In the first decision of its kind, the Bermuda Supreme Court has utilized its powers under Section 39 of the Arbitration Act 1986 (the "Act") to terminate an arbitration – and in this case a very important one – the arbitration between The Allied Trust and Allied Development Partners Limited (together "Allied") and The Government of Bermuda. This decision follows Parliament's voiding of Allied's lease over the Hamilton Waterfront (the "Waterfront Arbitration").

The Waterfront Arbitration began in May 2014 when Allied requested the Governor to constitute an arbitration tribunal under section 14(9) of the Municipalities Amendment Act 2013 (the "MAA"), as read with section 10(1) of the Acquisition of Land Act 1970 (the "ALA"), to determine their compensation claim against the Government following the voiding of the lease for the Waterfront. The Waterfront Arbitration was well under way by early 2015 with the pleadings having been exchanged and the parties moving to the drafting and exchange of evidence, with many witness statements anticipated from both sides.

However, Allied filed a constitutional claim in February 2015 in the Supreme Court which led to the Waterfront Arbitration being stayed. The constitutional claim was struck out by the Chief Justice in his ruling of August of that year, but Allied appealed in September 2015 and obtained leave to appeal in November 2015. In February 2016, the then Minister of Home Affairs (our client), successfully obtained a security for costs order from the Acting Registrar in the sum of $150,000.00. Allied appealed that order to the Court of Appeal in the March 2016 session, but the order was upheld. On 4 March 2016 the Court of Appeal ordered that unless security for costs was paid into Court by 31 March 2016, the Respondents' appeal would be dismissed. The security for costs was not posted and the appeal was dismissed.

In May 2016, the Waterfront Arbitration panel lifted the stay given that the constitutional proceedings had concluded and set a hearing for directions. Allied failed to attend the hearing and its attorney indicated that Allied had insufficient funds to participate in the Waterfront Arbitration. No further communication was received from Allied or its attorney after May 2016 and no steps had been taken by Allied to progress the matter which it referred to arbitration since February 2015.

Therefore, we were instructed by the then Minister of Tourism, Transport and Municipalities (the "Minister") to apply to the Supreme Court pursuant to its powers under the Act to seek termination of the Waterfront Arbitration for delay by Allied in prosecuting its claim. The Waterfront Arbitration was a statutory arbitration and Section 43 of the Act makes clear that the part of the Act to which Section 39 (the power to terminate) belongs, apply to statutory arbitrations.

Proceedings were filed with the Supreme Court in July 2017 and the first hearing took place on 31 August 2017 to which Allied did not appear. Hellman J who presided over that initial hearing directed that the Minister should file a supplementary Affidavit. The matter was then mentioned on 14 September 2017 before the Chief Justice and attorneys for Allied attended and indicated that the application was opposed. Directions were ordered which required evidence to be filed by Allied within 14 days but Allied failed to file any evidence or indeed to comply with any of the other directions.

At the hearing on 16 November 2017, I appeared for the Minister, supported by Mr Alan Dunch, while Allied's attorney did not appear. Mr Michael MacLean, a shareholder of Allied Development Partners Limited, appeared, and Llewelyn Peniston was permitted to assist Mr MacLean as a McKenzie friend, a person who is permitted to assist a litigant in person, despite the view that we raised that it was inappropriate for Mr Peniston to act as a McKenzie friend given that he was disbarred.

In any event, Allied was unable to advance any real defence to the claim that there had been undue delay on their part in prosecuting their claim in the Waterfront Arbitration. The Chief Justice therefore terminated the Waterfront Arbitration. His reasons are available in the link below. This is the first time that an application has been made under Section 39 of the Act in Bermuda.

Allied Development 2017 Ruling

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.