Vijay Construction stunned by court order to pay €20.2 million in landmark ruling
The ruling comes as a crushing blow to Vijay Construction but will be welcomed by foreign investors considering venturing into Seychelles.The Supreme Court of Seychelles has ordered that Vijay Construction pay Eastern European Engineering Limited (EEEL) nearly €20.2 million, in a stunning reversal that demands the engineering and construction company to cough up massive compensation for breaking the terms of a con-tract it signed for the development of Savoy Hotel in 2011.
The ruling, delivered on 30th June 2020 by Judge Ellen Carolus, may spell the end to a high-profile legal battle between the two parties that has stretched back the last eight years, involving courts from Seychelles, France and the UK.According to the ruling, Vijay Construction must pay EEEL a little over €16.6 million in line with a UK court order from 2015 as well as €3.56 million in interest. The final figure is expected to rise further, with hundreds of thousands of both pounds and dollars in legal fees and other costs also falling on Vijay Construction’s shoulders.To recall, EEEL hired Vijay Construction to carry out construction work for Savoy Hotel in 2011 through six contracts.
SIX CONTRACTS
Each of the six contracts included similar arbitration clauses, which provided that any dispute, disagreement or claim would be settled by arbitration in Paris. A dispute indeed arose and EEEL filed a Request for Arbitration in September 2012 before the International Chamber of Commerce in Paris.The sole arbitrator delivered an award in November 2014 in favour of EEEL, however, the costs to be incurred by Vijay Construction for breaking the contract were never paid.This is partly down to the fact the award was not enforceable in Seychelles because the Indian Ocean archipelago was, at that time, not party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).
A lengthy legal battle subsequently ensued to have the award recognized locally. But with Seychelles officially acceding to the New York Convention earlier in 2020, the award and its orders have now become enforceable.“In view of this change of the Seychelles position, this Court finds nothing objectionable about the procedure followed by the plaintiff [EEEL],” Judge Carolus wrote in her judgement notes.
CRUSHING BLOW
The decision represents a crushing blow to Vijay Construction, one which will put serious, perhaps untenable pressure on the company’s finances if upheld. To note, late last week, Bernard Georges, the lawyer representing Vijay Construction in the case, filed a challenge to the ruling with the Sey-chelles’ Court of Appeal. A date is yet to be set for the hearing. “It’s a disappointing outcome, a judgement which fails in numerous respects to follow legal prece-dent,” Georges told TODAY on Monday.
EEEL, through their lawyer Alexandra Madeleine, also issued the following statement at TODAY’s request. “We do not have anything to add to the judgement itself. Its well-substantiated reasoning speaks for itself. We are just pleased that the Supreme Court of Seychelles decided to follow the lines of argumentation of the High Court of England and Wales. The decision of the British Court in this case was so obvious and plain in its logic that even Vijay decided not to appeal it.”Though catastrophic for Vijay Construction, the ruling will come as welcome news for foreign investors considering venturing into Seychelles.Many commenters had previously raised concern that Vijay Construction vs EEEL had shaken foreign investors’ confidence in Seychelles, given their need to have a reliable court system to turn to in order to settle international disputes.In her closing remarks, Judge Carolus even refers to the impact of her ruling on foreign direct in-vestments into Seychelles, as well as “the consequent economic and social legacy of this decision.”
By W. J. May
