[*325] 1986 February 1
(NIKITAS, P.D.C.)
IN THE DISTRICT COURT OF NICOSIA
Commercial Bank of Greece, S.A.,
Plaintiffs,
The Attorney General of the Republic,
Defendant.
(Action No. 6510/85)
Assignment - No statutory assignment in Cyprus - Equitable assignment - Concept of - Applicable in Cyprus - Assignor should be joined as a party to an action, but non joinder is not fatal, if no objection is taken.
Arbitration - The Arbitration Law, Cap. 4, section 8 - Arbitration clause in a contract - Assignment of moneys due or to become due under the contract - Whether assignee is "any person claiming through or under" the assignor - Question determined in the affirmative - Stay of action brought by assignee.
Arbitration - The Arbitration Law, Cap. 4, section 8 - Arbitration clause in a contract - Stay of action based on such a contract - Discretion - How exercised.
Injunctions - Jnter1ocutory injunction - Building contract - Forfeiture of - Whether possible to grant an injunction to prevent it - As such injunction would amount to specific performance of a contract not specifically enforceable, the question was determined in the negative.
A. Evangelou, Senior Counsel of the Republic, with M. Photiou, Legal Assistant, for the Applicant/Defendant.
T. Papadopoulos, for the Respondent/Plaintiff. [*326]
RULING
The following ruling was delivered by:
NIKITAS, P.D.C.: This is an application by the defendant/ Attorney General for a stay of proceedings under section 8 of the Arbitration Law, Cap. 4. The proceedings were brought against the Republic by the Commercial Bank of Greece, a banking institution incorporated in Greece, in relation to a contract entered into on January 16, 1979, between another Greek concern called "XEKTE" and the Minister of Communications and Works on behalf of the Cyprus Government.
In the affidavit evidence and the other material put before the Court I have been given an outline of the facts for determining whether a stay should be granted with a view to the matters in dispute between the present parties being arbitrated. The relevant facts may be shortly stated most conveniently perhaps by reference to the chronology of events.
As I have said, the dispute arises out of the contract in question whereby "XEKTE", to which I will refer throughout as the contractor, agreed to execute a project for the Government. The project, the subject of the contract, consisted of a dual carriageway linking Nicosia to Limassol together with other ancillary road works. The contract - Exhibit 5 - was based on the standard form of agreement of the [*327] Federation International des Ingenieurs Conseils, known by its initials as F.I.D.I.C., but it seems that the parties introduced a number of variations.
One of those variations concerned the arbitration clause contained in the contract. It is clause 67 and the full text thereof appears on pages 21 to 23, inclusive, of Exhibit 5. In substance it provides that if any dispute or difference shall arise between the employer or engineer and the contractor in connection with or arising out of the contract whether during the progress of the works or after their completion and whether before or after the determination, abandonment or break of the contract it shall first be referred and settled by the engineer who shall give his written decision to the employer and the contractor. The decision is to be final and binding unless either party within 90 days of receiving notice of the decision requires it to be referred to arbitration under the Arbitration Law, Cap. 4.
The contract, contains a stipulation, clause 3 to be precise, that the contractor "was not to assign the contract or any part thereof or any benefit or interest therein or thereunder (otherwise than by a charge in favour of the contractor's bankers of any moneys due or to become due under this contract) without the prior written consent of the employer." Clause 4 forbids subletting of the whole of the works and deals with subcontracting parts of the works with the prior consent of the employer. The obvious [*328] purpose of both provisions is to prevent the assignment of the burden of the contract and let the employer retain control of who performs the work.
The contractor needed finance in order to be able to carry out the contract and got it from the plaintiffs (the bank). On July 25, 1980, the contractor executed an assignment in Greece in favour of the bank - see Exhibit 3. That assignment after reciting that the bank had lent the contractor an amount of U.S. dollars 3,000,000 and a further sum of 250,000,000 drahmas "επ’ ανοικτώ λογαριασμό" went on in the operative clause to provide in effect that in consideration of the moneys advanced or to be advanced by the bank the contractor assigned to plaintiffs by way of pledge every claim arising under the contract Exhibit 5.
The assignment, Exhibit 3, contains a number of covenants by the contractor, but I do not think I need read more now than the material part of the operative clause which is in these terms:
"Προς εξόφλησιν της τραπέζης ...... η Α.Ε. ΧΕΚΤΕ εκχωρεί λόγω ενεχύρου ...... πάσαν κατά του Υπουργείου Συγκοινωνιών και Έργων, Τμήμα Δημοσίων Έργων, Κλάδον Οδοποιίας της Κυπριακής Δημοκρατίας απαίτησιν της γενηθησομένην εκ της από 10.1.1979 συμβάσεως εκτελέσεως του ως άνω έργου, καθιστώσα άμα αυτή (την τράπεζαν) δια της παρούσης ανεκκλήτως πληρεξουσίαν και αντιπρόσωπον της ...... με δικαίωμα το μεν[*329] εισπράξεως δια λογαριασμόν της παρά του Εργοδότου της Κυπριακής Δημοκρατίας .... πάσης απαιτήσεως προερχομένης εκ της εκτελέσεως της εν λόγω υπογραφείσης την 16.1.1979 εργολαβικής συμβάσεως, το δε υπογραφής των εκάστοτε σχετικών εξοφλητικών αποδείξεων εισπράξεως των εν λόγω καταβολών παρά των αρμοδίων αρχών ......"
That is the clause which purports to assign the rights under the claims. It will be observed that on September 10, 1980, the office of the Accountant- General wrote a letter to the bank, Exhibit 4, acknowledging receipt of their letter of the 25th August, 1980, together with a copy of the assignment that was sent by the bank.
A number of disputes having arisen between the Government and the contractor the parties jointly appointed an arbitrator under the provisions of the arbitration agreement for hearing and determining same. The nature of the disputes is described in paragraphs 8 and 9 of the affidavit of the government engineer, Mr. Christos Papadopoulos. The appointment was made in August 1981. However, before the conclusion of the proceedings the arbitrator had accepted an appointment to public office and the proceedings became abortive. No adjudication was made on the subject matter of the reference. Soon after, in January 1982, the Government nominated another person, but the contractor refused to concur [*330] in his appointment. The bank alleges that the contractor named an eminent foreigner to act as sole arbitrator but the Government insisted on the appointment of a local man despite the hostile climate created locally against the contractor (see the affidavit of advocate Miss Marangos appended to the opposition). Anyhow the fact is that neither side resorted to the provisions of the Arbitration Law for making the necessary appointment.
In April 1982 matters came to a head and the Government exercised the power of forfeiture given to it expressly under clause 63 of the contract and took possession of the site along with the materials, plant and machinery brought onto the site by the contractor. The project was taken out of the hands of the contractor and completed by another company in collaboration with the Public Works Department. It will be observed that in the plaintiff's affidavit it is asserted that the forfeiture of the contract was wrongful and unlawful.
Put at its shortest the plaintiff's case before me is that the arbitration clause contained in the original contract does not bind the bank as the assignee of the moneys due or to become due under it and that the clause is not, for the reasons put forward by the bank, enforceable against it. It was urged therefore that the only appropriate forum for the determination of the disputes between the parties is the court rather than an arbitration. [*331]
Accordingly on July 12, 1985, the bank commenced this action by a generally indorsed writ claiming a number of declaration and other remedies to which I will refer shortly. On the same day the bank applied for the issue of an interim injunction restraining the defendant from selling certain vehicles and other machinery that had been seized by the Government previously and were due to be sold by auction on the 23rd July last. The writ having been served the defendant, if she wanted to have the dispute arbitrated did what she was bound to do, namely, issue an application for stay before taking any step in the action. This was done on the 18 July last and such application ought to be tried first. However, as it was not possible to complete the proceedings by the 23rd I thought it proper to make an interim order staying the sale pending the result of the application for stay.
Now in this action the bank, as assignee of the contractor, claims a declaration that it is entitled to all rights and claims of the contractor against the Government accruing or arising under the contract Exhibit 5. The bank further seeks a number of declarations relating to the ownership and right to sell the machinery seized by the Government in purported exercise of its rights under the forfeiture clause, namely: that the defendant on account of the deed of assignment cannot proceed to sell the machinery without the previous consent of the plaintiff; that the intended sale is unlawful; that the defendant should be enjoined [*332] from interfering with or selling the machinery or that they should be delivered to plaintiff including a declaration that the machinery or the proceeds of sale should be paid over to plaintiff (see paragraphs 2 up to 7 of the prayer). Further relief is claimed in the form of a declaration that the forfeiture is unlawful as having been made in breach of the provisions of the contract (paragraph 9).
On the basis of the last paragraph the plaintiff claims, as an alternative remedy, damages for trespass to the machinery or for their unlawful detention (see details of the relief claimed in paragraphs 9 and 10 of the writ). Lastly the plaintiff claims damages exceeding £7,000,000(pounds)for breach of contract (paragraphs 11 and 12 of the writ). It is to be noted that in the course of the argument it has not been disputed by plaintiffs that the action was brought in respect of disputes and differences that fall within the ambit of the arbitration agreement (see also paragraph 18 of the affidavit of Miss Marangos).
I should also mention, for completing the statement of facts, that three actions by the contractor against the Government have been stayed by the District Court of Nicosia on divers dates in 1982 (see Exhibits 4 and 5 and the ruling I gave in Action No. 2044/82 on May 8, 1983, which is reported in (1983) 2 J.S.C. 431). [*333]
It will, I think, be helpful, if at this stage I set out the provisions of section 8:-
"8. If any party to an arbitration agreement, or any person claiming through or under him, commences any legal proceedings in any Court against any other party to the arbitration agreement or any person claiming through or under him, in respect of any matter agreed to be referred, any party, to such legal proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to that Court to stay the proceedings, and that Court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings."
Even where the various conditions of section 8 are fulfilled the court still retains a discretion whether or not to grant a stay which, as shown by the authorities, is unfettered by any fixed rules. Czarnikow v. Roth Schmidt & Co. (1922) 2 K.B. 478, 488. See also Kaye (P. & M.) Ltd. v. Hosier & Dickinson Ltd. (1972) 1 W.L.R. 146, 152 (H.L.); Fakes v. Taylor Woodrow Construction Ltd. (1973) [*334]
1 Q.B. 436. But where there is a valid arbitration agreement the court is in favour of enforcing it by granting a stay and the onus in proceedings for a stay is upon the person opposing the stay. It is quite clearly established by authority, that such a party casts upon himself the onus, and it may be a heavy one, of putting before the court compelling reasons why he should not be held to his contract. The question in every case and the one in hand is whether there are sufficient compelling reasons why the party opposing the application for stay should not be held to his contract to arbitrate provided it is a valid and binding contract. Heyman v. Darwins Ltd. (1942) A. C. 356, 388 (H.L.); Metropolitan Tunnel Works Ltd. v. London Electric Ry (1926) Ch. 371.
Section 4(1) of the Arbitration Act 1950, and its forerunner section 4 of the 1889 Act, is the equivalent provision in English Law which is couched in almost identical terms with section 8. It is therefore entirely legitimate to resort to English decisions on the construction of the section for assistance and guidance. It is not irrelevant to mention that in 1975 and 1979 significant changes were brought about in England designed to improve the prospects of London as an international centre of arbitration. In the 1975 Arbitration Act provisions concerning international arbitrations were introduced and the New York Convention of 1958 (Recognition and Enforcement of Foreign Arbitral [*335]
Awards) was ratified. The 1979 Act abolished the special case procedure and the right to apply for setting aside an award for error of law or fact on its face, substituting for it a right of appeal to the courts subject to leave.
The 1975 Act does not cover domestic arbitration agreements, but applies only to international arbitration agreements. Unlike the 1950 Act the new law did not confer any discretionary power on the court to grant stay of an action or not. Once the dispute is within section 1(1) of the law it is mandatory to stay proceedings. The word "shall" in the section is imperative.
For the purpose of comprehending and following one of the main arguments advanced on behalf of the plaintiffs the important words of section 8, Cap. 4, are "or any person claiming through or under him", words that appear in all the Acts to which I have referred.
In his powerful argument counsel for the bank submitted that this expression does not extend to persons claiming through or under the contractor unless those persons were expressly mentioned or the phraseology of the section was adopted in the agreement to refer; and since in the present case the arbitration clause only provides for the determination of matters in dispute between employer and contractor without referring in terms to the contractor's assignees or alternatively the agreement [*336]
does not embody the words of the statute it is not binding on the bank as assignee. Consequently, it was urged upon me that I have no power to stay the action.
The contention is based primarily on Bonnin v. Neame (1910) 1 Ch. 732, where Swinfen Eady J. held that the mortgagee of a partner's share could enforce his security by an action for an account and foreclosure. It will be observed that in that case there was a partnership deed that contained an arbitration clause providing for the reference of disputes between the partners "or between one or more of them and the executors or administrators of the others or other of them or between their respective executors or administrators" to arbitration. The court refused to stay the action under section 4, the mortgagee's right to an account being statutory under section 31 of the Partnership Act 1890 and therefore independent of the partnership deed; and at any rate such clause did not embrace persons claiming through the partners.
Counsel for the Republic sought to distinguish that case on three points. He said, firstly, that the right to refer the matters in dispute to arbitration was limited expressly to the parties and their respective executors or administrators so that all other assignees except those mentioned were not bound by the agreement. Secondly, the mortgagee had a statutory right under section 31 of the Partnership Act to bring an action for an account. And thirdly, [*337] the case involved questions of law which is a factor militating against stay. Indeed this latter ground formed part of the ratio decidendi. I observe that another factor that influenced the court in the exercise of its discretion was that each of the nominated arbitrators expressed strong opinion in favour of their respective appointors. Counsel invited me to find that the distinctions he drew make the judgment inapplicable here.
The next stage in the argument is that the principle in Bonnin v. Neame not having been observed the arbitration agreement in Exhibit 5 is a personal covenant and according to Mr. Papadopoulos, in case the Court upholds the application for stay the bank will be left with no remedy as was the case in Cottage Club Estates v. Woodside Estates (1928) 2 K.B. 463. It is, I apprehend, a basic principle that the effect of a legal assignment in England is that the legal right and its remedies are thereby transferred to the assignee but in the above case Wright J. decided that an arbitration clause is not such a remedy. In that case there was an arbitration clause in a contract between builders and owners for the erection of houses. The builders by deed of mortgage assigned "all moneys due or to become due under the contract" to their bankers as security for an overdraft and gave due notice as provided in the relevant statute. On the completion of the houses disputes arose as [*338] to the amount payable to the builders and in arbitration proceedings between the builders and the owners the owners contended that the builders could not maintain their claim because under the assignment their rights had passed to the bank. The arbitrator made an award that the builders were entitled to recover £448.- from the owners but stated a special case for the opinion of the court. It was held that the arbitration clause was a personal covenant and could not be transferred; that the arbitrator had jurisdiction to deal with the dispute but he ought to do so having regard to the legal position created by the parties, and that as the builders had assigned the money due to them under the contract to third parties the award in their favour could not be upheld.
I was referred by both counsel to a more recent authority Shayler v. Woolf (1946) 1 Ch. page 320. The decision of the Court of Appeal was unanimous, but my attention was drawn to several passages from the judgment of the Master of the Rolls Lord Greene and the other members of the court in aid of the respective arguments of counsel. Mr. Papadopoulos said that the Cottage Club Estates is a case dealing with the rights of an assignor and an assignee and shows that in an arbitration between the Government and the contractor no award can be made in favour of the bank as the assignor had divested all his interest in the contract; whereas in Shayler the point was whether the benefit of a covenant in a contract of sale for supplying water to a house, containing an [*339] arbitration clause, was assignable. I observe that the case is authority for the proposition that an arbitration clause is not a personal covenant in the sense that it cannot be assigned. Counsel did not dispute the effect of the case but repeated that the principle is applicable only when the words of section 8 are included verbatim in the clause adding that the Cottage case was left unaffected by the later authority and is still good law.
The way Mr. Evangelou puts his case, as I understand it, is that the decision in Cottage Club Estates was overruled by the Court of Appeal in the following year in Aspell v. Seymour (1929) W.N. 152 and later by Shayler v. Woolf or at any rate it was explained. At all events the Cottage case did not decide that the jurisdiction of an arbitrator is ousted where the interest of a party to an arbitration clause devolved on some other person by voluntary assignment and that the pronouncement of Wright J. must be confined to the facts before him.
Before referring to the effect of Bonnin v. Neame I will have to say a few words about the assignment effected in this case. Originally Mr. Evangelou doubted its validity but in due course conceded that it was a valid equitable assignment though he said that it was confined only to a right in respect of "all the money due or to become due under the contract" and did not extend to property such as the machinery in question. [*340]
In England a legal assignment derives its authority from section 136 of the Law of Property Act 1925, but no similar provision exists in our law. Under Cyprus Law, therefore, there is no statutory assignment. However, two recent decisions in Chrysostomou v. Chalkousis (1978) 1 C.L.R. 10 and Markidou v. Kiliaris and Another (1983) 1 C.L.R. 392, cited to me by Mr. Papadopoulos, recognized the concept of equitable assignment as part of our law. In short an equitable assignment usually arises where there is a clear intention to assign a debt or other thing in action for which no particular form is required provided, of course, that the meaning is clear. There can be no doubt that Exhibit 3 fulfills those requirements and moreover there has been in this case written notice to the Government which was duly acknowledged. It was, therefore, rightly accepted that Exhibit 3 is a valid equitable assignment.
However, it is important to point out that under an equitable assignment the assignee must bring his action in the name of the assignor or add him as a defendant if he refuses to joint him as plaintiff. Non-joinder of the assignor is not fatal if no objection is taken (Brandt's Sons and Co. v. Dunlop Rubber Co. (1905) A.C. 454 H.H. and Chrysostomou v. Chalkousis), but the action of an equitable assignee will have to be dismissed if the issue is raised and he does not joint the assignor as a party. Williams v. Atlantic Assurance Co. Ltd. (1933) 1 K.B. 81. See also Markidou v. Kiliaris, p. 406, 20-30. [*341]
It must have become apparent from the above analysis that the assignee - in this case the bank - does not have, strictly speaking, an independent cause of action against the Government which was the case in Bonnin v. Neame. Moreover, the other features of the case, namely, that there were questions of law involved in addition to the partisanship manifested by the arbitrators sufficiently differentiate the case from the present situation. In my judgment Bonnin v. Neame does not support the wide proposition put forward on behalf of the plaintiffs.
It is interesting to observe that the argument which was addressed to me was also advanced in the Court of Appeal in Shayler v. Woolf, but was not accepted Lord Green observing at pages 322 and 323 on the very topic:-
"That only leaves one point and that is the arbitration clause. It is said that the contract cannot be assignable, because of the existence of the arbitration clause, inasmuch as such a clause is in its nature not assign- able, or, it is said, is only assignable where the assignees are expressly mentioned in the clause itself or the contract which contains the arbitration clause is itself expressly declared to be assignable.
In my opinion, those propositions are incapable of support in the wide way in which they are stated; nor does any of the authorities [*342] quoted to us in support of them really touch the point. The question whether an arbitration clause prevents a contract from being assignable must depend on the intention of the parties, and the nature of the contract will, of course, be very important. Quite apart from an arbitration clause, if the nature of the contract is one which makes it incapable of assignment, owing to its personal nature, there is no question, of course, of the assignability of the arbitration clause; but that an arbitration clause is assignable in its nature seems to me to be quite clearly contemplated by s.4 of the Arbitration Act, 1889, and it has been recognized in this court in one of the authorities referred to, namely, Aspell v. Seymour."
To the same effect passages can be found in the judgment of Lord Hanworth in Aspell v. Seymour in the clearest possible terms:
"The point taken was that the plaintiff was an assignee, and therefore that he could not have his action stayed, as he was not a party to the submission to arbitration. The contract, however, in terms contemplated that there might be an assignment with leave, and for the purpose of this application the assignment was accepted as correct. Sec. 4 provided that the right to a stay under an [*343] arbitration claim should arise not only as between the parties to the submission but also as between assignees as persons claiming through the original parties."
Shayler v. Woolf was, at first instance, tried by Roxburgh J. and his decision, reported in (1946) 1 ALL E.R. 464, was affirmed on appeal. Commenting on Bonnin v. Neame he said this at page 468:
"I cannot claim Bonnin v. Neame as an authority decisive in favour of the view which I am expressing, but I derive comfort from that case because, in my judgment, if the mortgagees had been claiming under the partnership deed and had not been claiming by virtue of some independent statutory right, the decision would almost certainly have been the other way."
And the learned judge summarized the essence of the decision in the Cottage Club case in these terms:-
"In the Cottage Club case Wright, J., said ((1929) 2 K.B.D. 463, at p. 466), that the arbitration clause was a personal covenant and could not be transferred; but the facts of that case show, I think, that he meant that the rights under the arbitration clause could not be transferred from the assignor to the assignee without the concurrence of the other party to the contract, and he did not suggest [*344] that, if an assignee claimed to take the benefit of a contract under an assignment, he could escape the burden of an arbitration clause if that other party desired an arbi- tration. In my judgment he could not."
My decision is also fortified by Roussel-Uclaf v. G.D. Searle and Co. Ltd. and Another (1978) F.S.R. 95 which was decided under the 1975 Arbitration Act, but as I have already said the phrase used in section 8, Cap. 40 is identical. It is the only other case which I have been able to trace which has a bearing on the point in issue. A summary of the facts and the essence of the decision is found in Russel on Arbitration, 19th Ed., under the heading "Person Claiming Through or Under him":-
"Searle U.S. agreed that the plaintiffs, a French company, should have exclusive rights to sell certain drugs outside the United States. The agreement contained an arbitration clause. Disputes arose as to whether a certain drug was within the exclusive rights so granted. Searle U.S. went ahead and marketed this drug in the United Kingdom through Searle U.K. who were not parties to the agreement. Held by Graham J., that the Act should not be construed narrowly, and a wholly owned subsidiary claiming a right to sell patented articles which it has obtained from, and been ordered to sell by, its parent, claims under or through that patent. The two parties and [*345] their actions were so closely related on the facts that both were either blameworthy or blameless."
The case is also reported in (1977) 127 N.L.J. 1127 and The Times, October 22, 1977.
As regards the point taken by the plaintiffs in the Cottage Club Estates I think there is no such real parallelism with this case as suggested. The facts in Aspell v. Seymour bear a more close resemblance. There an assignee of all the builder's rights including all moneys payable under the contract sued in his own name and a stay was ordered on the application of the building owners. It is important to read what the court had to say about Cottage Club Estates v. Woodside Estates which in my judgment is equally applicable and valid in this case:
"It had been stated that a difficulty was created in the mind of the Master and Judge by Cottage Club Estates, Ltd. v. Woodside Estates Co. (Amersham), Ltd. (1928) 2 K.B. 463. There, however, the persons suing were the contractors, and they had assigned all money to become due under the contract. In these circumstances no award could be made in their favour, as they had divested themselves of any interest."
However, it is true that, as was pointed out before me for the defendant, the claim in this action appears to exceed the loan made to the contractor and that the [*346] assignment was subject to a provision that the bank should retain 25% of every payment made by the Government paying over the balance of each instalment to the contractor.
For the reasons which I have endeavoured to express as shortly as I can, my conclusion is that the bank as assignee "of moneys due or to become due" can enforce, and is subject to, the arbitration clause in the contract.
There remains a last argument against an order for stay of the action. Mr. Papadopoulos submitted that, in the words of section 8 of the Arbitration Law, the defendant was not willing at the time when the proceedings were commenced to do all things necessary for the proper conduct of the arbitration. I have already mentioned that before the proceedings in Action No. 2044/82 were stayed there was an abortive attempt to arbitrate followed by a new nomination on the part of the Government. The person named was, however, rejected by the contractor by their letter dated the 29th March, 1982. It was not really in dispute that thereafter, at a time not specified by the evidence, but in any event after the action was stayed, the contractor suggested a certain foreign arbitrator for acting as a single arbitrator. But for the reasons advanced by Mr. Evangelou he was not acceptable to the Government. Put shortly those reasons were that a foreign arbitrator was not conversant with Cyprus Law and, secondly, the [*347] contractor's allegation of possible bias by any locally appointed person was unacceptable. However that may be the contractor did not resort to the Court for an appointment, nor did the Government.
I pause to observe that where, as here, the arbitration clause contemplates reference of the disputes to a single arbitrator the court is empowered under section 10(l)(a) of the law to make an appointment in case of disagreement between the parties. However, section 10(2) provides that if an appointment is not forthcoming within seven days after service of notice the court may exercise its power in this respect on the application of the party who gave notice.
Counsel for the bank submitted in an elaborate way that the defendant was not willing to take all necessary steps for the purposes of the arbitration. He laid stress on two aspects of the matter. He said that, despite the lapse of time since proceedings by the contractor were last stayed in May 1982, the defendant did not get an arbitrator appointed. Secondly, and more importantly, he emphasized the legal inability of the bank to take action in this respect. Of course the contention was made on the assumption that counsel's view of the law relating to the construction of clause 67 was correct, but it will be remembered that I felt the contention was not well founded. Counsel for the defendant submitted that no such unwillingness as suggested could be inferred in this case and relied on Hodson v. Railway [*348] Passengers' Assurance Co. (1904) 2 K.B. 833 for saying that delay in proceeding with the arbitration is no ground by itself for refusing a stay. In Hodson the defendant objected to the arbitrator nominated by the plaintiff, but took no further action in the matter. On an application by the defendant for stay of plaintiff's action, brought a few months after service of notice, it was held that although the defendant could have done more to further the conduct of the arbitration, he had been "ready and willing" within the meaning of the section. Mr. Evangelou contended that the Government having exercised its right of forfeiture under section 63 of the contract it was up to the other side to take action and that the Government's claim against the contractor crystallized only after the new contractor had finished the works, a matter resolved only recently.
A close examination and comparison of the relief claimed in this action with the remedies, subject matter of the action that was stayed by me, reveals that they are more or less the same. The basic claims centre round the Government's right to forfeit the contract under clause 63 and the claim for damages for breach of contract. If I am right in my conclusion that the bank in this case can enforce and is subject to the arbitration clause in the contract I do not see how I can reach a different conclusion in this case. It would be wholly inconsistent to allow this action to proceed on matters already stayed in other proceedings. [*349] Though one does not feel happy for the delay in bringing the dispute before the proper forum, I am of the opinion that the bank, which is really claiming through "XEKTE", is estopped from litigating matters for which a stay is still in operation and is, in my judgment, binding on the bank. Of course any litigant whose action has been stayed may always move the court for its removal if proper grounds are shown. See, inter alia, Cooper v.Williams ( 1963) 2 Q.B.D. 567. But the question does not arise on the application before me.
There is still the question, raised by Mr. Papadopoulos, whether in ordering a stay the court should impose terms. Counsel urged me to continue the injunction I have already made in the circumstances which I have recounted earlier in the course of this judgment until the conclusion of the arbitration proceedings. Counsel referred me to certain passages in the 1958 edition of the Annual Practice reproduced in the 1982 edition, but I think that it is plain that the jurisdiction of the court to attach terms as to costs or other matters is really founded on section 28 of the Arbitration Law which reads:-
"28. Any order made under this Law may be made on such terms as to costs, or otherwise, as the Court thinks just."
As a matter of general principle no injunction is granted in the case of a building and engineering contract for restraining forfeiture pursuant to a [*350]
term contained in the contract as the granting of the remedy would be tantamount to ordering specific performance. Garrett v. Banstead and Epson Downs Ry (1862) 12 L.T. 654, and Munro v. Wivenhoe etc.Ry (1865) 12 L.T. 655. In this case the forfeiture took place long ago and it would not be proper to grant indirectly the remedy now when it was not given in the first place in Action No. 2044/82. In any event the assignee can be adequately compensated in damages if the forfeiture is found to be wrongful and the Government's ability to pay damages in case any are awarded against it has not been doubted.
In the result, an order is made for stay of the action in the terms set out in the application and the interim order is hereby discharged. As the case involved novel points I will not make any order as to costs.
Order staying action .
Interim order discharged
No order as to costs.