JCW

[Judgment in Default – Right to enforce Arbitration Agreement] Justin was the counsel for the Appellant in this Appeal which was allowed by the Federal Court. The Federal Court decided on important principles of law relating to the right to set aside a Judgment in Default based on a valid Arbitration Clause. The following Questions of Law were inter-alia answered by the Federal Court : 1.Can a Judgment in Default in Court be sustained when the plaintiff who obtained the Judgment in Default is bound by a valid Arbitration Agreement/Clause and the defendant has raised disputes to be ventilated via Arbitration pursuant to the Arbitration Clause? We answer the question in the negative. 2.Should the Court in hearing an application to set aside the Judgment in Default where a valid Arbitration Clause is binding on parties consider the “merits” or “existence” of the disputes raised by the defendant? We answer the question in the negative.”   The Federal Court further held as follows in respect of important points of law :   (i)       That even when a judgment in default has been procured, Section 10 of the Arbitration Act remains applicable (paragraph 48 (i) of the Grounds) (ii)      The judgment in default cannot act as a bar to arbitration because the Contractor in initiating Court proceedings has effectively breached the arbitration agreement ( paragraph 48(ii) of the Grounds) (iii)     The Employer’s application to stay the Court proceedings pending arbitration raises a jurisdictional point which the Court is bound to consider( paragraph 48 (iv) of the Grounds) (iv)      Clause 30.3(ii) of the PAM Contract entitles the Employer to refer any disputes or differences in relation to the set offs our counterclaim or any allegations of defective work to an arbitrator under Clause 34 of the PAM Contract and therefore , the right to payment under Interim Certificates under Clauses 30.2 or Clause 30.3.(i) are not “carved out” from arbitration ( paragraph 53 ( b) of the Grounds.)