MADAM ABI HARUNA AND DELIAN SHENGAI OCEAN FISHERY CO.LTD (122)  SLHC (15 December 2015);
IN THE HIGH COURT OF SIERRA LEONE
COMMERCIAL AND ADMIRALTY DIVISION
FAST TRACK COMMERCIAL COURT
MADAM ABI HARUNA -PLAINTIFF
DALIAN SHENGAI OCEAN FISHERY CO. LTD - DEFENDANT
Sahid Sesay & Partners -Counsel for the Plaintiff
BEFORE THE HON. MR. JUSTICE SENGU M. KOROMA J.
RULING DELIVERED ON THE DECEMBER, 2015
This is an application by way of Notice of Motion dated the 19th day if November, 2015 for the following Orders:-
- That leave be granted for this application to be heard notwithstanding that a two clear day notice has not been given.
- An interim stay of execution of the Order of Court dated the 13th day of November, 215 before the Honourable Justice Sengu Koroma J. and all subsequent proceedings pending the hearing and determination of this application.
- A stay of execution of the Order of the Court dated the 13th day of November, 2015 before the Honourable Justice Sengu Koroma J. and all subsequent proceedings pending the hearing and determination of this matter.
- That the action brought against the Defendant in the Writ of Summons FTCC 122/2015 2015 H. No. 153 dated the 10th day of November, 2015 be struck out for want of jurisdiction by this Honourable Court.
- That the action brought against the Defendant in the Writ of Summons FTCC 122 122/2015 2015 H. No. 153 dated the 10th day of November, 2015 be struck out on the ground that Sierra Leone is not a convenient forum for the determination of the dispute between the Plaintiff and the Defendant as stated in Article 25 of their corporation agreement dated the 1st April, 2015.
- Any other Order (s) that this Honourable Court may deem fit and just.
- That costs of this application be costs in the cause.
- The Defendant used and relied on the Affidavit of Lamin Mohamed Banyoh Esq. sworn to on the 17th day of November, 2015.
- The Plaintiff opposed the application and used and relied on the Affidavit of Mohamed Sahid Sesay Esq. sworn to on the 20th day of November, 2015.
- By a specially indorsed Writ of Summons witnessed the 5th day of November, 2015, the Plaintiff claimed against the Defendant the following:
- Recovery of the sum of US $33,756.870.00 as payments due and owing the Plaintiff under a contract of services for the provision of license, monetary payments for 8 fishing vessels and other services rendered by the Plaintiff to the Defendant’s fishing business in Sierra Leone.
- Damages for breach of contract
- Interest on the said current of US $ 33,756870/00 pursuant to Section 4 of the Law of Reform (Miscellaneous Provisions) Act Cap 19 of the Laws of Sierra Leone, 1960 at such rate and for such period as the Court shall determine US $ 26,640,000.00
- Any further or other Orders that this Honourable Court may deem fit and just and expedient in the circumstances.
- By a Notice of Motion dated the 10th day of November, 2015, the Plaintiff prayed this for an Order for the issuance of warrants of Arrest of the Defendant’s vessels SHENGAI 1, 2, 3, 5, 6, 7, 8 and 9 lying in the territorial waters of Sierra Leone and for the said vessels to be kept under safe arrest until the Defendants herein owners or persons interested in the said vessel shall have given sufficient security for the satisfaction of the Plaintiff’s claim herein exceeding US $ 30,000,000.00 or until final satisfaction of the action herein. The application was heard on the 13th day of November, 2015 and the Orders prayed for were granted.
- The Defendant entered an appearance to the said Writ of Summons on the 17th November, 2015.
I will briefly comment that the said Memorandum and Notice of Appearance was not entered into at the “Mater’s Office High Court, Freetown” but at the “Office of the Deputy Master and Registrar, Fast Track Commercial Court, Freetown.”
- The Defendant filed a Notice of Motion dated 17th day of November, 2015 praying for an interim and filed a stay of execution of the Order of this Court dated 13th November, 2015, that the action be struck out for want of jurisdiction and that Sierra Leone is not a convenient forum.
At the hearing of this application, Counsel for the Plaintiff took a jurisdictional objection based on the provisions of Order 8 Rule 3 of the High Court Rules, 2007. The preliminary objection was upheld in a ruling of this Court dated the 19th November, 2015.
THE PRESENT APPLICATION
The present application came up for the hearing on the 24th November, 2015. The said application was hotly contested.
As I have earlier on in this ruling stated, the Defendant used and relied on the Affidavit of Lamin Mohamed Bayoh. The deponent in the said Affidavit swore as follows, amongst others:
- That the Plaintiff and the Defendant signed a co-operation agreement which set out in details the mode and scope of their relationship in terms of their fishing operations in Sierra Leone.
- That by Article 25 of the said Corporation Agreement both the Plaintiff and the Defendant had agreed that in the event of any dispute same should be governed by the rules of China International Economic and Trade Arbitration Commission (CIETAC) or by a Court in Hong Kong-Exhibit LMB 7.
- That the Plaintiff has not referred its dispute with the Defendant to arbitration but has rather instituted proceedings in Sierra Leone.
- That the Plaintiff had invoked the provision of the Corporation Agreement in a letter to the Managing Director of the Plaintiff Company dated the 5th day of November, 2015 in Exhibit LMB9.
- That China is a more convenient forum to determine the dispute
- That the action against the Defendant be struck out for want of jurisdiction. In his submission, Counsel for the Defendant argued that the Plaintiff ought to have sought an amicable settlement of the dispute in China or Hong Kong before instituting proceedings in Sierra Leone. He relied on the cases of CHRISTIAN OGOO CIV. APP. 31/2010, Court of Appeal and RE LEYLAND DAF Ltd, TALBOT & ANOR-V-EDCREST LTD (1994) BCC. He concludes that the Plaintiff having signed Exhibit LMB 7 should be stopped from going against the spirit and intent on the said agreement.
The Plaintiff opposed the application and filed an Affidavit in opposition sworn to on the 20th day of November, 2015. In the said Affidavit, the deponent deposed as follows:-
- That the Defendant is now seeking to invoke clauses on an agreement that it had unilaterally revoked-Exhibits “SMS 2 1-4,” “SMS 3 1-2”, “SMS 4 1-2” and “SMS 5 51-4” respectively.
- That the vessels herein had been the subject of an arrest. That arrest was never the subject-matter of such an application. The Plaintiff mortgaged her property for the release of the said vessels relying on the Defendant’s promise that her complaints will be looked into and settled.
- The claim of the Plaintiff is huge and the Defendant by its own admissions have no properties in Sierra Leone and so in Order not to render any Judgment nugatory, the Plaintiff has applied for the vessels, the only property of the Defendant in Sierra Leone to be put in safe security.
- That the Order of this Court dated 13th November, 2015 was yet to be effected as the Defendant was evading due process
- That there is no rule of law stating that the provision of an agreement has the effect of ousting the jurisdiction of this Honourable Court.
In his submissions, Counsel for the Plaintiff raised the following issues-
- Can the jurisdiction of the Admiralty Court be invoked where the processes issued have not been served. He submitted that until the processes have been especially the writ, the jurisdiction of the Admiralty Court cannot be effectively invoked. He relied on the case of RIGA SHIPYARDS-V-THE OWNERS AND/OR PERSONS INTERESTED IN THE VESSEL M/V REDCAT CC105/12 Unreported in which BROWNE-MARKE J.A (as he then was) sitting as a High Court Judge said “The jurisdiction of the Admiralty Court is invoked by service of a writ…from that moment, the parties are in rem…”
- Whether a litigant who unilaterally abrogates the clauses of an agreement embodying a contractual relationship with another avail himself of an agreement to unilaterally abrogate it. Counsel for the Plaintiff contended that the Defendant had by Exhibit terminated their contract with the Plaintiff and so it follows that the terms of that agreement were no longer operative. He referred the Court to Exhibits SMS1 1-4, SMS 2 1-2, SMS 3 1-2 and SMS 4 1-2 respectively. Counsel for the Plaintiff further submitted that the Defendants have no property in Sierra Leone. Counsel in addition cited the following authorities:-
- TECHNOSCAVI –V-CIVIL ENGINEERING COMPANY & ANOR. CC 424/2007 (Unreported)
- SEACOR COMMODITY TRADING LLC-V- OWNERS AND/OR PERSONS INTERESTED IN THE VESSEL M/V PRAPHATHEPPRARAT CC 67/2013 (Unreported)
- SIDIE INVESTMENT LTD-V-SIERRA RUTILE LIMITED
- LONDON N.W RYL CO V JONES (1915) 2 KB 35.
Umaru Koroma Esq., Counsel for the Defendant filed an Affidavit in reply. In the said Affidavit, the deponent averred that one of the vessels had been arrested. He contended that the Plaintiff ought to have invoked Article 25 of the Co-operation Agreement when it received the letter of termination of the contract rather than resorting to litigation.
I have carefully read the various Affidavits and submissions made by Counsel on both sides. I have also studied the various authorities cited. Before proceedings to draw my conclusions, I shall deal with an issue which was hotly contested by both parties, that is whether an Arbitration clause would survive after the main contract has been terminated.
The current position of our law on this is that a party cannot enjoy the benefits of a subordinate clause in the contract that has cease to exist. Thus, if a contract having an Arbitration clause has been terminated, a party cannot insist on proceeding to Arbitration on that contract. This was laid down by the Court of Appeal in the case of KABIA V KAMARA (1967-68) ALR S.L . In this case, Sir Bankole-Jones had this to say “A party to an alleged contract who wholly repudiates it by declaring that it does not exist cannot avail himself of an arbitration clause in it…” The principle herein was applied in the case of RIGA SHIPYARDS –V- OWNERS AND/OR PERSONS INTERESTED IN THE VESSEL M/V REDCAT CC 105/2012. While this is the existing law, it is my view that it is out of touch with reality. This reality has been established by the English House of Lords in the case of FIONA TRUST & HOLDING CORPORATION –V-PRIVALOV & ORS (2007) 2 ALL ER 1053 where it was held that the main agreement and the arbitration agreement should be treated as having been separated concluded and that the arbitration clause could be invalidated only on a ground which related to the arbitration agreement and not merely a consequence of the invalidity of the main agreement. The doctrine of separability required direct impeachment of the arbitration agreement before it could be set aside. Although this matter was decided under the English Arbitration Act, 1996, the principle stated therein had been established by the English Court of Appeal in HABOUR ASSURANCE CO. (UK)LTD-V-KANSA GENERAL INTERNATIONAL ASSURANCE CO LTD (1993) 3 ALL ER 897. What the 1996 did was merely restate the said principle in statutory form, it will be important for the development of our law for this issue to be tested in a higher Court.
QUESTION FOR DETERMINATION
The main question for determination here is whether there is any conceptual reason why the parties who have agreed to submit any dispute arising out of there conceptual relationship to arbitration should not be allowed to do so. Before answering this question, I shall comment on the application filed by the Defendant. The main prayers therein are that the Writ of Summons filed by the Plaintiff be struck out on the grounds that Sierra Leone is not a convenient forum for the determination of the dispute between the parties as stated in Article 25 of their Cooperation Agreement dated 1st April, 2015 and also that the said Writ of Summons be struck out for want of jurisdiction. It is my view that the correct application in seeking the reliefs herein is to apply for a stay. This view has judicial support in an obiter-dictum of Brandon J in the ELEFTHERIA (1969) 2 ALL ER 64. Be that as it may, I shall now determine whether this matter ought to proceed to Arbitration or be tried by our Courts in Sierra Leone.
Article 25 of the Agreement dated the 1st day of April, 2015 provides as follows:-
“ALL disputes and differences arising out of or in connection with the Agreement which were not settle amicably between the parties shall be settled under the Rules of CIETAC (China International Economic and Trade Arbitration Commission) or at a competent Court of Hong Kong).” A cursory glace at this clause would reveal evidence of tardy draftsmanship. I say tardy because it is always important when drafting arbitration agreement or indeed any agreement to state the Law under which it should be continued. Here reference is made to two different jurisdictions-China and Hong Kong though one country have different commercial laws. This is the clause the Defendant is relying on in applying to this Court to strike out the Writ of Summons herein which I have already said there should have properly been an application for a stay.
The single factor in favour of a stay is the experience of the jurisdictional clause. There are good reasons why parties should be held to the bargains they have entered into in their contract. However, in the instant case, there are several factors against a stay. The dispute is between parties trading in Sierra Leone; the events parties in dispute occurred in Sierra Leone, the significance of events, their seriousness and their foreseability or otherwise depend entirely on an appraisal informed by Sierra Leone’s commercial, regulatory and cultural conditions, virtually all the potential witnesses are based in Sierra Leone, if either party seeks to subpoena a witness they will have to do so in Sierra Leone.
Litigation in China would be extraordinary complicated with witnesses being flown thousands of miles and back. There may also be a need for expert witnesses to deal with topics unfamiliar to a foreign tribunal about which this Court would not need testimony because of its knowledge of local remedies. As I have already stated, the law governing the contract is yet to be determined but it can be presumed to be that of Sierra Leone.
The Defendants have the resources to defend the action in Sierra Leone and are represented by Counsel here. There are likely to be few if any witnesses coming from China.
There is urgency. This case must be resolved speedily in the interests of both parties and of the local business community. This action has been started in this Court and if it continues in this Court should be tried within 3-6 months. This Court has a compulsory Pre-trial settlement conference which may lead to a much swifter result than that. The Defendants have filed no evidence of how long litigation or arbitration would take in China or any information about what form it would take. It might take years. Furthermore, no action has yet been taken to start the process in China. This is not a LIS ALIBI PENDENS Case.
Quite apart from the rest of its broad discretion the Court will refuse a stay if the result would be oppressive or unscionable. There is a persuasive English authority to the effect that the Court will even grant an injunction abroad if that is established-SEE ELEKTRIM SA-V-VIVENDI UNIVERSAL SA (2007) EWHC 571 (Comm.) at paragraph 56. Such an injunction is a bolder and more intrusive remedy than a stay. Of course the English Arbitration Act, 1996 does not apply here but the power is exercised not under the Act but under the Law Reform (Miscellaneous Provisions) Act which has its equivalent in Sierra Leone. Applying this principle to the instant case, it would be oppressive and unscionable to force the Plaintiffs in effect to abandon their claim by making them go to China and unfair to both parties to subject them to an uncertain process in a distant land where neither the Court nor the arbitrators however distinguished will be familiar with the special conditions within which this contractual dispute is set. These are unusual if not exceptional circumstances.
For the reasons given above, I hereby Order as follows:-
- The application herein is refused
- That the Orders of this Court dated 25th day of November, 2015 and 2nd December, 2015 respectively shall remain in force until the settlement of this matter at a Pre-trial settlement conference or determination at trial.
- That the Defendant files a defense to the action within three days of the date of this Order
- That the Plaintiff files a reply and close all pleadings within three days after the expiration of the period set to file the defense
- That the Deputy Master and Registrar immediately thereafter assigns the matter to a Judge for a pre-trial settlement conference.
Hon. Mr. Justice Sengu M. Koroma J.