The recent decision in District Council of Rivière du Rempart v Alphamix Ltd and others [2017 SCJ 233] is the latest example of judicial support of the arbitral process.
Alphamix Ltd, as contractor, claimed against the Council amounts allegedly owed to it under a construction contract. The matter was referred to arbitration and during the arbitration proceedings an offer was made by the Council and accepted by Alphamix in respect of the capital amount claimed. The arbitrator made an interim award on 23 September 2016 in full and final satisfaction of the capital and ordered the Council to pay some Rs. 72 million (approximately USD 2 million) within 60 days of the award.
Alphamix applied to the Judge in Chambers under the Code of Civil Procedure (CCP) to render the interim award executory. This was not opposed by the Council and an exequatur order was granted. When Alphamix tried to enforce the interim award (now executory), the Council sought an injunction to resist the enforcement on grounds of public interest. During the pendency of the injunction case, the Attorney-General’s Office, as Ministère Public, served a notice under Article 1026-9 of the CCP stating that the sum which the Council has been ordered by the arbitrator to pay exceeds by far the yearly grant allocated to it from the Consolidated Fund and that the enforcement of the interim award is likely to result in the assets of the Council being seized hence leading to the disruption of essential services provided by the latter which is not in the public interest. The Council did not dispute that it owed the sum awarded in the interim award but instead stated that it needed to be put in funds by its parent Ministry, the Ministry of Local Government and Outer Islands. The Ministry, for its part, argued that it was not party to the arbitration, was kept unaware of the consent of the Council to the interim award and exequatur and thus was not bound to honour the interim award.
Article 1026-9 of the CCP provides that the Ministère Public may serve a notice of opposition to the enforcement of arbitral awards in cases where it considers that such enforcement would be contrary to public interest. The effect of such notice has the effect of removing the jurisdiction of the Judge in Chambers in exequatur proceedings where such application has not yet been lodged or is pending, with the result that the dispute must then be referred to court. The Judge in the Alphamix case, whilst declining to opine on the constitutionality of Article 1026-9, was of the view that it could not apply in that case because the Judge in Chambers had already issued the exequatur order and it could not have been the intention of the legislator to allow Article 1026-9 to reverse an order already made – very clear and unambiguous words would have been required in the CCP if that had been the real legislative intent.
On the merits of the injunction case, the Judge concluded that the Council was acting in bad faith and making an abuse of process. It never denied that it had made an offer in the arbitration proceedings, it never resisted the exequatur application and never alleged in the arbitration or before the judge in the exequatur application that the agents representing it had acted beyond their authority. The Council’s arguments that it was not in control of its finances and that it needed instructions from its parent Ministry were viewed as being dilatory tactics to avoid its payment obligations towards Alphamix. The Judge also dismissed what she termed as procedural irregularities raised by the Council, namely:
- That no prior notice ‘commandement’ had been served on the Council: this was premature as no seizure had been effected without the Council being given adequate notice in order to oppose the seizure; and
- That the assets of the Council were not capable of being seized because of its public interest statutory functions: this was not a meritorious argument because the inability to seize certain assets needed to be expressly set out in legislation. Neither the CCP, the Civil Code, the State Proceedings Act nor the Local Government Act contains any exclusion to prevent the seizure of assets of the Council.
In the past, doubts had been expressed by the Privy Council in the 1981 case of Société United Docks & others v Government of Mauritius (Privy Council Appeal Nos 29 of 1983 and 34 of 1982) on the constitutionality of Article 1026-9 if it could have the effect of depriving a person of property (i.e. the benefit of an arbitral award) without compensation.
Mauritius has made great strides in the field of international arbitration, whether in terms of legislative or institutional efforts or of the approach of the Supreme Court to such dispute resolution mechanism. Even though Alphamix concerned a domestic arbitral award, the attitude of the Judge in scrutinizing the arguments against the enforcement of an award when a litigant has gone through all the proper court procedures, even public interest ones, is most welcome and sends a strong signal to public bodies which choose to have their commercial disputes resolved by way of arbitration, that they should take arbitration proceedings and arbitral awards made against them seriously. This can only bolster the reputation of Mauritius as a pro-arbitration jurisdiction.
This article has first been published on iflr1000.com, 23 August 2017 and on mondaq.com , 30 August 2017