Brostrom Tankers AB v Factorias Vulcano SA

• Jurisdiction: Ireland
• Court: High Court
• Judge: MR. JUSTICE KELLY
• Judgment Date: 19 May 2004
• Neutral Citation: [2004] IEHC 198
• Docket Number: 44 sp/2003,[2003 No.44SP]
• Date: 19 May 2004

BROSTROM TANKERS AB v. FACTORIAS VULCANO SA

DUBLIN

BROSTRÖM TANKERS AB

PLAINTIFF

and

FACTORIAS VULCANO SA

RESPONDENT

[2004] IEHC 198

44 sp/2003

THE HIGH COURT

Synopsis:

- [2004] 2 IR 191

The plaintiff was a Swedish company and the defendant was a Spanish company. They entered into a contract which contained an arbitration clause whereby all disputes were to be resolved by arbitration in Oslo in accordance with the law of Norway. A dispute arose and was referred to arbitration. This application sought to enforce the award in the State pursuant to s. 7 of the Arbitration Act 1980. The defendant opposed the making of an enforcement order on the grounds that it would be contrary to public policy to enforce the award.

Held by Kelly J. in enforcing the award that the attempt to resist its enforcement on the basis of it being contrary to Irish public policy failed. Refusal of an enforcement order would extend to a considerable extent the notion of public policy.

Reporter: R.W.

Citations:

ARBITRATION ACT 1980 S7

ARBITRATION ACT 1980 S9(3)

ARBITRATION ACT 1980 PART III

ARBITRATION ACT 1980 S9(1)

ARBITRATION ACT 1980 S9(2)

SUSPENSION OF PAYMENTS ACT 1922 (SPAIN)

REDFERN & HUNTER LAW & PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 3ED 2003

NEW YORK CONVENTION ON THE RECOGNITION & ENFORCEMENT OF FOREIGN ARBITRAL AWARDS 1958

PARSONS & WHITMORE OVERSEAS CO V SOCIETE GENERAL DE L'INDUSTRIE DU PAPIER 508 F 2D 969

CONVENTION ON THE STATUS OF REFUGEES & STATELESS PERSONS 1951 (GENEVA CONVENTION)

CHESHIRE & NORTH PRIVATE INTERNATIONAL LAW 13ED

1 APPROVED JUDGMENT BY MR. JUSTICE KELLY ON WEDNESDAY, 19 MAY 2004

2 I hereby certify the following to be a true and accurate transcript of my shorthand notes of the evidence in the above-named matter.

APPEARANCES

For the Plaintiff:

Mr. J. Breslin BL

Instructed by:

Feídhlímíon Wrafter A & L

Goodbody,

North Wall Quay, IFSC, Dublin 1.

For the Respondent:

Ms. N. Hyland BL

Instructed by:

Helen Collins McCann Fitzgerald,

2 Harbourmaster Place, IFSC, Dublin 1.

MR. JUSTICE KELLY: The plaintiff is a Swedish company and carries on the

3 business of ship-owner. The defendant is a Spanish company.

4 On 23 December 1996, a contract was entered into between the plaintiff and the defendant whereby the defendant agreed to construct a chemical tanker on behalf of the plaintiff. The name of that vessel was New Building 476.

5 The contract was governed by Norwegian law. It contained an arbitration clause whereby all disputes were to be resolved by arbitration in Oslo in accordance with the law of Norway.

6 A dispute arose - - about which I will have to say more in a moment - - and was submitted to arbitration. A panel of three arbitrators chaired by a High Court Judge heard and determined the claim. By a majority, they found in favour of the plaintiff and made an award of 13,666,606 Swedish kroner being approximately €1.5 million. That award was made on foot of a breach of the shipbuilding contract, and the award was dated 27 November 2001.

7 This application seeks to enforce the award in this State pursuant to Section 7 of the Arbitration Act 1980.

8 One may wonder why a Swedish company is seeking to enforce an award governed by Norwegian law against a Spanish company in Ireland. The reason arises from the plaintiff's belief that there is an intercompany debt owed to the defendant by an Irish company called Rucile International Limited which may, if the application to enforce the award is successful, be garnished.

9 The defendant opposes the making of an enforcement order. It does so by reference to one, and only one, of the statutory grounds of defence available under the Act. It is the ground which is contained in Section 9 Subsection 3 of the Act.

10 Section 9 is contained in Part 3 of the Arbitration Act of 1980. That part of the Act deals with New York Convention Awards. The award in suit is such an award. Section 9 Subsection 1 provides, and I quote:

"Enforcement of an award shall not be refused otherwise than pursuant to the subsequent provisions of this section."

11 Subsection 2 provides six circumstances in which the court may refuse enforcement if the party against whom the award is sought to be enforced can prove the existence of any one of them. Subsection 2 provides, and I quote:

"Enforcement of an award may be refused if the person against whom it is invoked proves that:"

(a) a party to the arbitration agreement was (under the law applicable to him) under some incapacity; or

(b) the arbitration agreement was not valid under the law of the country to which the parties subjected it, or failing any indication thereon, under the law of the country where the award was made;

(c) he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present his case;

(d) subject to Subsection (4) of this Section the award deals with a difference 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; or

(e) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, with the law of the country where the arbitration took place; or

(f) the award has not yet become binding on the parties or has been aside or suspended by a competent authority of the country in which under the law of which, the award was made."

12 None of these provisions have any application to the present case.

13 Subsection 3 provides, and I quote:

"Enforcement of an award may also be refused if the award is in respect of a matter which is not capable of settlement by arbitration under the law of the State or if it would be contrary to public policy to enforce the award."

14 It is this latter proviso that the defendant relies upon asserting that it would be contrary to public policy to enforce the award in Ireland. In order to understand how this assertion arises, it is necessary to refer to certain background material.

15 The vessel was to be completed by 18 April 2000. On 6 December 1999, the defendant informed the plaintiff that it would not be able to complete by then. Correspondence was exchanged between the parties in the month of March 2000, and in particular between the 2nd and the 14th of March, concerning inter alia the possibility of substituting another ship in lieu of Number 476.

16 On 17 March 2000, the defendant obtained a form of court protection in Spain pursuant to an Act called the Suspension of Payments Act of 1922.

17 On 31 March 2000 the defendant wrote to the plaintiff, and here I quote from the award which has been made in favour of the plaintiff:

"In a letter of 31 March 2000 to Broström, Factorias writes that the yard's offer to deliver the sister, Vessel 475, has been rejected several times, that it is absolutely impossible for the yard to deliver 476 before 18 October 2000, and that the owners have stated several times that they do not want to take delivery of the ship after that date. Referring to this, the yard writes:"

18 "We had to consider your attitude as a repudiation of the contract and, in accordance with the terms of our letter dated March 10, 2000 we had cancelled the contract from March 15, 2000."

19 In the letter the yard repeats that, "We are at your disposal to return to you the amounts paid, and to agree a reasonable claim for expenses incurred."

20 Broström replies on 3 April 2000, "We are of the opinion that the contract is still in force. Your unilateral decision of nullifying the contract is legally without foundation."

21 In the course of the spring and summer 2000 negotiations were held for an out of court settlement which, however, did not succeed. On the 7th of September 2000, Broström cancelled the contract. Broström's request to have the advance instalments repaid was thereafter affected by Factorias' bank without Factorias intervening."

22 That is a quotation from the arbitrator's award.

23 The receivership or protection afforded to the defendant by the Spanish courts came to an end on 10 October 2001. On that date, an agreement between the defendant and its creditors became binding upon them pursuant to an order of the Spanish Court. By that procedure the defendant is liable to pay its creditors just 10% of the debts due to them,...