The bank transfer of Rs 5.7 billion to Betamax was made late Tuesday evening, Tuesday June 22. This, before the end of the new deadline demanded by the State Trading Corporation (STC) at the beginning of the week.
The bone of contention between State Trading Corporation (‘STC’) and Betamax Ltd (‘Betamax’) has finally come to end with the judgment of the Privy Council on the 14th June 2021. The conclusion of this 6 years’ battle before different courts ended with STC’s liability to pay damages of Rs 5,7 billion.
During the previous government, STC had, in 2009, entered a Contract of Affreightment with Betamax for the transport of petroleum products from India to Mauritius for a period of 15 years.
The contract between STC and the newly incorporated Betamax happened despite the reserves of the State Law Office which, amongst others, had to review the contractual arrangement and the missing approval of the Central Procurement Board.
In 2015, the Cabinet of the new government that come to power in December 2014 announced their decision to terminate the Betamax’s contract on the ground of “unlawful procedure and processes regarding the allocation of the contract.” As a result, STC gave notice that it will not use Betamax’s services and thus, Betamax terminated the contract. Betamax then referred the matter to the Singapore International Arbitration Centre (‘SIAC’) for damages and compensation following the termination of contract.
The ruling of SIAC in 2017 was in favour of Betamax with an entitlement to damages in the sum of US$115.3 M (‘Arbitral Award’). Following this ruling, two applications were lodged at the Supreme Court of Mauritius by the two parties. STC requested the ruling to be set aside while Betamax made an application to enforce the Arbitral Award.
In 2019, the Supreme Court of Mauritius ruled in favour of STC and set aside the Arbitral Award on the basis that it conflicted with the public policy of Mauritius.
Betamax then appealed to the Privy Council. The judgment of the Privy Council stated that “the Supreme Court was in error in reviewing the decision of the Arbitrator… The decision was final and binding on the parties and therefore no issue arose under section 39(2)(b)(ii) of the International Arbitration Act as to whether the Award conflicted with the public policy of Mauritius.”
A Legal Notice was served to the STC stating the payment should be affected on or before 22 June 2021. In reply to a Private Notice Question on the Betamax matter and the legal notice issued, the Commerce Minister, Soodesh Callichurn informed the House that the payment modalities are being finalised in consultation with the Ministry of Finance, Economic Planning and Development. The settlement will partly be repaid from the reserves of STC and from Government resources.
DID YOU KNOW ?
As an Alternative Dispute Resolution, arbitration allows parties to resolve matters outside of courts. The matter will be conducted in the presence of arbitrators – individuals acting as judges and giving their rulings on the matter. The parties are free to determine among themselves on the appointment of the arbitrator. In general, an arbitration award is binding and enforceable through the courts, unless it was already agreed by the parties that the award is not to be binding.
With the expansion and globalisation of cross-border investment and trade, there has been an increase in the complex relationships between businesses, investors, and states. This led to a rise in international arbitration.
The framework for international arbitration in Mauritius is governed by the International Arbitration Act 2008 (as amended in 2013) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 2001, which is also known as the New York Convention Act.
These two legislations complement each other so that parties can either enforce awards or ask a court to set the award aside or not enforce them. Usually, all foreign arbitral awards are enforceable in Mauritius since it is a party to the New York Convention.