TRICO MARITIME (PVT) LIMITED v. CEYLINCO INSURANCE CO. LIMITED

011-SLLR-SLLR-2010-V-1-TRICO-MARITIME-PVT-LIMITED-v.-CEYLINCO-INSURANCE-CO.-LIMITED.pdf


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Trico Maritime (pvt) Limited v. Ceylinco Insurance Co. Limited
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TRICO MARITIME (PVT) LIMITEDV. CEYLINCO INSURANCE CO. LIMITEDSUPREME COURTSHIRANEE TILAKAWARDANE, J.,
SRIPAVAN J. ANDRATNAYAKE, J.
S.C. APPEAL NO. 101/2005S. C. (SPL.) L. A. NO. 201/2005H. C./ARB/NO. 1961/2004DECEMBER 7™, 2009
Arbitration Act, No. 11 of 1995 – Application for setting aside Arbitralaward – Section 35(1) – Power to consolidate an application to setaside with an application to enforce an award – Actus curiae ncminumgravabit – An act of Court should not prejudice any man – Default inappearance – Can the award be set aside?.
Trico Maritime (pvt) Limited filed an application in the High Court,Colombo in terms of the Arbitration Act to have the majority award ofan Arbitral award enforced. Ceylinco Insurance Co. Limited who wasserved with notice, filed objections stating inter alia, that the arbitrationaward sought to be enforced has already been set aside by Court. Afterinquiry, the High Court upheld the said objection and dismissed theapplication for enforcement of the award. Trico Maritime has filed thisappeal to set aside the above-mentioned order of the High Court.
The Supreme Court granted Leave to Appeal against the order of theHigh Court.
The Petitioner sought to challenge the judgment mainly on the groundthat the High Court has failed to consolidate the two applications,HC/ARB/1848/2003 and HC/ARB/1961/2004 made by thePetitioner and the Respondent, in terms of section 35(1) of theArbitration Act, No. 11 of 1995.
Held
(1) The law contemplates the consolidation of applications made toset aside the award and to enforce the award. It is an accepted
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norm in the jurisprudence of this country that “actus curiaenemium gravabit” meaning, an act of Court should not prejudiceany man. If the Court has not consolidated both applications aparty should not suffer as a consequence of the Court not doingwhat it should do in terms of the law. It is the duty of the HighCourt to consolidate the two applications and take them uptogether.
(2) Default in appearance of the Respondent is not a ground on whichan arbitral award can be set aside under Section 32(1) of theArbitration Act, No. 11 of 1995.
Cases referred to:
United Plantation Workers’ Union v. The Superintendent CraigEstate Bandarawela – 74 NLR 499
Madurasinghe v. Madurasinghe – (1988) 2 Sri L.R. 142
Sili Nona v. Dayalal Silva and Others – (1992) 1 Sri L.R. 195
The Young men's Buddhist Association v. Azeez and Another -(1995) 1 Sri L.R. 237
APPEAL from the judgment of the High Court of Colombo.
D. S. Wijesinghe, P.C., with Kaushalya Molligoda for the Petitioner.
Sivarasa, P.C., with N. R. Sivendran for the Respondent.
Cur.adv.wj.lt.
RATNAYAKE. J.The Petitioner in this appeal is seeking to set asidethe judgment of the High Court of Colombo by which itsapplication for enforcement of an Arbitral award wasdismissed.
The Petitioner is a Company by the name of Trico Maritime(Pvt) Ltd., (hereiafter referred to as ‘Trico Maritime’) which
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7Ytoo Maritime (pvt) Limited v. CeyUnoo Insurance Co. Limited
(Ratnayake. J.)
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had an insurance policy with the Respondent by the name ofCeylinco Insurance Company Ltd. (hereinafter referred to asthe ‘Ceylinco Insurance’) .The sum insured by the said policyat the relevant date was Rs. 58 million. In April 1999, thePetitioner submitted a claim to the Respondent for a loss thatoccurred due to the premises going under water. The CeylincoInsurance paid a sum of Rs. 10 million to Trico Maritime inrespect of the claim but Trico Maritime referred the matterfor Arbitration in terms of the Arbitration Clause in the poli-cy as Ceylinco Insurance has not met the entire claim. Afterinquiry two out of the three arbitrators delivered a joint awardon 22nd October 2003 granting relied to the Trico Maritimeand the other arbitrator delivered a separate award.
The Ceylinco Insurance made an application on 15thDecember 2003 to the High Court of Colombo in case bearingNo. HC/ARB/1848/2003 to set aside the said awards,inter alia on the basis that the arbitrators had no jurisdic-tion to make the awards. The Ceylinco Insurance supportedthe application on 19.12.2003 and the Court issued noticeon Trico Maritime to show cause as to why the arbitrationawards should not be set aside. According to the case recordthe notice has been served on Trico Maritime but it failed toappear on application of Ceylinco Insurance, the High Courtset aside the arbitral award by its Order dated 20th May 2004and the subsequent decree dated 11th November 2004.
The Petitioner, namely Trico Maritime filed an applicationon 18th May 2004 in the High Court of Colombo in casebearing No. HC/ARB/1961/2004 under Part VII of theArbitration Act No. 11 of 1995 to have the majority awardenforced. Ceylinco Insurance who was served with noticefiled objections and took up the position, inter alia that thearbitration award sought to be enforced has already been set
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aside by Court. After inquiry, the High Court upheld the saidobjection and by its Judgment dated 1st August 2005dismissed the application. Consequently Trico Maritimehas filed this appeal to set aside this judgment of the HighCourt.
This Court has granted Leave to Appeal on 23rd November2005 and the proceedings to the said date state as follows:-
“parties agree that the questions of law that have beenformulated in the Petition will not arise. However the newquestion of law was raised;
“Did the Learned High Court Judge err in law indismissing the Petitioner’s application for enforcement ofthe arbitral award on the basis of the order dated 20.05.04and the decree dated 11.11.04 in HC/ARB/1848/2003 ofthe same High Court”
At the hearing before Court Counsel for the Petitionersought to challenge the judgment of the High Court on manygrounds.
He took up the position inter alia that the High Courthas failed to consolidate the two applications i. e. HC/ARB/1848/2003 and HC/ARB/1961/2004, in terms ofSection 35(1) of the Arbitration Act No. 11 of 1995.
According to the pleadings before Court, HC/ARB/1961/2004 was filed on 18th May 2004. The Order toenter the judgment as prayed for in HC/ARB/1848/2003was made only on 20th May 2004. Therefore at the applicationfor enforcement in this case was made to the High Court, theapplication to set aside the award in HC/ARB/1848/2003 waspending before the same High Court. In the circumstances,
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the High Court should have consolidated both applications interms of Section 35(1) of the Arbitration Act.
Section 35(1) of the Arbitration Act states as follows:-
*Where applications filed in Court to enforce an award
and to set aside an award are pending, the Court shall
consolidate the applications.”
If the Court consolidated the applications as required bythe above provision, there may not have been a default inappearance by the Petitioner Trico Maritime.
An argument was advanced by the Respondent CeylincoInsurance to the effect that the Court could not have knownthat an application to enforce the award had been filed priorto the order made on 20th May 2004 as the application toenforce the award was filed only on 18th May 2004. It is amatter for the Administration of the High Court to haveprocedures in place to ensure that such applications arebrought to the notice of Court without delay.
The Ceylinco Insurance has also taken up the positionthat Trico Maritime should have brought to the notice ofCourt the pending application to set aside the award whenit made its application to enforce the award. The PetitionerTrico Mealtime has taken up the position that it has notbeen served with notice prior to the ex-parte judgment inHC/ARB/1848/2003. Therefore the Court cannot find faultwith the Petitioner for not disclosing HC/ARB/1848/2003when application HC/ARB/1961 /2004 was filed.
The law contemplates the consolidation of applicationsmade to set aside the award and to enforce the award. It is
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an accepted norm in the jurisprudence of this country that“actus curiae neminum gravabit” meaning, an act of Courtshould not prejudice any man [United Plantation Workers1Union vs. The Superintendent Craig Estate Bandarawelaw,Also-Madurasinghe vs. Madurasinghd® – SiliNona vs.DayalalSilva & Others/® – The Young Mens1 Buddhist Associationvs. Azeez & Another®. Therefore, if the Court has not consoli-dated both applications a party should not suffer as a conse-quence of the Court not doing what it should do in terms ofthe law. In the circumstances this Court is of the view thatboth applications i.e. HC/ARB/1848/2003 and HC/ARB1961 /2004 be consolidated and taken up together.
At this stage it is necessary to consider the merits of theOrder of the High Court in HC/ARB/1848/2003 dated 20thMay 2004 and the consequent decree dated 11th November2004 by which the arbitration award was set aside. Theproceedings in HC/ARB/1848/2003 of 20th May 2004 asappearing in the document annexed by the Petitioner to itspetition dated 12th September 2005 marked as ‘A9* are asfollows:-
“IN THE HIGH COURT OF THE WESTERN PROVINCEOF THE DEMOCRATIC SOCIALIST REPUBLIC OFSRI LANKA(holden in Colombo)
Before:S. Srikandarajah Esquire – High Court Judge
Court No. 01
Case No: HC/ARB 1848/2003Date:20.05.2004
Attomey-at-law Mr. R. I. Thambirathnam withAttorey-at-Law Mr. N. R. Sivendran instructedby Mala Sabarathnam appear for the Respon-dent-Petitioner.
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Trico Maritime pvt) Limited v. CeyUnco Insurance Co. Limited
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Mr. Sivendran appearing for the Respondent-Petitionerstates as fbUows:-
aI move to support the motion that have been filed by theRespondent-Petitioner dated 17.05.2004. In this casenotice was issued on Claimant-respondent returnable on31.03.2004. According to the fiscal report that have beenfiled the said notice regarding in this action has been servedon the claimant-respondent prior to the' 31.03.2004. Thenotice has been served on the Manager of the claimant-respondent who is the principal officer of the respondentcompany. In the circumstances I respectfully state that asthe claimant-respondent was not present on 31.03.2004the respondent is in default and the Petitioner entitled to arelief that the petitioner has prayed for in the prayer to thepetition filed in Your Honour’s Court.
Order
Enter judgment as prayed for in the prayer to the petition.Enter decree accordingly.
Sgd.
S. SriskandarajahHigh Court Judge of theWestern Province – Colombo”
The decree dated 11th day of November 2004 of the HighCourt in Application HC/ARB/1848/2003 as appearingin the document annexed marked “A7” to the Petitioner’spetition is an follows
• HC/ARB/1848/2003
This action coming on for final disposal before HonourableS. Sriskandarajah Esquire High Court Judge of Colombo on
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the 2041 May2004in the presence of Mr. R. E. ThambirathnamAttomey-at-Law with Mr. N. R. Sivendran Attomey-at-Law Instructed by Ms. Mala Sabaratnam on the part ofthe Respondent-Petitioner and the Claimant-Respondentbeing absent on the notice returnable dated 31-03-2004,although the notice was served properly on the Managerof the Claimant-Respondent Company requesting themto appear on 31.03.2004 and hearing the submissions ofAttomey-at-Law for Respondent-Petitioner.
It is ordered and decreed that the award of the 1st, 2nd 8s3rd Arbitrators – Respondents dated 22nd October 2003 ishereby set aside.
It is ordered and decreed that 1st, 2nd & 3rd Arbitrators-Respondents have no jurisdiction to hear and make anaward in respect of prayers (a) and (b) of the statement ofclaim and that the Respondent- Petitioner is entitled to thecosts of this action.
Sgd.
High Court Judge of theWestern Province, Colombo
On this 11th day of November 2004
Drawn by: Sgd. Attomeys-at-Law for the Respondent-Petitioner. ”
Section 32 (a) of the Arbitration Act of No. 11 of 1995permits a High Court to set aside an arbitral award onlyin limited circumstances in the following manner.
Section 32(1)“An arbitral award made in an arbitration held in Sri Lankamay be set aside by the High Court, on application made there-fore, within sixty days of the receipt of the award –
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Where the party making the application furnishes proof
that –
a party to the arbitration agreement was under someincapacity or the said agreement is not valid under thelaw to which the parties have subjected it or, failingany indication on that question under the law of SriLanka; or
the party making the application was not given propernotice of the appointment of an arbitrator or of thearbitral proceedings or was otherwise unable topresent his case; or
(Hi) The award deals with a dispute not contemplated byor not falling within the terms of the submission toarbitration, or contains decisions on matters beyondthe cope of the submission to arbitration;
Provided however that, if the decision on matterssubmitted to arbitration can be separated from thosenot so submitted, only that part of the award whichcontains decision on matters not submitted to arbitra-tion may be set aside; or
The composition of the arbitral tribunal or the arbitralprocedure was not in accordance with the agreementof the parties, unless such agreement was in conflictwith the provisions of this Act, or, in the absence ofsuch agreement, was not in accordance with theprovisions of this Act; or
Where the High Court finds that –
(i) the subject matter of the dispute is not capable ofsettlement by arbitration under the law of Sri Lanka;
or
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(ii) the arbitral award is in conflict with the public policy ofSri Lanka.9
Default in appearance of the Respondent is not a groundon which an arbitral award can be set aside under the aboveprovision.
In the decree of 11th November 2004 the Court has*'further ordered and decreed that 1st, 2nd & 3rd arbitrators -Respondents have no jurisdiction to hear and make an awardin respect of prayers (a) and (b) of the statements of claim
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In accordance with the proceedings of 20th May 2004 asappearing in document ‘A9’ the Petitioner has not made anysubmission on the question of lack of jurisdiction of the 1st,2nd & 3rd Arbitrators. His only application has been to grantrelief as prayed for solely based on the default in appearanceof the Respondent. In fact the Petitioner has only moved “tosupport the motion that have been filed by the Petitionerdated 17.05.2004”. This motion dated 17.5.2004 is annexedto the Petitioner’s petition marked as ‘A8’. It is observed fromthe case record that a copy of this motion has not been servedon the Claimant-Respondent of the said case. In any eventthe said motion dated 17.05.2004 annexed to the Petitioner’spetition marked as ‘A8’ states as follows:
“HC/ARB/1848/2003
To: The Honourable High Court Judge of the DemocraticSocialist Republic of Sri Lanka sitting at Colombo.
Whereas notice of this action was issued on the Claimant-Respondent by Court and whereas notice was handedover on the Claimant-Respondent's Manager through theFiscal of this Court.
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And Whereas according to the notice served on theClaimant- Respondent notice returnable was on 31st March,2004
And Whereas on 31st March, 2004 the Claimant-Respon-dent was not present and/or was not represented inCourt.
And whereas the Claimant-Respondent-had not shown anyground as to why the relief claimed for by the Respondent-Petitioner in the Respondent-Petitioner’s petition to YourHonour’s Court should not be granted.
And whereas in the circumstances the Claimant-Respondent is in default and the relief claimed for by theRespondent-Petitioner in the prayer to the petition shouldbe granted.
We respectfully move that Your Honour’s Court be pleasedto mention this matter on 20h May 2004 to enable Counselfor the Respondent- Petitioner Mr. R. B. Thambiratnam tosupport this application.
On this 17th day of May, 2004.
Sgd.
Attomeys-at-Law for theRespondent-Petitioner”
Accordingly it is clear that there was no application bythe Petitioner in this case on 20th May 2004 for an orderon the lack of jurisdiction of the 1st, 2nd, & 3rd Arbitrators-Respondents. The only application has been to set asidethe arbitration award based on the default in appearanceof the Respondent. Submissions have not been made by thePetitioner in terms of the reasons and grounds contained in
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the substantive application dated 15th December 2003 filedin the High Court. The proceedings of 20th May 2004 thedecree of 11th November 2004 or the motion of 17th May 2004do not contain any material to show that the reasons andgrounds contained in the substantive application dated 15thDecember 2003 or the aspect of the lack of jurisdiction wasconsidered by Court when making the aforesaid order anddecree.
Due to the above reasons, this Court
sets aside the order dated 20th May 2004 and the decreedated 11th November 2004 in Application bearing No.HC/ARB/1848/2003.
Sets aside the judgment of the High Court dated 1st August2005 in Application bearing No. HC/ARB/1961/2004;and
Directs the High Court to consolidate both applicationsnamely HC/ARB/1848/2003 and HC/ARB/1961/2004and to hear and determine the consolidated applicationin terms of the law.
In all the circumstances of this case the parties to beartheir own costs.
TILAKAWARDANE, J. – I agree.SRIPAVAN, J. – I agree.
Appeal allowed.
Directions issued.