Complete Energy Solutions Limited v Vetivert Tech (Pty) Ltd (SCA 22/2023) [2024] ((SCA 22/2023) [2024] (Arising in MA 298/2021 Out of MC 31/2021) (3 May 2024)) [2024] SCCA 13 (3 May 2024)

 

 

DE SILVA JA

(S. Andre, K. Gunesh-Balaghee JJA, concurring)

 

                        Factual Matrix

                      

1. The Public Utilities Commission of Seychelles (“PUC”) and the Abu Dhabi Future Energy Company PJSC called for tenders for the construction of a 5 MW PV Plant. In order to tender, the Appellant and the Respondent entered into a Consortium Agreement in terms of which they would cooperate with the works.

 

2. However, the main contract was entered only between the Appellant and PUC, the Respondent having agreed with the Appellant to carry out works off contract. As disputes arose between parties, the Respondent referred them for arbitration to the Dubai International Arbitration Centre (“DIAC”) pursuant to the Consortium Agreement.

 

3. The Arbitral Tribunal issued an arbitral award for a sum of US$ 286,970.49 in favour of the Respondent who sought to recover the said amount against the monies held by the PUC on behalf of the Appellant.

 

4. The Supreme Court made a provisional order attaching the sum awarded in the arbitral award in the hands of the PUC. At the conclusion of the proceedings, the Supreme Court ordered the enforcement of the arbitral award and allowed the validation of the provisional seizure in the hands of the PUC. The Appellant has appealed.

 

Grounds of Appeal

 

5. The Appellant raises the following grounds of appeal:

1. The learned Trial Judge erred in law in holding that Articles 146 to 150 of the Commercial Code were applicable without further action from the National Assembly following the signing by the Executive.
2. The learned Trial Judge erred in law in failing to follow the decision of this Honorable Court of Appeal in line with Article 7 of the Civil Code of Seychelles 2020 in order to give life to Articles 146-150 of the Commercial Code.
3. The learned Trial Judge erred in law in determining that leave was not required to enforce a foreign arbitral award.
4. The learned Trial Judge erred in law in not dismissing the application of the Respondent as the wrong procedure had been followed for the enforcement.
5. The learned Trial Judge erred in law in allowing the application which was unsupported by an affidavit.
6. The learned Trial Judge erred in law and on the facts by relying on the arbitration agreement contained in the Consortium Agreement and Arbitral Award that had not been properly certified and/or authenticated and which was not adduced by way of a witness or affidavit evidence.
7. In the alternative to the above, the learned Trial Judge erred in law in enforcing the arbitral award, contrary to Article 150 of the Commercial Code, in light of being informed that the arbitration was held:
   1. Without proper notice on the Appellant;
   2. Without the Appellant being able to nominate an arbitrator for the committee;
   3. Based on a void and unenforceable Consortium Agreement.
8. The learned Trial Judge erred in law and on the facts in determining that the LNTP agreement, which contained an arbitration clause before the UAE courts, was unsigned.

 

Grounds of Appeal (a) and (b)

 

6. These two grounds are based upon the status of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) in Seychelles.

 

7. The Appellant submits that the application for the enforcement of the arbitral award was made under Article 148 of the Commercial Code of Seychelles (“Commercial Code”) but that Articles 146-150 of the Commercial Code have not been brought into operation after the accession to the New York Convention in 2020. Much reliance was placed upon the decision of this Court in Vijay Construction (proprietary) Limited v Eastern European Engineering Limited [(SCA 15 of 2017)(2017) SCCA 41 (12 December 2017)].

 

8. It was the position of the Appellant that Seychelles follows the dualist system of treaty making and for any international treaty to become part of the domestic law, there must be a ratification and domestication by the National Assembly. It was submitted that although accession to the New York Convention was made by Seychelles in 2020, to date the legislature had not completed the legislative process to make it part of the domestic law of Seychelles.

 

9. The Supreme Court held that although the New York Convention was not ratified by Seychelles, it was already in force by the time Seychelles agreed to be bound by it, the National Assembly having resolved to accede to it. It was held that accession to the New York Convention by Seychelles in 2020 effectively brought to life the provisions in Articles 146 to 150 of the Commercial Code.

 

10. In order to better appreciate the contention of the Appellant, an examination of the interface between international law and domestic law is required.  

 

                       Dualism

 

11. Positivists such as Oppenheim, Treipel and Strupp examine the interface between domestic law and international law based upon the supremacy of the State. This doctrine, known as dualism or dualist theory, considers domestic law and international law as operating in distinct spheres regulating distinct subject matter. According to proponents of dualism, international law becomes part of the domestic law only to the extent permitted by the State in the exercise of its supreme authority within its domestic jurisdiction. In the event of any inconsistency, domestic law prevails.

 

12. Rousseau [Droit international public (1953), 10-12; 93 Hague Recueil (1958, I), 473-4]  and Fitzmaurice [92 Hague Recueil (1957, II), 68-94] have sought to provide a modified narrative of dualism. They too deny a common sphere for domestic law and international law and acknowledge their superiority within its own sphere. However, there may be instances where a State acts domestically in a manner inconsistent with its international obligations. Here though the State is unaffected within the domestic law sphere, it may become liable in the international arena.

Monism

 

13. The monist theory or monism proceeds on the basis of the supremacy of international law even within the domestic law sphere. According to this doctrine, there is no need for specific incorporation of international law in to domestic law as they fall within a unitary system.

 

14. There are however some jurists within the monist school who have adopted different constructs of this unitary system.

 

15. Lauterpacht [62 Hague Recueil (1937, IV), 129-148] considers the primary function of all law to be the well-being of individuals and proposes the supremacy of international law as the most suitable method of accomplishing this goal. According to him, both domestic and international law must give way to natural law or general principles of law which determines their respective spheres.

 

16. Kelsen [General Theory of Law and the State (Harvard University Press, 1945), 363-80] on the other hand relies on the assumption that law is a constituting order prescribing accepted behavior. Where there has been a breach of such accepted norms sanctions follow. This is equally applicable to domestic and international law. As the relationship between States are regulated by international law, in order to ensure equality of States it follows that international law is superior to domestic law.

 

Status of International Law in Seychelles

 

17. In Roble & Ors v R [(SCA 19 of 2013) [2015] SCCA 24 (28 August 2015)] this Court held that Seychelles has always applied a dualist system in preference to a monist system.

 

18. In Vijay Construction (proprietary) Limited (supra. paras. 96-98), this Court held that the monist system is followed in Seychelles only in matters of Chapter III relating to constitutional enforcement, whereas in other matters the Constitution of the Republic of Seychelles (“Constitution”) has set up a dualist system. Similar approach was taken in Melissa Duffets v. Bastien Lapourielle [(2017) CA 26/2016].

 

19. Article 64 of the Constitution reads as follows:

20.      Clearly, the President possesses the authority to sign or facilitate the signing of any multilateral or bilateral treaty, agreement or convention in respect of international relations. Nevertheless, such treaty, agreement or convention shall not bind the Republic unless it is ratified by an Act or a resolution passed by the votes of a majority of the members of the National Assembly.  However, where a written law grants the President the power to execute or authorise the execution of a treaty, agreement or convention and in such cases, the instrument becomes binding on Seychelles without requiring the approval of the National Assembly.

 

21.      In general, the Constitution contemplates a two-step process to be followed for any treaty, agreement or convention in respect of international relations to bind the Republic. By general I mean situations falling outside Chapter III of the Constitution. I reserve my position on the interface between Chapter III and international law as it does not arise for determination in this matter.

22.      In order to bind the Republic of Seychelles, a treaty, agreement or convention in respect of international relations which is to be or is executed by or under the authority of the President, must be ratified by an Act or a resolution passed by the votes of a majority of the members of the National Assembly.

 

23.      I am of the view that the word bind in Article 64(4) of the Constitution refers to binding the Republic of Seychelles in international law. Let me explicate in some detail.

 

24.      Firstly, the word it in Article 64(4) of the Constitution, refers to a treaty, agreement or convention in respect of international relations. The Republic of Seychelles becomes bound by such treaty, agreement or convention when it is ratified by an Act or a resolution passed by the votes of a majority of the members of the National Assembly. In terms of Article 85 of the Constitution, the legislative power of Seychelles is vested in the National Assembly. This power is exercised by passing of Bills which subsequently becomes Acts [Article 86]. Passing of a resolution does not convert it to an Act. Therefore, Article 64(4) of the Constitution is dealing with the procedure to be followed in taking on obligations in international law and not enacting domestic legislation to give effect to international obligations.

 

 25.     Secondly, the word ratification is a term of art in international law. Article 2(1)(b) of 1969 Vienna Convention on the Law of Treaties (VCLT) defines ratification to imply that a State establishes on the international plane its consent to be bound by a treaty.

27. In Good v Botswana [Decision, Comm. 313/05 (ACmHPR, 26 May 2010)] the African Commission explained that: 

“Ratification is therefore a formal commitment in addition to the signature, normally required by multilateral treaties. This is an action by a state, normally conducted once necessary domestic legislation or executive action has been completed. This can also be the case in a situation whereby the state endorses a preceding signature and signifies its intention to comply with the specific provisions and obligations of the treaty. In the period between signature and ratification, a state is provided with an opportunity to reconsider its obligations under the treaty concerned. After ratification a state is formally bound by the substantive provisions of the treaty. At the AU, ratification is completed by a formal exchange or deposit of the treaty with the Chairperson of the African Union Commission, and in case of the UN, with the Secretary General of the UN.”

 

28. There is some debate as to what type of treaties require ratification. In so far as the New York Convention is concerned, there can be no doubt since Article VIII (2) of the New York Convention requires ratification.

 

29. Accordingly, in my view Article 64(4) of the Constitution sets out the procedure by which Seychelles becomes bound in international law to obligations set out in a treaty, agreement or convention in respect of international relations. It does not deal with how such instrument acquires force of law in Seychelles. Nevertheless, where the National Assembly ratifies it by an Act, it is possible that the required domestication is made effective by such Act.

 

30. Domestication is the process of incorporating an international treaty into the domestic legal system of a country. This is essential in dualist countries, where international law does not automatically become part of the national law upon ratification. Domestication involves legislative action, such as passing an Act by the legislature, to give the treaty force and applicability within the domestic legal framework.
31. According to Brownlie (supra. pp. 48-49), legislation to give effect in domestic law to the provisions in a treaty, agreement or convention may take different forms. An Act may directly enact the provisions of such instrument which will be set out as a schedule to the Act. In the alternative, an Act may employ its own substantive provisions to give effect to such instrument without directly enacting the text.

 

32. Seychelles appears to have followed two practices of domestication. The first approach is to domesticate some provisions of the treaty, convention or agreement. In such a case, the enabling legislation will specifically state that the relevant provisions ‘shall have the force of law in Seychelles’. For example, the National Assembly followed this approach when it enacted the Privileges and Immunities (Diplomatic, Consular and International Organisations) Act No. 9 of 1980 to domesticate some provisions of treaties such as Vienna Convention on Diplomatic Relations, Vienna Convention on Consular Relations, Convention on the Privileges and Immunities of the Specialized Agencies. This means that at international level, Seychelles is still bound by all the provisions of these treaties (including those which were not domesticated). But at national level, only the domesticated provisions have the force of law. 

 

33. The second approach is to domesticate the whole treaty. For example, section 85(1) of the Merchant Shipping Act provides that ‘…the Collisions Convention, the Load Line Convention and the Safety Convention shall have the force of law in Seychelles.’

 

Status of New York Convention in Seychelles

 

34. Articles 146-150 of the Commercial Code reads as follows:

Article 146

On the basis of reciprocity, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, and the arbitral award within the meaning of the said Convention shall be binding. Such Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than Seychelles and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in Seychelles.

Article 147

1. Recognition under the said Convention shall extend to an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject-matter capable of settlement by arbitration.
2. The term 'agreement in writing' shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.
3. The Supreme Court of Seychelles, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.
4. At the request of a party to an arbitration agreement, or of any person claiming through or under him, the Court shall make an order to stay any proceedings already commenced before such Court and such other order as it thinks fit in the circumstances, subject to the rules which permit the Court to refuse to enforce an award under the Convention under article 150 of this Code.

Article 148

Arbitral awards under the said Convention shall be recognised as binding and shall be enforced in accordance with the rules of procedure in force in Seychelles. The conditions or fees or charges on the recognition or enforcement of arbitral awards to which the said Convention applies shall not be more onerous than those required for the recognition or enforcement of domestic arbitral awards.

Article 149

The party seeking to enforce an arbitral award under the Convention must provide:

(a)    the duly authenticated original award or a duly certified copy thereof; and

(b)    the original arbitration agreement or a duly certified copy thereof; and

(c)     where the award or agreement is in a foreign language, a translation thereof carried by an official or by a sworn translator or by a diplomatic or consular agent.

Article 150

1. Enforcement of an arbitral award shall be refused if the person against whom it is invoked proves:

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

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

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

(d)    (subject to paragraph 3 of this article) that 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)     that the composition of the arbitral tribunal 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)     that the award has not yet become binding on the parties, or has been set aside or suspended by an authority duly exercising jurisdiction in the country in which, or under the law of which, it was made.

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

3. An arbitral award which contains decisions on matters not submitted to arbitration may be enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those on matters not so submitted.

4. Where an application to set aside or suspend an award has been made to such an authority duly exercising jurisdiction as is mentioned in paragraph 1 (f) of this article, the Court before which enforcement of the award is sought may, if it thinks fit, adjourn the proceedings and may, on the application of the party seeking to enforce the award, order the other party to give security.

 

35. The United Kingdom acceded to the New York Convention on 24^th September 1975. At that time, Seychelles was a colony of the United Kingdom.

 

36. Seychelles gained independence in 1976 pursuant to an exchange of Notes between the two Governments. According to the agreement concerning treaty succession reached between parties, all obligations and responsibilities of the Government of the United Kingdom and Northern Ireland as from 29^th June 1976 were to be assumed by the Government of Seychelles as applicable to Seychelles.

 

37. In Vijay Construction (Pty) Limited (supra. paras. 33-36), this Court having regard to these facts concluded that  at the time the Commercial Code was enacted, Seychelles had succeeded to the New York Convention.

 

38. Nevertheless, Court went on to conclude that the New York Convention is not applicable to Seychelles and accordingly Articles 146-150 of the Commercial Code has no legal effect. This conclusion was based upon the notification made by Seychelles pursuant to Article 8.1 of the VCLT by Note No. 37/79 whereby the British Government was notified that Seychelles did not consider itself bound by treaties which came within the ambit of the Treaty Succession Agreement.

 

39. The Court held that this repudiation resulted in the non-applicability of Articles 146-150 of the Commercial Code in view of the lack of evidence to indicate that Seychelles acceded to the New York Convention later (para. 41). Court went on to hold (paras. 101 and 102):

“101. …[t]hrough the conscious and deliberate act of repudiation and renunciation in 1979, the NY Convention ceased to have its domestic application, though the text of the Article 146 and others remained part of our domestic law. This article needs to have life breathed in into in order to waken it from its slumber. The only way is to follow the dictate of our supreme law.

102. In 1993, the Seychelles enacted its Constitution. In order to give life to the New York Convention in our domestic law, the President would have to execute it and the National Assembly would have to ratify it. Ratification may properly be done in this case by way of a resolution of the National State Assembly, giving the existing provisions of Article 146 of the Commercial Code.”

41. The Commercial Code came into existence on 13^th January 1977. By virtue of the provisions in Articles 146-150, there can be no doubt that the New York Convention was given force of law in Seychelles. There need not be any debate as to whether this was part of domestication, in a domestic sense, or ratification, in an international sense. The New York Convention became part of the law of Seychelles on 13^th January 1977 by virtue of Articles 146-150 of the Commercial Code. There is no prohibition to a State enacting a domestic law in line with a treaty, agreement or convention notwithstanding it not ratifying to such instrument.

 

42. According to Clause 2(1) of Schedule 7 of the Constitution, except where it is otherwise inconsistent with the Constitution and subject to paragraph (2), an existing law shall continue in force on and after the date of coming into force of the Constitution. Articles 146-150 of the Commercial Code is not inconsistent with the Constitution and continues to remain in force. It was never in slumber and did not need any act of ratification as contemplated in Article 64(4) of the Constitution to give it life as held in Vijay Construction (Pty) Limited (supra).

 

43. In Young v Bristol Aeroplane Company Limited [(1944) 1 KB 718] the Court of Appeal held that the Court is not bound to follow a decision of its own if it is satisfied that the decision was given per incuriam, e.g., where a statute or a rule having statutory effect which would have affected the decision was not brought to the attention of the earlier court.

 

44. I hold that the conclusion in Vijay Construction (Pty) Limited (supra) that the New York Convention ceased to have domestic application consequent to its repudiation and requires an act of ratification to give life in the domestic law of Seychelles is per incuriam since it failed to appreciate the difference between ratification and domestication and the legal effect of Clause 2(1) of Schedule 7 of the Constitution, and Articles 146-150 of the Commercial Code. Therefore, it is not of high persuasive value and we are entitled to depart from it in terms of Articles 7(2) and 7(3) of the Civil Code of Seychelles.

 

45. I hasten to add that generally a judicial decision is binding on all courts lower in the judicial hierarchy other than the court which delivered the precedent decision. Lord Denning in Morelle Ltd v. Wakeling [(1955) 2 QB 379] sought to overcome a judgment of the House of Lords by holding it to be per incuriam. Nevertheless, subsequently Lord Diplock in Davis v. Jhonson [(1979) AC 264] disapproved of this approach and restated the principle that the Court of Appeal was bound by the decisions of the House of Lords, even if it considered the decision to be per incuriam. This principle is reflected in Article 7(1) of the Civil Code of Seychelles.

 

46. The same approach is found in India where the Supreme Court in South Central Railway Employees Cooperative Credit Society Employees Union v. B. Yashodabi & Ors [(2015) 2 SCC 727, ¶15-17] held that it was not open to the High Court to hold that the judgment of the Supreme Court was per incuriam. A contrary construction was determined by the Supreme Court to lead to total chaos in the country if there is no finality attached to the orders passed by it.

 

 

_____________________      

J. De Silva JA

 

I concur:                                                     ___________________         

S. Andre JA

 

 

 

I concur:                                                     ____________________

                                                                   K. Gunesh-Balaghee JA

 

 

Signed, dated and delivered at Ile du Port on 3 May 2024.