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The European, Middle Eastern and African Arbitration Review 2016

Ireland

Andrew DUPE and Peter Woods

Arthur Cox

19 October 2015

The Arbitration Act 2010

The Arbitration Act 2010 (the 2010 Act) repealed all previous arbitral legislation and effectively codified the law in this area into one Act of Parliament. It was signed into law on 8 March 2010 and entered into force on 8 June 2010. It applies to all arbitrations held in Ireland after the date of entering into force, both international and domestic.1

The main purpose of the 2010 Act is to bring Irish law in line with international best practice by adopting the UNCITRAL Model Law on International Commercial Arbitration (the UNCITRAL Model Law) and applying it to all arbitrations that take place in Ireland.

The 2010 Act provides a default framework to be applied to arbitrations in Ireland in circumstances where the parties themselves have not agreed to an alternative position or procedure. The 2010 Act provides certainty in relation to the arbitral process in Ireland while maintaining the independence of the arbitral process and protecting the autonomy of the parties who have chosen to arbitrate and agreed on the application of certain procedures.

The use of arbitration in Ireland

Arbitration as the preferred method of binding alternative dispute resolution is commonplace in commercial contracts and is almost the exclusive method employed in the construction sector. Insurance disputes in Ireland are also frequently resolved by arbitration. Traditionally, prior to the complete overhaul and change of Ireland’s arbitration law in 2010, arbitration was perceived as being prone to delays. However, the combination of the 2010 Act and the transformation of litigation efficiency in the Commercial List of the Irish High Court over the past number of years has completely turned around the culture among practitioners, and now the rapid resolution of cases is the focus among the Irish legal community. One of the principal advantages of arbitration arises from the highly open and international nature of the economy and the almost routine situation whereby a counterparty to a contract is from overseas. The private, independent and internationally enforceable outcome of the arbitral process is particularly appropriate for an economy such as Ireland’s.

Most arbitrations conducted in Ireland are domestic in nature, often ad hoc and, in the case of construction disputes, routinely conducted under the auspices of the Arbitration Procedure (2011) of Engineers Ireland, the Irish professional body for engineers.

Given the rapid development of Ireland as an open and international economy, international arbitration is now a regular feature of dispute resolution with an increasing number of cases, particularly under the International Chamber of Commerce (ICC) Rules, involving an Irish party or Dublin as a seat. The Preamble to the 2010 Act gives the force of law in Ireland to the following international treaties:

  • the UNCITRAL Model Law (as amended by UNCITRAL on 7 July 2006);
  • the Geneva Protocol on Arbitration Clauses (24 September
  • 1923);
  • the Geneva Convention on the Execution of Foreign Arbitral Awards (26 September 1927);
  • the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (10 June 1958); and
  • the Washington Convention on the settlement of investment disputes between states and nationals of other states (18 March 1965).

The UNCITRAL Model Law, as adopted by section 6 of the 2010 Act, provides in its article 28 that the dispute should be decided in accordance with the rules of law chosen by the parties as applicable to the substance of the dispute, and unless otherwise expressed, the designation of a law or legal system by the parties refers to its substantive law and not to its conflict of laws rules. Where the parties have failed to designate a chosen rule of law, the arbitral tribunal must apply the law determined by the conflict of laws rules which it considers applicable.

The 2010 Act provides that an arbitration agreement must be in writing. However, it will be held to be in writing if its content is recorded in writing including by electronic means, whether or not the arbitration agreement or contract has been concluded orally, by conduct or by other means.

Furthermore, an arbitration agreement is in writing if it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.

Finally, the reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract under the general principles of contract law.

Rules of the Superior Courts (Arbitration) 2010 (as amended)

The Rules of the Superior Courts (Arbitration) 2010 (S.I. No. 361 of 2010) as amended by the Rules of the Superior Courts (Arbitration) 2012 (S.I. No. 150 of 2012) facilitate the operation of the 2010 Act.

Order 56, Rule 3(1) of the Rules of the Superior Courts (RSC) sets out the applications for Orders which can be made to the High Court in aid of arbitration as follows:

for any interim measure of protection in relation to an arbitration or an intended arbitration under article 9 of the UNCITRAL Model Law;

  • to appoint an arbitrator pursuant to article 11(3)(a) or 11(3)(b) of the UNCITRAL Model Law;
  • to take the necessary measure pursuant to article 11(4) of the UNCITRAL Model Law in the event of a failure to act, an inability to reach agreement or a failure to perform a function under an appointment procedure agreed upon by the parties;
  • to decide on a challenge to an arbitrator pursuant to article 13(3) of the UNCITRAL Model Law (provided the application is made within the period prescribed in that article);
  • to decide on the termination of the mandate of an arbitrator pursuant to article 14(1) of the UNCITRAL Model Law;
  • to decide on a plea that the arbitral tribunal does not have jurisdiction pursuant to article 16(3) of the UNCITRAL Model Law (provided that the application is made within the period prescribed in that article);
  • to recognise or to recognise and enforce an interim measure issued by an arbitral tribunal in accordance with article 17H(1), but subject to the provisions of article 17I, of the UNCITRAL Model Law;
  • to issue any interim measure in relation to arbitration proceedings in accordance with article 17J of the UNCITRAL Model Law;
  • to make an order in accordance with article 34 of the UNCITRAL Model Law (provided, in a case to which section 12 of the 2010 Act applies, the application is made within the period prescribed in that section);
  • for the leave of the High Court to enforce or to enter judgment in respect of an award pursuant to section 23(1) of the 2010 Act;
  • to enforce an award in accordance with article 35(1), but subject to the provisions of articles 35 and 36, of the UNCITRAL Model Law;
  • to enforce the pecuniary obligations imposed by an award, within the meaning of section 25 of the 2010 Act, under that section;
  • for any other relief under or in pursuance of the 2010 Act, for which provision is not otherwise made in Order 56 RSC.

Section 11 of the 2010 Act provides that there is no right of appeal in respect of the following:

  • any court determination of a stay application, pursuant to article 8(1) of the UNCITRAL Model Law or article II(3) of the New York Convention;
  • any determination by the High Court —
    • of an application for setting aside an award under article 34 of the UNCITRAL Model Law, or
    • of an application under Chapter VIII of the UNCITRAL Model Law for the recognition and enforcement of an award made in an international commercial arbitration; or
  • any determination by the High Court in relation to an application to recognise or enforce an arbitral award pursuant to the Geneva Convention, New York Convention, or Washington Convention.

Appointment of arbitrator

Section 13 of the 2010 Act provides that, in the absence of agreement between the parties, the default number of arbitrators will be one. However, the parties retain the right to appoint more than one arbitrator by including that requirement in the arbitration agreement at the outset of the relationship or by agreement once the dispute arises.

Article 13(2) of the UNCITRAL Model Law provides that a challenge to the arbitrator’s appointment must be brought within 15 days of becoming aware of any grounds for such a challenge, for example, reasonable doubts as to his impartiality or independence.

Article 4 of the UNCITRAL Model Law provides that a party waives its right to object if such an objection is not brought within the relevant timeline.

Enforcement of agreements to arbitrate

Article 8 of the UNCITRAL Model Law, as adopted by the 2010 Act, provides that, where a dispute that is governed by an operative and enforceable arbitration agreement as defined under the 2010 Act comes before a court, the dispute must be referred to arbitration. Where court proceedings have been commenced in the above circumstances, arbitration proceedings can commence and an award can be made pending the outcome of the court’s deliberation.

Multi-tier clauses prescribing steps in a dispute resolution process leading up to arbitration are very common, particularly in the construction sector. There is no direct authority on enforceability; however, the practice in Ireland clearly shows a respect for the steps in a tiered clause and parties in Ireland do not usually enter into a dispute about contracted-for steps leading to arbitration.

Arbitrability and jurisdiction

The 2010 Act does not apply to an arbitration under an agreement relating to the terms or conditions of employment or the remuneration of any employees, although the parties can always agree under contract or otherwise to refer non-statutory disputes to arbitration. Also, the arbitrator does not have the power to order specific performance for a contract for the sale of land.

Article 16 of the UNCITRAL Model Law, as adopted by the 2010 Act, applies the principle of competence-competence to the law governing arbitrations in Ireland and provides that the arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause that forms part of a contract shall be treated as an agreement independent of the other terms of the contract, and a decision by the arbitral tribunal that the contract is null and void does not automatically invalidate the arbitration clause.

A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence, and a party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified, and can decide such a plea as a preliminary question or in an award on the merits.

If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within 30 days of having received notice of that ruling, that the High Court decide the matter, the decision of which shall not be subject to appeal. While such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award.

Article 9 of the UNCITRAL Model Law, as adopted by the 2010 Act, provides that it is not incompatible with an arbitration agreement for a party to apply to the High Court before or during arbitral proceedings for an interim measure of protection and for the High Court to grant such measure.

Article 17J of the UNCITRAL Model Law, as adopted under the 2010 Act, provides that the High Court has the same power of issuing an interim measure in relation to arbitration proceedings as it has in relation to court proceedings. The High Court shall exercise such power in accordance with its own procedures in consideration of the specific features of international arbitration.

Whether or not the High Court will grant, for example, an injunction to keep the status quo in place pending the outcome of the arbitration will depend on the normal test for interlocutory injunctions in Ireland by which one, in practice, must show merit, a serious question to be tried, and inadequacy of damages.

Awards

Article 31 of the UNCITRAL Model law, as adopted under the 2010 Act, prescribes that an award be made in writing and signed by the arbitrator or the majority of the arbitrators where there is more than one arbitrator, provided that the reason for any omitted signature is stated. An award given in Ireland must state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under article 30 of the UNCITRAL Model Law. The award must be dated and state the place of arbitration, which shall be deemed to have been the place where the award was made, and a signed copy must be delivered to each party.

There are no restrictions – save for the inability to direct specific performance in respect of a contract for the sale of land – to the relief which may be granted.

Irish law provides for punitive or exemplary damages; however, the scope for doing so is limited. Doubling or trebling damages, as sometimes seen in the United States of America, is unknown and probably contrary to public policy.

Section 18 of the 2010 Act provides that the parties may agree on the arbitral tribunal’s powers regarding the award of interest. Unless agreed by the parties, the arbitral tribunal may award simple or compound interest from the dates, at the rates and with the rests that it considers fair and reasonable on all or part of any amount awarded by the arbitral tribunal, in respect of any period up to the date of the award, or on all or part of any amount claimed in the arbitration and outstanding at the commencement of the arbitration but paid before the award was made, in respect of any period up to the date of payment.

Article 30 of the UNCITRAL Model Law, as adopted under the 2010 Act, provides that if the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms which shall be made and have the same status and effect as any other award on the merits of the case.

The 2010 Act prescribes a liberal regime for costs and the parties are free to agree such provisions as to the allocation of costs as they see fit. The normal practice in Ireland is that costs follow the event, but this invariably is not the case. If the parties submit to the rules of an arbitral institution, they shall be deemed to agree to be bound by the rules of that institution as to the costs of the arbitration.

Section 21(3) of the 2010 Act provides that where the parties have no advance agreement on costs, the arbitral tribunal shall determine by award those costs as it sees fit but must state: the grounds on which it acted; the items of recoverable costs, fees or expenses, as appropriate, and the amount referable to each; and by and to whom they shall be paid. In a domestic arbitration, the arbitrator can direct that costs be taxed by the taxing master or the county registrar.

Challenges to awards

Article 34 of the UNCITRAL Model Law, as adopted under the 2010 Act, sets out the provisions relating to the setting aside of an award (and the time limits) as the exclusive recourse against an arbitral award in the following circumstances:

  • the applicant must prove one of the following:
    • that a party to the arbitration agreement was under some incapacity, or that 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 state;
    • that the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present his case;
    • that the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or 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, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
    • the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of the UNCITRAL Model Law from which the parties cannot derogate or, failing such agreement, was not in accordance with the UNCITRAL Model Law; or
  • the High Court finds that:
    • the subject matter of the dispute is not capable of settlement by arbitration under the law of the state; or
    • the award is in conflict with the public policy of the state.

The time limit for such applications is three months from the date of the award; however, an application to the High Court to set aside an award on the grounds of public policy must be made within a period of 56 days from the date on which the circumstances giving rise to the application became known or ought reasonably to have become known to the party concerned.

The procedure for challenge is set out in the Rules of the Superior Courts (the civil procedure rules of the High Court referred to above). There are clear deadlines for the prompt filing of evidence by way of affidavit, and the High Court usually deals with these matters in a summary manner. Arbitration applications tend to be dealt with in a matter of weeks rather than months.

While there is no express bar on enforcement where a set-aside application is pending, the practical approach of the High Court is to promptly deal with both applications in parallel so that time and effort are not wasted.

The High Court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside.

Recognition and enforcement of awards

In relation to the enforcement of awards rendered in Ireland, this involves a simple application to the High Court (provided for under section 23 of the 2010 Act). The party seeking enforcement takes an action or applies for leave of the High Court by way of summary procedure on affidavit evidence only, and where leave is given, judgment may be entered in terms of the award. Such an award shall, unless otherwise agreed by the parties, be treated as binding for all purposes on the parties between whom it was made, and may be relied on by any of those parties by way of defence, set-off or otherwise in any legal proceedings in Ireland.

Nothing in section 23 affects the recognition or enforcement of an award under the Geneva Convention, the New York Convention or the Washington Convention.

A key feature to note is section 23(4) of the 2010 Act, which does not permit a losing party to invoke articles 35 and 36 of the UNCITRAL Model Law to resist enforcement of an award rendered in Ireland. Thus, this puts the onus on the losing party to move against any such award pursuant to article 34 as it will not have a second opportunity to do so at the recognition or enforcement stage.

The process for the recognition and enforcement of foreign awards is governed by either the New York Convention or the UNCITRAL Model Law.

As regards the New York Convention, article III is applicable in Ireland and provides that each contracting state shall recognise arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the New York Convention. Substantially more onerous conditions or higher fees or charges on the recognition or enforcement of foreign arbitral awards cannot be imposed than are imposed on the recognition or enforcement of domestic arbitral awards.

Article IV of the New York Convention provides that the party applying for recognition and enforcement must at the time of the application supply the duly authenticated original award or a duly certified copy of it; or the original agreement to enforce if applicable or a duly certified copy of it; and if the award or agreement is not made in an official language of the enforcing country, the requesting party must produce a translation of these documents certified by an official or sworn translator or by a diplomatic or consular agent.

In addition to the grounds under the New York Convention and the UNCITRAL Model law, enforcement or recognition can also be refused if the High Court finds that the subject matter of the dispute is not capable of settlement by arbitration under Irish law or if the recognition or enforcement of the award would be contrary to the public policy of Ireland. If an application for setting aside or suspension of an award has been made to the High Court, if it considers it proper, the High Court may adjourn its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the other party to provide appropriate security.

Nevertheless, there is a strong pro-enforcement approach taken by the Irish courts. The issue of enforcing awards set aside at the place of arbitration has not received judicial attention.

As with all applications to the High Court under the 2010 Act, enforcement proceedings are dealt with in a matter of weeks rather than months. The limitation period for the enforcement of an award is six years.

Trends and developments

With the passage into law of the 2010 Act on 8 June 2010, arbitration has significantly advanced into all sectors of commercial dispute resolution well beyond the areas already routinely addressed by the process, including being the preferred form of dispute resolution for aircraft leasing contracts which have a significant presence in Ireland. A further indicator of support is section 32 of the 2010 Act, which provides that, without prejudice to any provision of any other enactment or rule of law, the High Court or the Circuit Court may, if appropriate and the parties consent, adjourn the proceedings to enable the parties to consider arbitration.

The 2010 Act is still in its early stages, but it is the single most important event in Irish arbitration law since 1954 when the original domestic Irish act was passed and has been the basis for a significant increase in the amount of arbitrations taking place in Ireland, both domestic and international. There are no plans at present to introduce any further legislation in this area.

Some recent cases are dealt with below.

Deluxe Art & Theme Limited v Sheffs Limited [2014] IEHC 695 (High Court, Gilligan J, 16 July 2014)

The applicant sought an order pursuant to Order 56, Rule 3(1)(i) RSC and pursuant to article 34 of the UNCITRAL Model Law setting aside an arbitration award made in its favour.

The parties entered into a contract under which the applicant agreed to provide and install fit-out works for the sum of €1.2 million. A dispute arose in relation to that contract and it was referred to arbitration. The applicant sought a declaration that it was entitled to exercise a lien over certain of the respondent’s property to the value of €75,500 which it said it benefited from under the terms of clause 34(b) of the contract and, in the alternative, an award in the sum of €60,400 inclusive of VAT in respect of the works which was due and owing.

The arbitrator granted the applicant an award in the amount of €60,400 inclusive of VAT plus interest on the basis that the applicant was estopped from invoking clause 34(b) by his own actions in handing over possession of the property and accepting that the outstanding monies would be paid by the respondent out of its projected cash flow.

However, the respondent entered into receivership and liquidation with the result that the monetary award made by the arbitrator was of little or no value to the applicant.

The applicant submitted that the alleged estoppel was never raised by the respondent either in its statement of defence or during the course of the hearing and that no evidence was adduced in support of that issue and the award was therefore improperly procured.

The applicant contended that the arbitration did not comply with fair procedures in circumstances where the arbitrator failed to give the applicant the opportunity to adequately present its case in relation to the issue of estoppel which it claimed was a breach of article 34(2)(a)(ii) of the UNCITRAL Model Law on the basis that it was ‘otherwise unable to present his case’ and also article 18 of the UNCITRAL Model Law which provides that ‘the parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.’

The applicant also submitted that by addressing an issue which was not raised by the parties to the arbitration the arbitrator had exceeded the terms of the arbitration and therefore breached article 34(2)(a)(iii) of the UNCITRAL Model Law.

The respondent argued that no question of procedural unfairness arose as the award made by the arbitrator was based on an interpretation of the contract which was within the jurisdiction of the arbitrator and that issue was fully debated at the hearing. While the respondent accepted that the issue of estoppel was neither pleaded nor raised at the hearing, it contended that the word ‘estopped’, as noted in the award, was not based on the doctrine of estoppel but on an interpretation of the contract alone.

The respondent referred to the decision in Snoddy v Mavroudis [2013] IEHC 285 in which it was held that the court had only a ‘very limited jurisdiction’ to set aside an arbitral award which could only be done for a reason specified in article 34 of the UNCITRAL Model Law.

The issue for the Court to determine was whether or not the word ‘estoppel’ was used in its legal sense or in a more general fashion. Noting that clause 34(b) was fully argued by both parties, and referring to the decision of the Supreme Court in Galway City Council v Samuel Kingston Construction Limited and Anor [2010] IESC 18 where it was held that a court should set aside an award where the offending matter is so substantial or so fundamental that it would be clearly unjust to allow the award to stand, the Court held that the use of the offending term ‘estopped’ did not meet that threshold. The Court further held that the applicant had not satisfied article 34(2)(a) or article 34(2)(b) of the UNCITRAL Model Law and therefore refused the relief sought.

The Lisheen Mine v Mullock and Sons (Shipbrokers) Limited and Vertom Shipping and Trading BV [2015] IEHC 50 (High Court, Cregan J, 12 January 2015)

The High Court had to consider its jurisdiction (competence-competence) to decide whether an arbitration agreement existed and, in particular, to decide whether it should apply a prima facie test or a ‘full judicial consideration’ test.

A dispute arose between the plaintiff (a mining firm) and the defendants (ship brokers and ship owners) in relation to whether a framework agreement and a charter-party agreement had been agreed between the parties.

The plaintiff issued High Court proceedings seeking a declaration that it had not entered into any agreement with the defendants or if it was a party to such an agreement that it was entitled to rescind it and did so lawfully.

The second defendant (Vertom) sought an order staying the proceedings (pursuant to article 8 of the UNCITRAL Model Law and Order 56, Rule 3 RSC or pursuant to the inherent jurisdiction of the High Court) and also an order referring the proceedings to arbitration under the charter-party agreement which it contended had been agreed and which included an arbitration clause.

Vertom subsequently commenced separate arbitration proceedings against the plaintiff and Lisheen Milling Limited (a separate entity and party to the charter-party agreement) in London pursuant to the arbitration clause in the alleged charter-party agreement which Vertom alleged had been incorporated into the alleged framework agreement.

Referring to article 8 of the UNCITRAL Model Law, the Court noted that the effect of article 8(1) (together with the provisions of article 7) meant that before a matter could be referred to arbitration there had to be an arbitration agreement.

The Court observed that in order for Vertom to successfully argue that the proceedings should be stayed, and that the matter should be referred to arbitration, it would have to establish:

  • that there was a concluded framework agreement in place between the plaintiff and Vertom;
  • that there was also a valid charter-party agreement in place between the plaintiff (or Lisheen Milling Limited) and Vertom (because only the charter-party agreement had an arbitration clause); and
  • that the alleged charter-party agreement had been incorporated into the framework agreement.

The Court noted that article 16(1) of the UNCITRAL Model Law provided that an arbitral tribunal ‘may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement’. In this context, the Court referred inter alia to the decisions in Barnmore Demolition and Civil Engineering Limited v Alandale Logistics Limited and Others [2010] IEHC 544 where it was held that the arbitral tribunal’s power under article 16(1) does not mean that the Court does not have the power to consider and decide whether or not an arbitration agreement exists and the Court is not precluded from making such inquiry and deciding if there is such an arbitration agreement (under article 8) and in P Elliot and Company Limited (in receivership and in liquidation) v FCC Elliot Construction Limited [2012] IEHC 361 which considered similar issues.

For consideration by the Court was the exact nature of the jurisdiction of the Court in hearing such applications and, more particularly, whether the Court should consider if there was an arbitration agreement either on a prima facie basis or on a ‘full judicial consideration’ basis.

The Court observed that it would be unsatisfactory for a court having heard the matter fully argued before it, to only consider on a prima facie basis whether an arbitration agreement existed as it would be leaving open the essential question of whether there was an arbitration agreement between the parties on a final and conclusive basis. The Court further noted that conducting only a prima facie review would leave the matter open to the arbitrator who could decide it differently to the Court and that decision of the arbitrator would then be open to challenge by way of appeal on a point of law which would mean that the issue might come before the courts again. In addition, the Court stated that the question of whether there was an arbitration agreement was a question of law which was best decided by a court as it regularly dealt with these matters.

Applying the full judicial consideration test, the Court held that that there was neither a concluded framework agreement nor a concluded charter-party agreement between the parties. The Court further stated that even if this was the incorrect test to apply, and the appropriate test was the prima facie test, it was of the view that the prima facie test was also not satisfied by the defendant. The Court also observed that even if there was a valid framework agreement between the parties, it would not be appropriate to incorporate the arbitration agreement in the charter-party agreement into the framework agreement as the parties to those two agreements were not the same.

The Court thus refused the defendant’s application to stay the proceedings and to refer the dispute to arbitration.

Delargy v Hickey & anor [2015] IEHC 436 (High Court, Gilligan J, 24 June 2015)

The applicant entered into a combined contract for sale and building agreement with the respondents for the sale of a site and the construction of a crèche thereon. The parties also entered into a deed of indemnity whereby the respondents covenanted to ‘rectify and make good [...] all the Major Defects in the building notified to the builder during the Defects Period.’ The indemnity included a number of limitations on the respondents’ liability.

The combined contract for sale and building agreement contained an arbitration clause in the event of a dispute between the parties. Certain defects appeared in the property and arbitration ensued between the parties in relation to the applicant’s claim for damages arising from the defective construction of the property.

The pleadings closed following the issuing by the respondents of their points of defence. The arbitrator subsequently struck out the respondents’ defence on account of their failure to comply with an order for discovery and their refusal to take any further active involvement in the proceedings.

The arbitrator issued an interim award in favour of the applicant for such monies ‘as may be determined by [the arbitrator] to be due arising from the matters set out and claimed in the claimant’s Point of Claim’. The applicant delivered written submissions on the matter of quantum and costs, and in the absence of any further engagement by the respondents, the arbitrator made his final award in favour of the applicant in the sum of €101,200.

The applicant then sought, inter alia, leave of the Court to enter judgment in the terms of the award and to enforce same.

The respondents subsequently brought an application seeking, inter alia, to set aside the award, either in part or in full, pursuant to article 34 of the UNCITRAL Model Law and, in particular, article 34(2)(a)(iii) on the basis that neither the agreement nor the deed of indemnity gave the arbitrator jurisdiction to deal with a dispute on ‘major defects’. The respondents also relied on the provisions of article 31(2) and article 36 of the UNCITRAL Model Law.

The applicant submitted that if a party fails to participate in arbitral proceedings, having been given reasonable notice of the proceedings and having been given ample opportunity to present its case, the tribunal does not offend due process or commit a procedural error if it proceeds to determine the proceedings in the absence of the non-participating defaulting party. The applicant further argued that the respondents, having not participated in the arbitral proceedings after the issue of their defence, should be considered to have forfeited their right to resist the final award, particularly where they were informed of the order striking out their defence and also informed of the default interim award and remained silent throughout. The applicant also submitted that the arbitrator sufficiently articulated the reasons for his decision in accordance with article 31(2) of the UNCITRAL Model Law.

The Court observed that the respondents had the burden of proof in establishing a breach of article 34 of the UNCITRAL Model Law in circumstances where there was a presumption that the arbitral tribunal had acted within its mandate. The Court further noted that if the respondents met that burden it still had discretion whether or not to set aside or remit the final award taking all material facts into account.

The Court further observed that it would be against the spirit upon which the UNCITRAL Model Law was constructed, namely to avoid unnecessary legal costs through a process that should guarantee expediency, finality, and closure, if any party to an arbitral process could simply opt out of the proceedings, by reason of strategy or opportunism, and then step back in after the fact complaining of an error of due process. In addition, the Court noted that the respondents had failed to take any further action or to cooperate in any way with the arbitral process and were on notice of the course of action which the arbitrator proposed to follow.

The Court held that the respondents had forfeited their right to raise any objections after the final award was delivered and that while it accepted that the arbitrator could have expanded on the reasoning in the award, the respondents’ points of defence were struck out, and judgment was entered in favour of the applicant in circumstances which would not be dissimilar to the reasons which might ordinarily be given in a default judgment handed down by a court. The Court stated that it did not consider that the respondents had suffered any possible injustice in the award handed down and noted that the requirement for due process was not intended to protect a party from its own failures or strategic choices. Accordingly, the Court refused the respondents’ application to set aside the award.

Mayo County Council v Joe Reilly Plant Hire Limited [2015] IEHC 544 (High Court, McGovern J, 31 July 2015)

The applicant sought a declaration pursuant to Order 56, Rule 1(3)(f) RSC and article 16(3) of the UNCITRAL Model Law, that an arbitrator had no jurisdiction to arbitrate a dispute under a works contract.

The applicant made a payment to the respondent which the respondent subsequently cashed without qualification. The applicant argued that because the respondent had accepted the payment without qualification there was accord and satisfaction. It was common case that there was no agreement signed by the parties acknowledging that monies were paid or accepted in full and final discharge of any sums due.

When the conciliation process failed, the respondent referred the matter to arbitration pursuant to the arbitration clause in the contract. The applicant advised the respondent that it contested the arbitrator’s jurisdiction to proceed with an adjudication. The applicant did not dispute the existence of the arbitration clause nor did the applicant dispute that the matter was outside the scope of the arbitration clause. A preliminary issue was raised before the arbitrator on his jurisdiction to determine the dispute and the arbitrator ruled that he had the necessary jurisdiction. The applicant challenged the arbitrator’s ruling pursuant to article 16(3) of the UNCITRAL Model Law.

The Court held that the arbitrator was entitled to embark upon a preliminary hearing as to whether or not he had jurisdiction to arbitrate the dispute and that the arbitrator could determine whether there was accord and satisfaction. The Court also held that if an issue of accord and satisfaction arose, this was a defence to the claim made by the respondent in the arbitration and did not go to the issue of the arbitrator’s jurisdiction. The Court also stated that in circumstances where the existence of an arbitration clause was not in dispute, and having regard to the competence-competence principle, the courts would be very slow to interfere with the arbitrator’s ruling on his own jurisdiction. The Court thus refused the relief sought by the applicant.

Other cases to note:

  • Franmer Developments Limited v L&M Keating & Ors [2014] IEHC 295 (High Court, Ryan J, 4 June 2014).
  • Yukos Capital SARL v OAO Tomskneft VNK [2014] IEHC 115 (High Court, Kelly J, 13 March 2014).
  • Fayleigh Ltd v Plazaway Ltd (trading as Hotel Partners) and Francis Murphy [2014] IEHC 52 (High Court, Ryan J, 11 February 2014).
  • Snoddy & Ors v Mavroudis & Anor [2013] IEHC 285 (High Court, Laffoy J, 19 June 2013).
  • Mount Juliet Properties Ltd v Melcarne Developments Ltd & Ors [2013] IEHC 286 (High Court, Laffoy J, 19 June 2013).
  • P Elliot & Co Limited v FCC Elliot Construction Limited [2012] IEHC 361 (High Court, MacEochaidh J, 28 August 2012).
  • Danish Polish Telecommunication Group I/S v Telekomunikacja Polska SA [2011] IEHC 369 (High Court, Finlay Geoghegan J, 6 October 2011).

Notes

    1. Unlike some other jurisdictions that have adopted the UNCITRAL Model Law a la carte, Ireland has adopted the UNCITRAL Model Law wholesale into the 2010 Act, with any supplementary provisions unique to Irish law set out in the body of the 2010 Act (a mere 32 provisions).