On 14 December 2022, the High Court of Trinidad and Tobago handed down judgment in National Infrastructure Development Company Limited v Construtora OAS S.A. (Claim No. CV2022-01832), in which the Court set aside a US $126 million arbitration award made in favour of the Defendant (“OAS”).
The dispute arose out of a FIDIC Yellow Book contract dated 4 July 2011 (the “Contract”), under which NIDCO appointed OAS to design and build the Sir Solomon Hochoy Highway Extension to Point Fortin, Trinidad. On 6 July 2016, NIDCO terminated the Contract, alleging that OAS had abandoned the works or otherwise plainly demonstrated the intention not to continue performance of its obligations thereunder. Following the termination, NIDCO drew down advance payment and performance securities in the total sum of US $139 million.
OAS disputed NIDCO’s right to terminate and to draw down the securities. Litigation in England concerning NIDCO’s right to draw down the securities was finally resolved in NIDCO’s favour by a Court of Appeal judgment handed down in January 2017 (National Infrastructure Development Co Ltd v Banco Santander SA  EWCA Civ 27).
Meanwhile, OAS commenced arbitral proceedings against NIDCO, alleging that the termination was unlawful on the basis that OAS had not abandoned the works because it was purporting to exercise a right to reduce the pace of works as a result of an alleged payment breach by NIDCO. OAS claimed (inter alia) the return of the sums drawn down under the securities. The seat of the arbitration was Port of Spain, Trinidad and Tobago.
The Tribunal (John Fellas, Adam Constable KC and Andrew White KC) delivered their Award on 16 April 2022, finding in OAS’s favour and ordering that NIDCO pay OAS damages in the sum of US $126 million.
NIDCO applied to set aside the Award on the grounds that it contained: (a) errors of law manifest on the face of the Award, and (b) findings which were unsupportable based on the material before the Tribunal, such that no reasonable arbitrator could have reached them properly applying the law, the evidence and the provisions of the Contract.
The Honourable Mr Justice Seepersad held that:
- Contrary to OAS’s case, NIDCO was permitted to bring a claim to set aside the Award. A provision in the Contract purporting to oust such a right was invalid on the basis that it was contrary to public policy (in accordance with the principles set out in Czarnikow v Roth, Schmidt and Company  2 KB 478).
- The Tribunal’s finding that NIDCO was in payment default was based on an erroneous interpretation of the Contract. The engineer had certified that NIDCO was not in payment default as at the date of termination. That certification could not be invalidated retrospectively merely on the basis that the engineer had fallen into error.
- Even if NIDCO had been in payment default, OAS would not have been entitled to abandon the works, but rather it was required to remain sufficiently mobilised on site and maintain sufficient resources to enable it to resume full work on the project upon payment by NIDCO. The Tribunal’s finding that OAS’s conduct was justified under the Contract was “fundamentally flawed”. On the face of the Award, the Tribunal fell into error and either disregarded or misconstrued the purpose and effect of the contract and/or failed properly to evaluate the evidence placed before it. The Court was “resolute in its view that no reasonable arbitrator cognizant of the law and seized of the evidence adduced could have arrived at the position reflected in the Award.”
- Accordingly, the Court held that it “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.”
- Further, the evidence suggested that NIDCO was also entitled to terminate on the alternative basis that OAS had compounded with its creditors on 11 January 2016. The Court held that the Award gave “no proper consideration as to the purport and effect” of the relevant contractual provision and that “the Tribunal’s handling of this issue was fundamentally flawed and unsound.”
The judgment is available here.