English court would only extend time if satisfied that the provisions of s. 12 of the Arbitration Act are properly complied with. Thus the argument before the President of the High Court appears to have been that although it would be contended by Flinter that the claim made by Grassland is time barred having regard to the terms of the Charter Party, if such a ruling was made by the arbitrators, Grassland would have the option of making an application to the courts in England and Wales for an order pursuant to s. 12 of the Arbitration Act 1996 to extend the time for arbitration.
The relevant law
It would be helpful to refer to provisions of the Arbitration Act 2010. Section 6 provides as follows:
Section 11(a) is also of relevance. It provides:
“There shall be no appeal from -
(a) any court determination of a stay application, pursuant to Article 8(1) of the Model Law or Article II(3) of the New York Convention . . ..”
Article 8 of the UNCITRAL Model Law is central to the issues which arise in this case. It provides as follows:
“(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
(2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.”
Submissions
Mr. Lewis on behalf of Flinter referred to Article 8 and noted that its provisions are mandatory: in other words, the Court “shall” refer the parties to arbitration. It was pointed out that a court in considering an application pursuant to Article 8 can only disapply the mandatory provisions in circumstances where the arbitration agreement is null and void, inoperative, or incapable of being performed. There was no evidence or argument advanced in the High Court to those categories. It was pointed out that Grassland was entitled to commence the arbitration proceedings albeit that the time for doing so had expired and that Flinter could defend the claim on the basis that the time had expired. It was up to Flinter to raise the matter of the time bar before the arbitrator. In addition, an application could be made pursuant to the provisions of s. 12 of the Arbitration Act 1996 to extend the time for the commencement of arbitral proceedings. In the circumstances it was submitted that the High Court had no discretion in relation to the application and that Quirke J. in making that order was compelled to refer the parties to arbitration and thus to stay the proceedings. Equally it was argued that the learned President had no discretion to ignore the provisions of Article 8.
The second point made on behalf of Flinter was that it was not open to the President of the High Court who did not have jurisdiction to interfere with the order of Quirke J. He examined the arguments made before the President of the High Court in which it was contended on behalf of Grassland that the Court had an inherent jurisdiction to set aside the order and pointed out that no authority was advanced to the Court below to support that contention. He notes the comment made on behalf of Grassland to the effect that Grassland complained that it was left with “little option but to institute” these proceedings given that Flinter had refused to engage in relation to arbitral proceedings but he contended that it was open to Grassland to commence the proceedings without Flinter’s consent or co-operation. He added that even though these proceedings had been commenced, there was no bar to Grassland commencing arbitration proceedings at the same time and in that context he referred to the provisions of Article 8(2) of the Model Law set out above.
Mr. Lewis added that the fact that there was a time bar defence available to Flinter in the course of the arbitration did not invalidate the arbitration clause. He accepted that the behaviour of Flinter might be characterised as appalling but that was a matter to be considered elsewhere, initially by the arbitrator in the course of the arbitration proceedings or, if appropriate, by the Court in England and Wales on appeal from a decision of the arbitrator.
He emphasised that whilst the behaviour of Flinter could be criticised, one had to bear in mind that it was always open to Grassland to commence the arbitration proceedings.
Mr. Lewis made the point in relation to the inherent jurisdiction of this Court that this Court’s jurisdiction has been limited clearly by statute. In that context he referred briefly to the decision of the Supreme Court in The People v. Conmey [1975] I.R. 341 in which Walsh J. (at p. 360) stated:
“. . .any statutory provision which had as its object the excepting of some decisions of the High Court from the appellate jurisdiction of this Court, or any particular provision seeking to confine the scope of such appeals within particular limits, would of necessity have to be clear and unambiguous.”
Having referred to the provisions of s. 11 of the Arbitration Act 2010, and the fact that it excludes the possibility of an appeal to this Court from any determination of a stay application, he commented that it would be curious if the parties to such an application could not appeal to the Supreme Court but could make an application to another Judge of the High Court to vacate an order made by another Judge of the High Court. On that basis he submitted that the order of the President of the High Court should be set aside and that the order of Quirke J. should be reinstated.
Mr. McCarthy, S.C., on behalf of Grassland, argued that the High Court had an inherent jurisdiction to vacate an order in circumstances where the order made was one staying the proceedings, as opposed to an order dismissing the proceedings. Given that the provisions of the Arbitration Act 2010 refer to a stay, as opposed to a dismissal of proceedings, he argued that the Court has a continuing supervisory role in relation to matters referred to arbitration under Article 8(1) of the Model Law. The distinction between an action which is stayed and one which is dismissed in the context of arbitration proceedings is one which could give rise to an interesting academic discussion but it is not necessary to embark on such a discussion for the purpose of determining the issues between the parties in this case.
The thrust of the submissions made on behalf of Grassland by Mr McCarthy was to the effect that the order made by the President of the High Court was an order which was a determination of a stay application. That being so, it was argued that the provisions of s. 11 of the Arbitration Act were applicable and that consequently there could be no appeal to this Court given that s. 11 provides that there shall be no appeal from any Court determination of a stay application. Accordingly, he submitted that the appeal should be dismissed.
Discussion and conclusion
A number of issues have been raised on this appeal, not least the question of the jurisdiction of a Judge of the High Court to vacate or set aside an order of another Judge of the High Court. The issues raised bring into focus important and connected policy aspects behind the Arbitration Act 2010. Those policies are primarily concerned with adopting the UNCITRAL Model Law into Irish law both for international and domestic arbitrations (but excluding consumer arbitrations).
It is well settled that, when interpreting Irish legislation which is designed to comply with Ireland’s international treaty obligations, the courts should endeavour to interpret the relevant Irish legislation in a way which complies with those international obligations (H.I. v. M.G. [2000] 1 I.R. 100; Crilly v. T. & J. Farrington Ltd. [2001] 3 I.R. 51). Likewise, where Ireland adopts an internationally recognised legal model into domestic law, it must clearly be the intention of the Oireachtas in so doing that Irish law will, broadly, confirm with that international model. In Crilly, Murray J. observed (at page 291):
“For a very long time principles of common law concerning the interpretation of statutes which give effect to international treaties permit the courts to interpret such a statute in the light of the meaning of relevant provisions of the treaty concerned. No doubt this is in part because the intention of the national legislature is clear - to give effect to provisions of the treaty in domestic law - and the objective consequence of that intent can be clarified or ascertained, where necessary, by reference to the meaning of the relevant provisions of the treaty, itself a legal instrument. There is also the consideration that contracting parties to international agreements should seek, as far as possible, to give uniform effect to its provision in domestic law.”
Sometimes international treaties or norms have their own means of authoritative interpretation. The Model Law does not have such. However, to a greater or lesser extent, the Model Law has been adopted in many countries worldwide. It is clearly desirable that there be consistency of interpretation of the provisions of the Model Law. In those circumstances, it is important to emphasise that, where there is an international consensus in the courts of countries which have adopted the Model Law as to the interpretation and application of a particular provision or provisions thereof, the Irish courts should lean heavily in favour of adopting the same interpretation.
It is, in the context of the dispute which arose at the hearing before this Court as to the extent to which, as a result of the adoption of the Model Law, the courts retained any wider discretion to decline to stay or dismiss the pending arbitration than that expressly conferred in Article 8 that the comments already made on the proper approach to the interpretation of the Model Law need to be seen. One of the key issues which was before the High Court was as to whether the fact that the plaintiff might run into time bar problems in the United Kingdom (were the case referred to arbitration) was a factor which could have been of any relevance, under the Model Law, in deciding whether to stay the proceedings pending arbitration. Obviously, if that fact could not have been of any relevance (because the Model Law did not permit a court to decline to stay on such a basis), then any failure to disclose would have to have been seen against the backdrop of a situation where the matter not disclosed could not have affected the decision of the court in the first place. Likewise, the question of the extent to which it may be appropriate, as a result of a mixture of Irish law and the Model Law, to allow the question of a stay to be revisited, is also a matter which requires interpretation of the Model Law which should, for the reasons already set out, be interpreted consistently internationally.
It appears that the Model Law is designed to significantly restrict the circumstances in which it can be appropriate for a court to decline to stay or dismiss proceedings in favour of arbitration and, indeed, to interfere with the awards of arbitrators when made. The Model Law as pointed out previously limits the circumstances which a court may decline to refer the parties to arbitration to those in which the Court finds “that the agreement is null and void, inoperative or incapable of being performed”. There is a second further policy consideration to be found in the 2010 Act in the significant restrictions imposed on the right of appeal which would otherwise exist under the Constitution from the High Court to this Court. It might well be said that the policy of the Model Law is that persons who have agreed to arbitration must submit to that arbitration and its result (save in very limited specified circumstances) even if that submission to arbitration and its result may not be correct. Likewise, doubtless for similar reasons, the policy of the 2010 Act is that parties have to submit to the judgment of the High Court on questions of stay even if the judgment of the High Court not be correct. In those circumstances, it would only be appropriate for this Court to express a view on whether the High Court was correct in its judgment if an appeal to this Court is available under the 2010 Act, an issue which I will now consider.
Reference has previously been made to the decision of the Supreme Court in the case of The People v. Conmey and to the passage from the judgment of Walsh J., set out above. Subsequently, in the case of The People (DPP) v. O’Shea [1982] I.R. 384, at p. 397, O’Higgins C.J. made the following observation:
“The Constitution brought into existence a new State, subject to its own particular and unique basic law, but absorbing into its jurisprudence such laws as were then in force to the extent to which these conformed with that basic law. It follows that existing laws or formerly accepted legal principles or practices cannot be invoked to alter, restrict or qualify the plain words used in the Constitution unless the authority for so doing derives from the Constitution itself. Indeed the very existence of an inconsistency between what was formerly the law and what the words of the Constitution, according to their literal meaning, declare, repeals and abrogates what had been the law. . . . [The respondent] cannot rely solely on the legal principles which prevailed prior to the establishment of Saorstát Éireann. He must go much further than this. He must establish that there is something in the Constitution itself which qualifies the plain words of Article 34.4. 3 so as to restrict the appellate jurisdiction thereby given to the Supreme Court in criminal cases to appeals against convictions. Or he must show that a statutory provision made subsequent to the Constitution has such an effect.”
O’Higgins C.J. added (at page 402) the following:
“A law which regulates by subtraction from the Supreme Court's appellate jurisdiction must do so expressly and must, in particular, conform to the stipulation contained in Article 34.4.4 that it shall not extend to cases involving questions of constitutional validity. . . . The section relied on does not purport to be a regulation, as envisaged by Article 34.4.3, nor does it refer to the appellate jurisdiction which it is supposed to curtail. I regard it as a section of general application conferring on the Supreme Court an additional consultative jurisdiction in relation to questions of law arising on directions given by trial judges in both the Central Criminal Court and the Circuit Court. It is in no way inconsistent with the continuation of the Supreme Court's full appellate jurisdiction under Article 34.4.3.”
Thus, it is clear that laws can be passed which provide for the removal or as O’Higgins C.J. described it the “subtraction” of the appellate jurisdiction of the Supreme Court (save in relation to questions of validity of any law having regard to the provisions of the Constitution). It is also clear that if the appellate jurisdiction of the Supreme Court is to be removed, the law providing for such removal must be in clear and unambiguous terms. It is in that context that one must consider the provisions of s. 11 of the Arbitration Act 2010. I have already set out the precise terms of s. 11 and it is not necessary to repeat those here. I would observe that the words of s. 11 of the Arbitration Act 2010 are expressed in clear and unambiguous terms which leave no doubt whatsoever that an appeal from a determination of a stay application cannot be appealed to the Supreme Court. That being so, it is necessary to consider whether the application before the President of the High Court falls within the provisions of s. 11 of the Arbitration Act 2010. If it does, then inevitably, it follows that this Court has no jurisdiction to deal with the appeal from that order.
The order made by the High Court on the 17th October, 2011 staying the proceedings herein and referring the dispute between the parties to arbitration was, to paraphrase the provisions of s. 11 of the 2010 Act, a court determination of a stay application, pursuant to Article 8(1) of the Model Law. The application which came before the High Court on the 15th July, 2013 sought, inter alia, the following relief:
On any interpretation, it is impossible to see how the application before the High Court on the 15th July, 2013 could be characterised as anything other than a court determination of a stay application. The application was one seeking to have the stay, previously granted in favour of Flinter, lifted. As such, in my view, the application before the Court on the 15th July, 2013 was seeking a court determination of a stay application. That being so, it follows that, having regard to the provisions of s. 11 of the 2010 Act, there can be no appeal from the order of the High Court made herein on the 15th July, 2013 to this Court.
In those circumstances, it would not be appropriate to express any view on the interesting issue as to the question of the jurisdiction of the President of the High Court to vacate the order of Mr. Justice Quirke made herein on the 17th October, 2011.
Accordingly, I will dismiss the appeal of Flinter from the decision of the High Court.
