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Court of Appeal rules in favor of MER. TELEM ordered to respect arbitral award.

PHILIPSBURG:--- Below is the free translation of the verdict pronounced in by the Court of Appeals.

 

CIVIL MATTERS FOR 2023 RULING: September 13, 2023

CASE NO.: SXM202200845 - SXM2022H00180

JOINT COURT OF JUSTICE

from Aruba, Curacao, Sint Maarten and from Bonaire, Sint Eustatius and Saba

ORDER

regarding:

the public limited company

SINT MAARTEN TELEPHONE COMPANY N.V.,

located in Sint Maarten,

defendant at first instance, now appellant, hereinafter referred to as: Telem,

representatives: mrs. E.R. de Vries and S.N.J. Goldfinch

-in return for-

the private company

MER SINT MAARTEN B.V.,

located in Sint Maarten,

applicant in the first instance, now guarantor, hereinafter referred to as: MER,

representatives: mrs. J.J. Rogers, G.J. Meijer, S.H. Barten and J.J. Oetomo.

1. The course of the procedure

1.1 Reference is made to the decision of the Court of First Instance of Sint Maarten (hereinafter: the Court) pronounced on 8 December 2022. The content of that decision applies as Kier inserted.

1.2 Telem has appealed the aforementioned decision by filing on

December 19, 2022 of an appeal.

1.3 Both parties have submitted exhibits in advance for the oral hearing.

1.4 The oral hearing took place on May 16, 2023

Courthouse in Sint Maarten. Telem appeared before Mr. Putter mentioned above, as well as before Mrs. Vriezen and Dunkirk. On behalf of MER, M. Cohen and J. Enoch, assisted by MER's representatives mentioned above, who were at the Court in the Courthouse, appeared via video link. The parties' representatives have their positions further explained on submission of pleadings and questions from the Court are answered.

1.5 The ruling has been determined to date.

2. The assessment

2.1 The Court relies on the following facts, which had already been established by the General Court (see paragraphs 2.1 to 2.10 of the contested decision).

2.1.1 Telem is a government company that offers telecommunications services in Sint Maarten.

2.1.2 MER is a local subsidiary of the Israeli MER Group, a listed multinational, which is active, among other things, as a main contractor for telecommunications works. MER was specifically established as a special-purpose vehicle to act as the main contractor on Telem's work in Sint Maarten.

2.1.3 At the end of 2016, Telem issued a tender for the construction of a "fiber optic cable network" in Sint Maarten (hereinafter: the project).

 

2.1.4 EIA won the tender. MER and Telem subsequently entered into an agreement on June 30, 2017, and an addendum on August 15, 2017. The "total estimated contract price" was NAf 28,126,554.27.

2.1.5 The agreement is based on the model agreement "Conditions of Contract for Plant and Design Building" of 1999, also referred to as FIDIC

Yellow Book 1999. The general terms and conditions of the Yellow Book form part of the agreement, with some adjustments.

2.1.6 The parties have had a dispute about the (interim) termination of the agreement and the project by Telem by letter dated October 17, 2019, as well as about some related issues.

2.1.7 MER has subsequently responded to this in accordance with the provisions of the agreement

arbitration proceedings brought before the International Court of Arbitration of the ICC (hereinafter: the arbitration proceedings). The ICC consisted of Mr. Zvi Bar-Nathan,

appointed by MER, Mr. A. van Wassenaar, appointed by Telem and the chairman Dr.

M. Sasson, appointed on the joint recommendation of the other two arbitrators. In agreement, MER has a claim regarding work in progress and compensation has been submitted and Telem has filed various claims in counterclaim.

2.1.8 The ICC issued an Award on January 20, 2022, in which the conventional claims were (partly) granted and the counterclaims were

rejected (hereinafter: Award or arbitral award). The dictum reads as follows:

i. MER was entitled to an extension of the Time for Completion.

ii. TELEM wrongfully terminated the Agreement.

iii. TELEM wrongfully exercised the Bank Guarantee under the Schedule attached to the Agreement. iv. TELEM breached its contractual obligations under the Agreement and shall pay to MER (a)
      USD 561,904.80 (inclusive of TOT) and (b) USD Z671,522.38 (upon issuance of an invoice).

v.  TELEM shall pay to MER the costs of the arbitration in the amount of USD 282,125 (plus

statutory legal interest on USD 282,125 at the rate of 4.5% from 14 May 2020 to 30 June 2020; 3% from 30 June 2020 to 30 June 2022 and such percentage after 30 June 2022 which shall be published under the relevant "Landsbesluit houdende algemene maatregelen, ter uitvoering van artikel 120 van Boek 6 van het Burgerlijk Wetboek").

vi. TELEM shall pay to MER its legal costs in the amount of USD 231,186.53 (plus statutory

interest on USD 231,186.53 at the rate of 4.5% 14 May 2020 to 30 June 2020; 3% from 30 June 2020 to 30 June 2022 and such percentage after 30 June 2022 which shall be published under the relevant "Landsbesluit houdende algemene maatregelen, ter uitvoering van artikel 120 van Boek 6 van het Burgerlijk Wetboek").

vii. All other claims and requests for relief are rejected. Place of arbitration: Amsterdam (The Netherlands) Date: 20 January 2022

(...)

 2.1.9 MER requested Telem in a letter dated March 25, 2022, to (voluntarily) comply with the arbitral award. Telem did not do this. 2.1.10 Telem initiated proceedings before the court on May 13, 2022Amsterdam Court of Appeal to annul the Award. The Amsterdam Court of Appeal has not yet rendered a judgment in these proceedings.2.2 In the contested decision, the Court granted MER's (primary) request for leave to enforce the arbitral award. 2.3 The appeal was presented in vain. The Court considers as follows. This is a request for recognition and enforcement of an arbitral award.Pursuant to art. 1020 paragraph 1 CCP the UNCITRAL Model Law on International Commercial Arbitration (hereinafter: Model Law) applies. The art. 35 and 36 thereof read as follows:

Article 35. Recognition and enforcement

(1) An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced subject to the provisions of this article and of article 36.

(2) The party relying on an award or applying for its enforcement shall supply the original award or a copy thereof. If the award is not made in an official language of this State, the court may request the party to supply a translation thereof into such language.

Article 36. Grounds for refusing recognition or enforcement

(1) Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only:

(a) at the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that:

(i)  a party to the arbitration agreement referred to in article 7 was under some

incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

3

 

(ii)  the party against whom the award is invoked was not given proper notice of the

appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iii)  the award deals with a dispute not contemplated by or not falling within the terms of
         the submission to arbitration, or it contains decisions on matters beyond the scope of
         the submission to arbitration, provided that, if the decisions on matters submitted to
         arbitration can be separated from those not so submitted, that part of the award which
         contains decisions on matters submitted to arbitration may be recognized and
         enforced; or

(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 the law of the country where the arbitration took place; or

(v)   the award has not yet become binding on the parties or has been set aside or

suspended by a court of the country in which, or under the law of which, that award was made; or

(b) if the court finds that:

0)      the subject matter of the dispute is not capable of settlement by arbitration under the

law of this State; or

(ii)  the recognition or enforcement of the award would be contrary to the public policy of
         this State.

(2) If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)(v) of this article, the court where recognition or enforcement is sought may, if it considers it proper, adjourn its decision and may also, on the application of the party claiming
recognition or enforcement of the award, and order the other party to provide appropriate security.

2.4 The starting point is therefore: granting leave. It is up to Telem to make it plausible to create a ground for refusal as referred to in Article 36(1)(a) of the Model Law. If, after summary assessment, the judge comes to the conclusion that:

it is sufficiently plausible that a ground for refusal exists, he or she may refuse the leave. There is no room for the judge's own investigation or a full review of certain points of the arbitral proceedings or the arbitral award, as argued by Telem.

2.5 Taking this standard into account, the Court finds that the formal requirements of art. 35 Model Law has been met and none of the provisions in art. 36(1) Model Law mentioned grounds for refusal arise. Furthermore, in view of the grounds for refusal referred to in art. 36 paragraph 1, under (a)(ii) and under (b)(ii), Model Law, the Court agrees with para. 4.8. (the second, on pages 7 and 8) and para. 4.9. (except for that part that refers to art. 1039 paragraph 5 RvN1) of the contested decision and makes it his own.

2.6 Telem has not sufficiently substantiated its defense and appeal complaints that various grounds for refusal apply. Much of what Telem has put forward under the heading of substantiation of grounds for refusal amounts to objections to the arbitral award or is otherwise not relevant, for which reason it will not be discussed.

2.7 The Court sees no reason to use the provisions in art. 36 paragraph 2 of the Model Law to suspend or suspend enforcement condition of providing security. It cannot be said that it must now be judged on the basis of a summary assessment that the risk of annulment of the Award in the proceedings at the Amsterdam Court of Appeal

is to be considered significant, given the procedural documents submitted in relation to that procedure. Furthermore, the Court agrees with para. 410. of the contested decision and makes it his own. 2.8 Finally, the Court agrees with para. 4.11. and 4.12. of the contested decision, dealing with provisional enforceability.2.9 The Court will confirm the contested decision. Telem, as the unsuccessful party, will be ordered to pay the costs of MER's appeal.  DECISION: The Council: confirms the contested decision; and orders Telem to pay the costs of MER on appeal, estimated to date NAf 4,000 (2 x rate 5) in attorney's salary and NM 250 in additional costs without service or ANG 400 with service - all amounts in the event of non-servicepayment to be increased by the statutory interest from the fifteenth day after this decision; declares the order for costs to be enforceable immediately; rejects the additional or different request. Thus given by Mrs. E.M. van der Bunt, E.A. Saleh, and S. Verheijen, members of the Joint Court of Justice, and pronounced at the public hearing of the Court in Sint Maarten on September 13, 2023, in the presence of the clerk.

 

 

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