Sascha Wil­son

A High Court judge has set aside the $850 mil­lion ar­bi­tra­tion award to Brazil­ian-firm Con­struc­to­ra OAS SA over the Solomon Ho­choy High­way ex­ten­sion project.

In a writ­ten rul­ing in favour of the Na­tion­al In­fra­struc­ture De­vel­op­ment Com­pa­ny Ltd (Nid­co) yes­ter­day, Jus­tice Frank Seep­er­sad or­dered the mat­ter re­mit­ted to the Lon­don Court of In­ter­na­tion­al Ar­bi­tra­tion for fur­ther con­sid­er­a­tion. OAS was al­so or­dered to pay costs to be as­sessed by a mas­ter in de­fault of an agree­ment.

Seep­er­sad found that on the face of the award, the tri­bunal fell in­to er­ror and/or dis­re­gard­ed, or mis­con­strued the law and failed to prop­er­ly eval­u­ate the ev­i­dence.

Seep­er­sad said, “Hav­ing re­viewed the ev­i­dence which is be­fore the tri­bunal, this court is res­olute in its view that no rea­son­able ar­bi­tra­tor cog­nisant of the law and seized of the ev­i­dence ad­duced could have ar­rived at the po­si­tion re­flect­ed in the award.

“In the cir­cum­stances, this Court, with­out fear or hes­i­ta­tion, must ex­er­cise its in­her­ent ju­ris­dic­tion and dis­charge its oblig­a­tion to de­fend the rule of law and to pro­tect the pub­lic in­ter­est. Con­se­quent­ly, the com­mer­cial de­ci­sion re­flect­ed in the con­tract to have dis­putes de­ter­mined by the ar­bi­tra­tor has to be over­rid­den and the Court must set aside the award, as same was premised up­on find­ings which were un­sup­port­able on the ev­i­dence, in­con­sis­tent with the law and are de­ci­sions which no rea­son­able ar­bi­tra­tor could have ar­rived at.”

On April 16, ar­bi­tra­tors John Fel­las, Adam Con­sta­ble, KC, and An­drew White, KC, up­held OAS’s ar­bi­tra­tion claim against Nid­co and or­dered US$126.3 mil­lion in com­pen­sa­tion. This in­clud­ed dam­ages for per­for­mance and re­ten­tion se­cu­ri­ties, a se­ries of un­paid in­ter­im pay­ment cer­tifi­cates (IPCs), ma­te­ri­als in stock, tem­po­rary works and con­tract­ing equip­ment.

How­ev­er, Nid­co filed a law­suit in the lo­cal courts seek­ing to have the award set aside and re­mit­ted to the tri­bunal. Rep­re­sent­ing Nid­co, British King’s Coun­sel An­neliese Day sub­mit­ted that the ar­bi­tra­tors made er­rors when as­sess­ing the case and failed to pro­vide rea­sons why it ig­nored ev­i­dence which sup­port­ed Nid­co’s con­tentions. OAS at­tor­ney Rol­ston Nel­son had coun­tered that the judge should not en­ter­tain the case based on a clause in the con­tract be­tween the par­ties, which stat­ed that they would re­solve their dis­putes sole­ly through the ar­bi­tra­tion process.

In his judg­ment, Seep­er­sad point­ed to var­i­ous ar­eas of the award where he found the tri­bunal failed to put for­ward a po­si­tion, prop­er­ly eval­u­ate or make a find­ing on the ev­i­dence and con­tentions put for­ward by Nid­co.

“The Tri­bunal had an oblig­a­tion to crit­i­cal­ly re­view all the in­for­ma­tion be­fore it and to ex­plain why the Claimant’s ar­gu­ments and ev­i­dence were re­ject­ed. How­ev­er the award does not re­flect that such a mea­sured eval­u­a­tion of the ev­i­dence was en­gaged,” Seep­er­sad said.

One of the tri­bunal find­ings the judge ze­roed in­to was at para­graph 283, where the pan­el out­lined the doc­u­ments it said il­lus­trat­ed the fact that OAS con­tin­ued to work on the project af­ter Oc­to­ber 2015.

The judge, how­ev­er, said, “The tri­bunal po­si­tion stands in di­rect con­flict with the doc­u­men­tary ev­i­dence which was be­fore it and re­gret­tably, there was no rea­soned rec­on­cil­i­a­tion of the com­pet­ing po­si­tions.”

He al­so found that the tri­bunal’s han­dling of cer­tain is­sues were fun­da­men­tal­ly flawed and un­sound.

Seep­er­sad said, “As an ar­biter of fact, the Tri­bunal ought to have clear­ly and com­pre­hen­sive­ly ex­plained why it re­ject­ed Nid­co’s ev­i­dence and sub­mis­sions that the com­pound­ing of OAS’s cred­i­tors was a cir­cum­stance which gave to NID­CO a right to ter­mi­nate un­der Clause 15.2 (e). This oblig­a­tion was ev­i­dent­ly more height­ened giv­en that the Tri­bunal’s find­ings ap­pear to con­tra­dict both the ev­i­dence and the like­ly in­tent of the said clause.”

OAS was award­ed the project con­tract in 2011 at an es­ti­mat­ed cost of $5.3 bil­lion un­der the Peo­ple’s Part­ner­ship gov­ern­ment. The con­tract was ter­mi­nat­ed in Ju­ly 2016, af­ter Nid­co ac­cused OAS of aban­don­ing the project. OAS, how­ev­er, de­nied this and claimed the prob­lems on the project were caused by NID­CO’s pay­ment de­faults.

In Ju­ly 2019, the Gov­ern­ment an­nounced a Com­mis­sion of En­quiry chaired by Jus­tice Se­bastien Ven­tour to in­ves­ti­gate more than $500 mil­lion be­ing spent on land ac­qui­si­tion for the high­way project.

Af­ter the OAS con­tract was ter­mi­nat­ed, the project was put on hold for sev­er­al years be­fore be­ing restart­ed with lo­cal con­trac­tors. Sub­se­quent to Nid­co’s an­nounce­ment last year that the project was three-quar­ters com­plete, a seg­ment of the high­way at Mos­qui­to Creek col­lapsed.

Nid­co’s le­gal team in­clud­ed Day KC and Ja­son Mootoo, in­struct­ed by Mar­celle Fer­di­nand, and Hugh Saun­ders, while OAS was rep­re­sent­ed by Nel­son SC and Ria Mo­hammed-David­son, in­struct­ed by Gre­go­ry Pan­tin and Miguel Vasquez.