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[2010] ZAGPPHC 264
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Bellingan Ingenieurs Ontwikkeling (Pty) Ltd v Saab Grintex Defence (Pty) Ltd And Another (49822/09) [2010] ZAGPPHC 264 (1 June 2010)
NOT REPORTABLE
IN THE HIGH COURT OF
SOUTH AFRICA
(NORTH GAUTENG HIGH
COURT, PRETORIA)
CASE
NO. 49822/09
DATE:01/06/2011
In the matter between:
BELLINGAN
INGENIEURS ONTWIKKELING (PTY) LTD
....................
Applicant
and
SAAB
GRINTEX DEFENCE (PTY) LTD
......................................
1st
Respondent
THE
SECRETARIAT OF THE INTERNATIONAL
…....................
2nd
Respondent
CHAMBER OF COMMERCE
INTERNATIONAL
COURT OF ARBITRATION
JUDGMENT
Legodi J,
The
inter
pretation of the so called Amended
Co-operation agreement and Escrow Agreement concluded on the 21
February 2006 and 24 February
2006 respectively is the subject of
the dispute before me.
The
applicant seeks a relief to the effect that it be declared that the
dispute between the applicant and the first respondent
that has been
referred by the first respondent for arbitration by International
Chamber of Commerce International Court of Arbitration
(second
respondent) falls to be determined by way of inter-pleader
proceedings before this court and not by way of arbitration
before
the second respondent. In the alternative that insofar as it
relates to the Escrow intellectual property right it be
declared
that it falls to be determined by this court by way of inter-pleader
proceedings.
The applicant in seeking
for relief as set out above, seems to rely on the following
averments contained in paragraphs 15.9 and
16 of the applicant’s
founding affidavit:
“15.9 The
applicant disputes the jurisdiction of the ICC Court of Arbitration
to determine the aforesaid dispute. It is
the applicant’s
contention that upon a proper interpretation of the Amended
Co-operation Agreement, read with Escrow Agreement
(especially
clause 6.6 thereof), the dispute between the parties falls to be
determined by way of interpleader proceedings before
this Honourable
Court, which is a Court of competent jurisdiction, and not by way of
arbitration before the ICC court of Arbitration.
16. The
issue that must be determined by this Honourable Court is thus
whether upon a proper interpretation of the Amendment Co-operation
Agreement, read with the Escrow Agreement (especially clause 6.6
thereof), the dispute between the parties falls to be determined
by
way of interpleader proceedings before this Honourable Court,
which is a court of competent jurisdiction or by way of arbitration
before the ICC Court of Arbitration.
Whilst
the applicant’s counsel sought
to
argue the applicant’s cause of the application beyond clause
6.6 of the Escrow Agreement, the cause of action is founded
on
clause 6.6. Prayer 2 of the notice of motion read together with
clauses 16 and 17 of the Escrow Agreement makes it clear
to this
effect.
Clause 6.6 referred to
in paragraph 15.9 of the founding affidavit reads as follows:
“6.6 In
the event that (i) any dispute shall arise between the Parties with
respect to the disposition or disbursement
of any of the assets held
hereunder or (ii) the Escrow Agent shall be uncertain as to how to
proceed in a situation not explicitly
addressed by the terms of this
Agreement whether because of conflicting demands by the other parties
hereto or otherwise it shall
be permitted to interplead all of the
assets held hereunder into a court of competent jurisdiction, and
thereafter be fully relieved
from any an all liability or obligation
with respect to such interpleaded assets. The parties hereto other
than the Escrow Agent
further agree to pursue any redress or recourse
in connection with such a dispute, without making the Escrow Agent a
party to same.
As
contended
by the respondents’
counsel, clause 6.6 deals with the Escrow agent’s right
(hereinafter referred to as the agent)
to interplead in the event of
an occurrence referred to in (i) or (ii) under clause 6.6. It is
not peremptory on the agent to
interplead. However, in the event
the agent so chooses to interplead, it
shall
be so allowed to interplead
(my own
emphasis).
If
the agent chooses not to interplead, any of the parties that is, the
first respondent or the applicant would be entitled to
pursue any
redress or recourse in connection with such dispute referred to in
clause 6.6 and as this happens, the agent shall
not be made a party
to any such dispute.
Neither the
applicant nor the first respondent is authorised to interplead under
clause 6.6. To be more precisely you cannot
interplead when you are
a party to the dispute.
Therefore
any cause of action for the relief sought and based on clause 6.6 is
without a basis whatsoever. However, counsel for
the applicant,
during the discussion sought to suggest that a cause of action based
on clause 6.6 should be seen in context.
Before I deal with this
contention, I need to immediately state that the cause of action as
pleaded in paragraph 15.9 and 16,
does not justify a relief for a
declaratory order proposed by the applicant.
Coming
back to the context in which it is suggested that the matter should
be approached, a brief background to the dispute might
be necessary.
The
first respondent having sought to have terminated the two
agreements, approached the second respondent in terms of clause
17
of the Amended Co-operation Agreement. Clause 17 of the said
agreement provides that any dispute arising out of or in connection
with this agreement should be finally settled by arbitration in
accordance with the provisions of the Interpretations Chamber
of
Commerce as are in force at that time.
Having
referred the dispute to the second respondent regarding termination
of the agreement and the applicant having been notified
of the
arbitration proceedings held in South Africa, the latter decided not
to participate in the arbitration proceedings. The
applicant took
the point apparently that arbitration was the wrong forum to deal
with the dispute. According to the applicant
the terms and
conditions of Amendment Co-operation Agreement are not applicable to
the dispute.
In
other words, the applicant contends that the dispute being about
delivery of intellectual property held by the agent, it has
to be
decided in terms of the provisions of the Escrow agreement. In
making this submission, I understood counsel for the first
respondent to rely mainly on the provisions of clauses 4 and 11 of
the Escrow agreement. Clause 4 deals with release of Escrowed
intellectual property and it provides as follows:
“4.1 The
ESCROWED IP may be removed and/or exchanged only on written
instructions signed by a person authorised by a specific
Party and to
a person authorised by the other Party. Notwithstanding the
aforementioned, the Escrow Agent shall release the ESCROWED
IP to at
the offices of the Escrow Agent upon a determination
(“Determination”) that either of the following events
(a
“Triggering Event”) has occurred.
An event of Force
Majeure occurs and BED is unable to deliver the Product under the
Agreement for a period of 12 (twelve)
months after the contractual
delivery date; or
A Party has committed
an irreparable breach, which resulted in termination of the
Agreement. In such event access will be
given to the ESCROW IP,
to the non-defaulting Party.
“
BED”
referred to in clause 4, is the applicant. Clause 11 on the other
hand provides that Escrow agreement shall be governed
by and
construed in accordance with the laws of South Africa and that, the
parties hereto consent to the jurisdiction in Pretoria.
A more or less similar
provision is made in clause 16 of the amended main-cooperation
agreement and it reads as follows:
“This
agreement shall be construed in accordance with and be governed by
the laws of the Republic of South Africa”.
It
looks like the applicant’s counsel wishes to equate “Parties
hereto consent to the jurisdiction in Pretoria”
as a consent
to the jurisdiction of “this court”. Clause 11 of the
Escrow agreement makes no reference to a court,
but rather to a
place or area that will have a jurisdiction to deal with the
parties. In other words, it deals with the area
where proceedings
must be instituted. The arbitration proceedings are said to have
been instituted in Pretoria, but later moved
to Sandton as same
would be convenient for participating parties and for the people
involved in the arbitration proceedings,
the applicant having
elected not to participate in such proceedings. I do not see clause
11 as creating a jurisdiction upon
this court by consent.
The
other point which was taken by the applicant and
vigorously
argued by counsel on behalf of the applicant was that, for the
purpose of its application, the Escrow Agreement should
be seen as
being existing independently and separate from the Amended Escrow
agreement. In making this submission, counsel for
the applicant
sought first to understate the provisions of clause 14 of the
amended main cooperation agreement and secondly,
sought to rely on
the preamble to the Escrow agreement.
Clause
14 of the main co-operation agreement deals with the Escrow
agreement and it provides that the Escrow agreement attached
hereto
as annexure A forms an integral part of this agreement. The
relevant portion of the preamble relied upon, states as follows:
“WHEREAS,
AVITRONICS and BED have entered into an agreement entitled “Amended
Co-operation Agreement” dated
21 February 2006 (the
“Agreement”);
WHEREAS, Clause 14 of the
Agreement provides that this Escrow Agreement forms an integral part
thereof, which in turn provides
for a Triggering Event. In the event
of a triggering event BED shall grant AVITRONICS access to own, used,
apply, or reproduce
the intellectual property subsisting in the
ESCROWED IP (as hereafter defined) to undertake the manufacture,
support, supply and
development of the HSDL, (“the Product”)
as defined in the Agreement; and
WHEREAS, AVITRONICS and
BED (the parties) desire to provide Escrow Agent with the terms and
conditions under which certain information
to be deposited with the
Escrow Agent will be released;
NOW,
THEREFORE, in consideration of the above and for other good and
valuable consideration, the receipt and sufficiency of which
is
hereby acknowledged, the Parties hereto do hereby agree as follows:
Definitions
Unless the context
requires or otherwise defined herein, the capitalized terms set
forth herein shall have the definitions and
meanings set forth in
the Agreement,
The
term “ESCROWED IP” shall be the IP as defined under
clause 8 of the Amended Co-operation Agreement dated 21
February 2006 and consist of software and all other material
sufficient to allow the manufacture and support of the Product,
including, but not limited to, source code, object code, and
available source listings and source documentation on CD format,
Standard text files for the technology used to manufacture the
Product or its development data to date of a Trigger Event
.
I
cannot see how the preamble makes the applicant’s case better
on the alleged existence of the Escrow agreement separate
from
or independently from the main co-operation agreement. Clear that
the triggering event referred to in clause 4 of the Escrow
agreement
should be seen as part of the main cooperation agreement. Secondly,
the capitalised Terms set forth in the Escrow
agreement, shall have
the same definitions and meanings set forth in the main co-operation
agreement (
See clause 1.1 of the Escrow
agreement
, see also clause 1.2 of the
Escrow agreement quoted in paragraph 17 above
).
It did
not appear that the applicant was contending that the arbitration was
not the right forum to deal with whether or not there has been a
material breach in terms of clause 4.1.2 of the Escrow agreement.
What the applicant sought to contend if I understood it correctly was
that as far as the delivery of the intellectual property
was
concerned, it could only be entertained by this court and not by the
arbitrator. Assuming that the applicant is right in this
regard, the
issue before the arbitrator is said to be whether or not there has
been a material breach in terms of clause 4.1.2
of the Escrow
agreement and not delivery of the intellectual property per se. The
question that arises is why the applicant did
not participate in the
arbitration proceedings and raise the very same issue in respect of
which it now seeks a declaratory order.
The applicant says it made a
choice not to participate and that it was entitled to do so. This
attitude in my view, smacks the
serious desire of wanting to have the
dispute be resolved as soon as possible.
20. Should the arbitrator
find that there was a breach by the applicant as envisaged in clause
4.1.2, the first respondent as a
non-defaulting party would be
entitled to delivery of the intellectual property. To have boycotted
the arbitration proceedings,
in my view, is and was not helpful to
the applicant.
21. On the pleaded cause
of action, I am not satisfied that the applicant made out a case for
the relief sought. The alternate
relief suggested by the applicant's
counsel can also not be justified.
22. Consequently, the
application is hereby dismissed with costs.
M F LEGODI
JUDGE OF THE HIGH COURT
WELGEMOED ATTORNEYS
Attorneys for the
applicant
c/o WEIDEMAN ATTORNEYS
608 Reitz Street
SUNNYSIDE, PRETORIA
Tel. 012 656 1063
Ref: C
Lwelgemoed/mh/BE0002
PHILIP COETZER INC.
Attorneys for the first
respondent
Unit 14, Falcon Crest
Office Park 142 Suid Street
LYTTELTON,
CENTURION
Tel. 012 667 5127 Ref: J
Fouche