BVIHC(COM) 235 of 2013: Belport Development Limited (BDL) and Chimichanga Corporation – “Encouraging signs regarding enforcing arbitration awards in the BVI”.
In any dispute that triggers an arbitration clause, one of the most important questions the Claimant should always ask is “If I am successful at arbitration, will the award be recognised and enforceable in the Defendant’s jurisdiction”?
The New York Convention is fully extended to the BVI as of May 25, 2014. For many years, however, and subject to a few exceptions, foreign arbitral awards from New York Convention jurisdictions have generally been enforceable in the BVI. A recent BVI judgment (in which Forbes Hare acted for the successful holder of the arbitration award) considered the scope of some of the, rather narrow, exceptions.
Arbitration Award
The background to the arbitration award is not complicated. In short, a panel of distinguished arbitrators, (the Honourable Marc Lalonde PC, OC, QC, Sir Simon Tuckey and Mr Gary Born ) found in favour of the Claimant in an ICC arbitration held in Switzerland, and, in doing so, made an award of over US$60 million in compensation. The award reflected BDL’s interest in a joint venture between BDL and Chimichanga.
During the arbitration process, both parties instructed an expert to produce a valuation report to establish how much the joint venture was worth. In addition to these expert valuation reports there were a number of additional contemporaneous valuations that had been disclosed during the arbitration proceedings and which formed part of the documentary record.
The arbitrators eventually concluded that, amongst other things, the assumptions deployed by each expert were not appropriate. As an alternative, the arbitrators decided to rely on a contemporaneous valuation by an anonymous leading accountancy firm (the “Valuation”). As it pre-dated the arbitration, the Valuation had not been prepared in accordance with the applicable rules on expert evidence.
BVI Proceedings
In these proceedings, the Claimant obtained an ex parte order on 28 August 2013 giving it leave to enforce the arbitration award obtained against the Defendant, in the ICC arbitration (the “Enforcement Order”).
The Defendant applied for the Court to set aside the Enforcement Order on the grounds that:
1. It had been unable to present its case in the arbitration because the Valuation relied on by the tribunal had not been produced in accordance with the ICC rules on expert evidence, the identity of the valuer was unknown, and the Defendant had not had an opportunity to cross-examine the valuer (s. 36(2)(c) of the Arbitration Ordinance); and/or
2. Enforcing the award would be contrary to public policy of the Virgin Islands for the same reasons (s. 36(6) of the Arbitration Ordinance).
Conclusion
Bannister J concluded that:
1. It was not for him to go into the merits of the arbitration award.
2. All the material was fairly and squarely in evidence before the tribunal.
3. Chimichanga had sufficient opportunity to challenge the Valuation, but their arguments were rejected.
4. The Valuation was not an expert report and had not been relied on as such by the tribunal.
5. Chimichanga was not in any sense of the term “unable to present its case”.
Accordingly, neither s.36(2)(c) nor s.36(3) was successfully engaged.
Commentary
The decision is further indication that the BVI courts will take a robust approach to attempts by award debtors to raise spurious procedural matters as a basis for evading enforcement of awards. Given the importance of maintaining the enforceability of New York Convention awards, this approach is a welcome demonstration of the jurisdiction’s positive attitude towards arbitration.
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