About this case:

• Citation:
  [2024] IEHC 309
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Mark Sanfey

Delivering judgment for the High Court, Mr Justice Sanfey considered it “axiomatic that, if the court can exercise its inherent jurisdiction to grant a stay, it must equally have inherent jurisdiction to lift the stay. Where the circumstances in which it might do so are agreed by the parties, its jurisdiction to lift the stay when those circumstances occur cannot be doubted.”

Background

The proceedings concerned a property owned by the plaintiff’s deceased parents in Dunmore East, Co Waterford which was situated on a north-facing clifftop. In January 2010, a portion of the cliff collapsed and severely undermined the foundations of the property. A claim in respect of that damage was made by the homeowners under an insurance policy held with the defendant.

The defendant declined the claim on the basis that damage caused by ‘subsidence, landslip or heave’ was excluded from the scope of cover under the policy.

High Court proceedings subsequently issued contending inter alia that the damage to the property was covered by the policy, and that the defendant was in breach of contract.

On 7 October 2019, the defendant issued a motion seeking an order pursuant to Article 8 of the UNCITRAL Model Law staying the High Court proceedings to allow referral to arbitration. The stay was granted by Mr Justice David Barniville on 22 January 2020, the parties having concluded an ‘agreed order’ between them which stated inter alia that the defendant’s solicitor would undertake to participate in the arbitration on behalf of his client in a timely and efficient fashion, and that the plaintiff would be entitled to apply to lift the stay in the event of non-compliance with that undertaking.

On 4 February 2022, the plaintiff issued a motion seeking an order lifting the stay and seeking directions for the progression of the High Court proceedings. The plaintiff claimed that the defendant had delayed matters by failing to furnish its affidavit of discovery despite 17 months having passed since the expiry of the parties’ agreed timeframe for discovery.

The plaintiff also contended that despite suggesting in November 2020 that the arbitration should proceed by way of modular hearing and indicating that an application would be made to the arbitrator in relation to same, the defendant had failed to make that application.

The defendant asserted that the issues raised by the plaintiff were matters more appropriate for the arbitrator as they concerned the conduct of the arbitration. Highlighting that the plaintiff had not made an application to the arbitrator in respect of same, the defendant posited that the plaintiff should not be permitted to seek an order from the court exiting the arbitration process without firstly having invoked the jurisdiction of the arbitrator.

The High Court

Finding the wording of the undertaking “curious”, Mr Justice Sanfey believed that it was clearly intended that the conduct of the defendant’s participation in the arbitration would occur “in a timely and efficient fashion…”

Noting the submissions of the plaintiff that the court has an inherent jurisdiction to grant and to lift a stay, the judge considered the defendant’s contention that once an order is made pursuant to Article 8, the court can only determine that the arbitral process is at an end in the circumstances as set out in that article.

The court examined Article 8(1), which states: “A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.”

Highlighting that the order of Mr Justice Barniville specified that it was made “by consent”, Mr Justice Sanfey confirmed that “it is not indicated that Article 8(1) is the authority under which the referral to arbitration is made”. Nonetheless, in circumstances where the plaintiff did not argue that the order was not made pursuant to Article 8, the judge proceeded on the basis that Article 8(1) governed the referral to arbitration.

Finding it “absolutely clear” that the referral was subject to the observance by the defendant’s solicitor of his undertaking, the court noted: “The respondent now seeks to resile from that agreement by saying that, far from ‘any non-compliance’ with the undertaking resulting in the lifting of the stay, the claimant must now establish that the arbitration agreement is ‘null and void, inoperative and incapable of being performed’ — clearly far more exacting criteria than were agreed between the parties.”

Mr Justice Sanfey also considered that in circumstances where the order gave liberty to apply to lift the stay in the event of non-compliance with the undertaking, “to hold the claimant to the more exacting standard of ‘null and void, inoperative and incapable of being performed’ runs contrary to the intention of the parties and the express order of this Court”.

The court continued: “In my view, it is axiomatic that, if the court can exercise its inherent jurisdiction to grant a stay, it must equally have inherent jurisdiction to lift the stay. Where the circumstances in which it might do so are agreed by the parties, its jurisdiction to lift the stay when those circumstances occur cannot be doubted.”

Having regard to the defendant’s suggestion that the plaintiff should have raised the issue of the defendant’s delay with the arbitrator, the court considered: “Certainly, the claimant could have done this. However, having been subjected to unacceptable foot-dragging by the respondent, the claimant chose to avail of the process the parties themselves agreed and which was ordered by the court, and applied to court to lift the stay. In my view, he was plainly entitled to do so.”

In response to the defendant’s contention that the plaintiff could simply have applied for a unitary hearing if he did not agree with the defendant’s proposal of a modular hearing, Mr Justice Sanfey emphasised: “Once again, the claimant could have done this. However, from February 2021 onwards… the respondent was intimating its intention to apply to the arbitrator for a direction that a preliminary issue applied. The respondent suggested on a number of occasions throughout 2021 that it would make such an application. I do not think that the claimant can be faulted for waiting to see if the respondent would carry out its intention…”

Disagreeing with the defendant that Bremer Vulkan Schiffbau v South India Shipping Corp [1981] AC 909 could be relied upon to fix the plaintiff with an obligation to apply to the arbitrator to progress the proceedings where the defendant was causing delay, Mr Justice Sanfey considered it “somewhat ironic that the respondent calls those comments in aid in circumstances where it had been the source of serious delay in the proceedings, agreed to mend its ways for the purpose of the arbitration, and then entirely failed to do so”.

Conclusion

Confirming that there was “no basis upon which Article 8 could be proffered as a means by which the court could be prevented from giving effect to its previous order”, the High Court made an order lifting the stay.

Jephson & Anor v Aviva Insurance Ireland DAC [2024] IEHC 309