The Samoa National Provident Fund (S.N.P.F.) has been asked to pay $2million to a local company as a result of a long-standing legal dispute dating back to 2004.
The order was given by the Court of Appeal, made up of Justice Fisher, Justice Pankhurst and Justice Hansen, in their decision of 11 September 2017.
In 2004, Apia Construction and Engineering Limited was engaged by the S.N.P.F. to construct what was later referred to as the Molesi Food Court.
Five months later, the S.N.P.F. terminated the contract.
This led to a series of arbitrations and Court proceedings between the two parties.
The third Arbitration was held before Arbitrator, Vui Mariner.
The Arbitrator issued his liability award on 24 March 2014.
He found that Apia Construction’s termination had been unlawful. He awarded $2 million made up as follows:
(a) $118,501 directly due to the appellant under the Construction Contract
(b) $299,420 representing financing costs incurred as a result of non-payment of the sum due under the Contract.
(c) $782,000 by way of damages for loss of reputation
(d) $800,000 by way of damages and costs for legal fees incurred
But the S.N.P.F. disagreed.
On 28 August 2014, the S.N.P.F. applied to the Supreme Court to have the quantum award set aside.
In it’s ruling, the Supreme Court set aside most of the $2 million awarded.
Unhappy about this, Apia Construction challenged the Supreme Court’s decision before the Court of Appeal.
They argued that the Supreme Court should not have intervened.
J K Goodall and L Stevenson represented Apia Construction while Tanya Toailoa and S. Lafaialii-Koria represented the S.N.P.F.
In their decision, the Court of Appeal supports the argument from Apia Construction.
“We agree, for the reasons that follow,” the ruling reads.
“The respondent relied on a number of grounds for setting aside the award of 14 July 2014.
“The only ones capable of legal recognition were bias, excess of jurisdiction, and error on the face of the award. None can be sustained in this case. Consequently there was no basis for setting aside the award.”
Apia Construction also sought costs in the Supreme Court and in the Court of Appeal.
“Its actual solicitor-client costs, including VAGST, amounted to $105,978 in the Supreme Court and $120,478 in this Court. It seeks two-thirds of the total.
“We accept that party and party scale costs in both Courts are well out of date. In appropriate cases costs of up to two-thirds of actual and reasonable costs may be possible.
“However there is no rule to that effect and each case must be considered according to its own particular circumstances.
“In this case the relevant invoices were produced. Having read them we can see no cause for thinking them unnecessary or unreasonable. We accept that the proceedings in both courts were unusually complex and time-consuming. The respondent’s various challenges to the award were wide-ranging and diffuse. We have also had regard to the volume of the materials that had to be prepared and reviewed and the legal issues that had to be researched in Samoa and overseas jurisdictions. Engaging senior counsel from overseas was justified. The respondent itself incurred costs of $65,450 plus VAGST in the Supreme Court without overseas counsel and claimed two-thirds as a reasonable recovery rate.
“In all the circumstances we uphold the appellant’s claim to costs.
“The appeal is allowed. The order setting aside part of the award of 14 July 2014 is rescinded. The award of 14 July 2014 is reinstated in its entirety.
“The respondent must pay the appellant costs of $150,970 representing the total awarded for costs incurred in both courts.”
The Court’s ruling in full is published below:
In the Court of Appeal of Samoa Held at Mulinuu
In the matter: section 51 of Judicature Ordinance 1961
Between: APIA CONSTRUCTION & ENGINEERING LTD a duly incorporated company having its registered office at Stevensons Lawyers, First Floor, Samoa National Provident Fund, Apia
And: SAMOA NATIONAL PROVIDENT FUND a body corporate established pursuant to the National Provident Fund 1972 having its registered office at Beach Road, Apia, Samoa.
Coram: Honourable Justice Fisher
Honourable Justice Panckhurst
Honourable Justice Hansen
Hearing: 11 September 2017
Counsel: J K Goodall (of the New Zealand Bar) and L Stevenson for appellant T Toailoa and S Lafaialii-Koria for respondent
Judgment: 15 September 2017
Judgment of the Court
 When parties choose arbitration they are effectively saying that speed and finality are more important to them than having fine legal points analysed by judges.
 Of course when the decision is known, losing parties often have second thoughts. They will complain that the case has not been handled in the way that a court would have handled it. But by then it is generally too late. If they had wanted the substantive law and procedures of a court they should not have agreed to arbitration in the first place. Arbitration legislation may differ from one Western country to another but respect for party autonomy is now universal. Party autonomy means that the parties are free to choose their own method of dispute resolution. Once they have made that choice, modern courts will refuse to interfere unless the reasons for doing so are truly compelling.
 In 2004 the respondent property owner engaged the appellant construction company to help construct the Molesi Food Court. Later that year the respondent wrongfully terminated the contract. A long and unhappy series of arbitrations and Court proceedings followed. Ten years later the appellant appeared to have won when the third of three arbitrators awarded the appellant $2 million. Undeterred, the respondent again challenged the award in the Supreme Court. The Supreme Court set aside most of the $2 million awarded.
 In this Court the appellant contends that the Supreme Court should not have intervened. We agree, for the reasons that follow.
 The parties entered into their construction contract on 12 January 2004. The respondent terminated it five months later on 8 June 2004. The appellant commenced the first of three arbitrations, contending that the termination was unlawful.
 The appellant was successful in the first arbitration but the Supreme Court set aside the award. There was a second arbitration before a new arbitrator. Although the Supreme Court acquitted the first arbitrator of bias, he resigned at the request of the respondent. Sadly, the second arbitrator died after hearing all the evidence.
 The first two arbitrations are no longer material except as background to the delay and losses that were accumulating. The appellant’s business collapsed. The bank sold its assets to repay debt. The bank called up the personal guarantees of the proprietors, a married couple. They lost their home.
 Eventually a third arbitration was held before a third arbitrator, Mr Vui Mariner (“the Arbitrator”). The Arbitrator issued his liability award on 24 March 2014. He found that the respondent’s termination had been unlawful. There is no longer any challenge to that finding.
 Having made his decision on liability, the Arbitrator called for submissions on the quantum of the damages due to the appellant. The appellant claimed $4.6 million. The Respondent contended that it should be $417,000. In an award of 14 July 2014, the Arbitrator awarded $2 million made up as follows:
(a) $118,501 directly due to the appellant under the Construction Contract (not now disputed)
(b) $299,420 representing financing costs incurred as a result of non-payment of the sum due under the Contract.
(c) $782,000 by way of damages for loss of reputation
(d) $800,000 by way of damages and costs for legal fees incurred
 On 28 August 2014 the respondent applied to the Supreme Court to have the quantum award set aside. The parties agreed to a judicial settlement conference to explore possible settlement. In anticipation of the conference the appellant wrote to the Arbitrator sent an explanatory note to the Registrar of the Court.
 No settlement was achieved. Accordingly the respondent’s application to set aside was brought on for hearing in the Supreme Court.
Supreme Court Judgment  The Supreme Court Judge set aside those parts of the award concerned with reputation losses and compensation for costs incurred.  As already noted, the Arbitrator had awarded the appellant $782,000 for loss of reputation. On this subject the Judge considered that there were two deficiencies in the Arbitrator’s reasoning. One was that in the Judge’s view it was a speech given by the Deputy Prime Minister that caused the appellant’s reputational losses and not the wrongful termination. The other was the Judge’s view that reputational losses were special damages and that the parties had to have special knowledge of the potential for this kind of loss at the time of the contract.
He could find no evidence of such knowledge. The Judge went on to invoke two legal sources of jurisdiction to intervene. One was that in his view the difference between what the Arbitrator had awarded and what he, the Judge, would have awarded was so great as to demonstrate bias and therefore “misconduct”. The Judge also regarded those deficiencies as errors of law on the face of the award. For those reasons he permanently set aside the award of $782,000 for reputational losses.
 In relation to the $800,000 awarded for legal fees incurred as a result of the wrongful termination. On that subject the Judge held that “The award shows that the following costs were awarded to ACEL by way of legal fees; $54,850 for the foreclosure proceedings by the MBS, $58,850 for the outstanding MPF contributions proceedings and $54,850 for the ACEL’s bankruptcy proceedings”. The Judge considered that there was no jurisdiction to award legal fees in respect of those three matters because there was no agreement to refer them to the Arbitrator for decision. He set aside the costs award of $800,000 but remitted it back to the Arbitrator for further consideration.
The appeal  In this Court the fundamental ground of appeal was that the Judge failed to appreciate the limits of a Court’s jurisdiction to set aside an arbitration award. Notwithstanding the Judge’s accurate survey of the legal principles involved, his approach in practice had much in common with an appeal on the merits. The appellant goes on to contend that even had there been jurisdiction for the Court to examine the merits of the Arbitrator’s decision, the award was in fact fully justified on the evidence. The Jurisdiction to set aside an Award  The Arbitration Act 1976 governs arbitrations in Samoa It is based on the former Arbitration Act 1908 (NZ) which in tum was based on the Arbitration Act 1889 (UK). In 1996 New Zealand and the United Kingdom introduced entirely new Arbitration Acts. The Arbitration Act 1996 (NZ) is based on the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration 1985 (the UNCITRAL Model). The new United Kingdom legislation is based on similar fundamental principles. At some point Samoa may elect to follow suit in order to attract more domestic and international arbitration. In the meantime, however, pre-1996 commentaries and decisions from New Zealand and England will have continued relevance in Samoa.  Even before more modem legislation was introduced, there was strong overseas support for finality in arbitral awards. The courts would not overturn awards except where that was unavoidable. Authoritative English commentators put it this way:
“Arbitration is not always the best way of deciding a dispute, and the judges have occasionally said so. Nevertheless, they recognise that the process is often more efficient than litigation; and they also recognise that, efficient or not, it is in very many cases the procedure which the commercial man prefers. The courts respect, and give effect to, this preference by abstaining from intervention even in the face of the widest deviation from the conventional procedural norms: always provided that the procedures actually followed conform with those which the parties have expressly or impliedly chosen to accept.”  The same policy has been endorsed in Samoa  It is also important to note that a mistake of fact or law by an Arbitrator is not, without more, a ground for judicial intervention. As Russell, one of the two main English arbitration texts, puts it, “[i]t is not misconduct on the part of an arbitrator to come to an erroneous decision, whether his error is one of fact or law, and whether or not his findings of fact are supported by evidence”.
This excerpt was adopted with approval in New Zealand where it was held that “It is not misconduct to come to a decision considered by the Court to be wrong on the facts or indeed on the law.”5 As Mr Goodall rightly pointed out, if the position were otherwise, courts would be free to set aside arbitral awards whenever there was a material disagreement with any aspect of an arbitrator’s decision, legal or factual.  Error of law or fact is not, in itself, a ground for setting aside an award. We cannot emphasise this point too strongly because it underlies the problems in the Supreme Court. In the circumstances of this particular case the Court could set aside the award only if the respondent could bring it within one of two legal categories: (a) Misconduct; or (b) Error on the face of the award.  The legal principles require explanation before they can be applied to this case.
Misconduct Principles  Section 13(2) of the Arbitration Act 1976 provides: If an Arbitrator or Umpire has misconducted himself or herself or the proceedings or an arbitration or award has been improperly procured, the Court may set the award aside.  “Misconduct” for this purpose is a broad concept. It is generally thought to include failure to decide all matters submitted for decision, procedural unfairness, bias, and deciding matters not submitted for decision, otherwise known as excess of jurisdiction. In the present case only the last two are alleged - bias and excess of jurisdiction. Nothing turns on the question whether excess of jurisdiction is a form of misconduct or, as some commentators prefer, an independent reason for judicial intervention.
Bias Principles  One of the grounds on which the Supreme Court set aside aspects of the award was that the arbitrator was biased. The bias was held to be a reasonable inference from the excessive nature of the award.  It is undoubtedly a ground for setting aside an award that an arbitrator had been biased. Bias is a predisposition to decide for or against one party, without proper regard to the true merits of the dispute. Actual or apparent bias is enough. It is sufficient if an objective and fully informed observer would have had a reasonable apprehension of bias. But bias generally reflects on the integrity of an arbitrator and is not lightly to be inferred.
Certainly, it cannot be used as a pretext for intervening on the basis that a Court disagrees with the arbitrator’s decision.  In this case the respondent relies on the proposition that if there is sufficient disparity between the views of the arbitrator and those of the judge, that alone justifies the inference that the arbitrator must have been biased. In support of such a principle the respondent relied exclusively on the obiter dictum of a first instance New Zealand judge in 1969. In Wilson v Glover Moller J had said this: “It would certainly appear that, if what Mr White says is correct, the allowances made by the Arbitrator may well be greater than they should have been.
But that is a question of fact for decision by the Arbitrator, and, in my view, l should not interfere with the award, in this particular instance, merely on the ground that l might have come to a different decision from that at which the Arbitrator arrived. I would at least have to find, on the way this case was presented, that the difference was so great that it clearly, by itself, showed bias on the part of the Arbitrator or that it was of such a nature and amount that, taken in conjunction with all other matters, bias was sufficiently evident to justify setting the award aside.
I do not think that the evidence of overcharging at present before me does, when taken by itself, justify me in finding bias as alleged by the Applicant.”  Several comments may be made about that passage. First, the reference to bias was a comment which the Judge did not apply in the case before him; he declined to interfere with the award. Secondly the reference to bias was introduced by the qualifier “I would at least have to find ...”. So the Judge was not excluding the need to consider other evidence relevant to bias.
Thirdly the Judge did not provide any authority or analysis to support the possibility that disparity of views alone might be sufficient to establish bias. Fourthly, and despite the vast array of textbooks and cases on arbitration over the past hundred years or so, counsel were unable to find any case in which such a principle has ever been recognised or applied.  We are not surprised that no other authority for the proposition could be found.
The principal obstacle it would face is that with the exception of errors of law on the face of the award, the law and facts are for the arbitrator alone. It would not be possible for a judge to compare his or her view with the result arrived at by the arbitrator without straying into matters left exclusively to the arbitrator.
Thus in New Zealand it was held as long ago as 1914 that: “Where parties have agreed to refer certain matters to arbitration, and have nominated their own tribunal the decision of which is not subject to the approval of the Court, the mere inadequacy of the amount awarded, even if such award be against the weight of evidence, is no proof of partiality or misconduct on the part of the arbitrators of such a nature as to enable the Court to set aside the award.”  There is the further difficulty that bias is a conclusion which could be reached only after considering the totality of the evidence.
It is concerned with the arbitrator’s actual or apparent attitude to the parties or the dispute. The court would need to consider all the surrounding circumstances before it could decide whether the arbitrator displayed, or did not display, an improper tendency to prefer one party over the other.
 Neither authority nor principle supports the view that a mere disparity between the views of the arbitrator and those of the judge as to the proper resolution of the dispute could, without more, provide a ground for concluding that the arbitrator was, or appeared to be, biased. Such a disparity might well play a part in arriving at that overall conclusion from other sources, but it could never be more than one of the ingredients in a much larger exercise.
Bias in this case?  It was not suggested that there was any evidence of bias in this case other than an alleged disparity between the result arrived at by the arbitrator and the result which would have been adopted by a court.  Counsel for both parties traversed various aspects of the original dispute in their submissions. We are not convinced that there would have been a significant disparity between the conclusion reached by the arbitrator and the conclusion we might have reached had we been called upon to make that assessment. But the real point is that there is no basis for a Court to embark on that exercise in the first place. In Samoa there is no appeal from an arbitration award.
 There is also the point that either the Arbitrator was predisposed to find in favour of one of the parties or he was not. If he was so predisposed, or would have been so regarded by an objective observer, that conclusion would have logically vitiated the whole of the award, not merely selective aspects of it.  Our conclusion is that bias was not available as a ground for striking out any part of this award. This ground of appeal is upheld.
Excess of Jurisdiction Principles  In the Supreme Court the Judge considered that there was no jurisdiction to award legal fees in respect of three prior sets of court proceedings because there had been no agreement to refer them to the Arbitrator.  An arbitrator’s jurisdiction is undoubtedly confined to the disputes that the parties had submitted for decision. An award is therefore open to challenge if relief had been given for a claim which had not been referred. As is said in Mustill & Boyd: “The award will be partially void if the relief granted related to a matter which was not referred, or if for some other reason it was outside the jurisdiction of the Arbitrator. In all these situations, the primary active remedy is for the Court to declare that the award is void, in whole or in part. Alternatively the complaining party may wait until the time comes for enforcement of the award, and then rely on the want of jurisdiction as a defence.”'
Excess of Jurisdiction in this case?
 The Judge considered that there was no jurisdiction to award legal fees in respect of three court matters. We have not been provided with the details but the costs in question were described as “$54,850 for the foreclosure proceedings by the MBS, $58,850 for the outstanding MPF contributions proceedings and $54,850 for the ACEL’s bankruptcy proceedings”.  It does not appear to be disputed that each of those court proceedings followed the wrongful termination, the collapse of the appellant business, and the declining fortunes of its proprietors. The Judge’s objection to their inclusion in the arbitration appears to have stemmed from his view that the costs involved were properly the province of the courts and not the Arbitrator. He said that:
...it would have been much more appropriate for the ACEL’s lawyers to seek those costs from the Court in respect of those Court proceedings rather than to seek such costs several years later from the arbitrator who did not take part in any of those Court proceedings. In addition, the Court in the 2007/2008 case did not award costs but ordered each party to pay its own costs.”  Mr Goodall mounted essentially two challenges to that reasoning.
One was that resolution of those costs did fall within the scope of the dispute which the parties had submitted to the Arbitrator. In that regard clause 3 of the relevant arbitration agreement provided: 3. The Arbitrator’s jurisdiction shall include all disputes arising out of or in connection with the contract date 12th January 2004 between SNPF and ACEL, up to and including issues identified and disputed during pleadings. “Arising out of or in connection with the contract” is a particularly broad phrase. In our view it embraces losses, including legal costs, suffered by a party as a result of a wrongful termination of the contract.  Had there been any doubt on that score it would have been dispelled by the way in which the arbitration was subsequently conducted without objection from either side. The appellant included the relevant legal fees in evidence before the second arbitrator without jurisdictional objection from the respondent. All exhibits and the transcript were provided to this Arbitrator. He called for input from the parties on a number of issues including “Legal fees: accrued to date - timesheets?”.
The parties responded with detailed submissions on this among other issues. The respondent certainly opposed the appellant’s claim to costs on its merits but at no point did it suggest that some of the fees claimed fell outside the jurisdiction of the Arbitrator.
The respondent could not have successfully done so given the broad scope of the original arbitration agreement. Nor can we see any incompatibility between a right to claim compensation for legal fees in an arbitration and the fact that at an earlier point the claimant might have claimed, but in the event did not claim, all or part of the same fees from the respondent by way of application to a court.  Mr Goodall’s second point was that it has not been established that the Arbitrator included the fees in question in his award. The appellant had claimed $1,680,512.48 for legal fees of which only $168,550 is currently in question.
The Arbitrator awarded $800,512.48. There is no reason for assuming that the $800,512.48 awarded included the $168,550 which is currently in question. Where it is unclear from an award whether or not the arbitrator was justified in the approach taken, the award is to be benignly interpreted. It has been put this way: The Court will not go out of its way to find uncertainty or error in the award merely because the arbitrator has not expressed his conclusions in the correct legal language.
Furthermore, not only will the Court not be astute to look for defects, but in case of uncertainty it will so far as possible construe the award in such a way as to make it valid rather than invalid. Thus, if it is alleged that an award is subject to error on the face, but the award contains insufficient facts to enable the Court to tell whether the arbitrator’s conclusion of law was justified or not, it will assume that any justifying facts which could exist did exist, even though the arbitrator has not found them.”  There is substance in both Mr Goodall’s points. We conclude that no excess of jurisdiction has been made out. This ground of appeal succeeds.
Error of Law Principles  The respondent advanced error of law as a ground for setting aside the award. The Supreme Court relied on that ground as a source of jurisdiction to intervene.  An error of law on the face of the award represents an independent ground for setting it aside, whether in Whole or in part. The principles are long-established and uncontroversial. Four conditions must be satisfied before a court can invoke that source of jurisdiction: (a) The error must appear on the face of the award.
To be on the face of the award it must be in the formal award itself or in a document contemporaneously incorporated therein, for example where separate reasons are issued with, but stapled to, the award when issued.” A document issued by the Arbitrator after the issue of the award by way of explanation to the parties does not form part of the award.” (b) The error must be one of law and not of fact. (c) The legal error must have been a matter of express exposition and not merely a matter of inference.”
(d) The error must have been material to the outcome. It must have been truly significant in the sense that the outcome before the Arbitrator would have been different but for the error.”  The question is whether those four requirements were satisfied in the present case.
Error of law in this case?  The first requirement is that the error appear on the face of the award. In the present case the Supreme Court Judge did not rely on errors on the face of the award of 14 July 2014. Instead he focused on the explanatory note sent by the Arbitrator to the High Court nine months later. That was the explanatory document requested by one of the parties for the purpose of a judicial settlement conference.  The principles discussed earlier preclude reliance on such a document.
A document issued by an arbitrator after the issue of the award by way of explanation to the parties does not form part of the award.”  In an ingenious argument Ms Toailoa submitted that the so-called explanatory note was in fact a subsequent award which amended the earlier one. She pointed out that in the explanatory note the Arbitrator purported to internally adjust the figures which went to make up the total sum awarded. The Arbitrator acknowledged a minor miscalculation at one stage of the calculations but introduced a compensating increase in damages for on-going losses. By that means he endorsed the original sum awarded as the one due to the appellant. Ms Toailoa submitted that this made the explanatory note another award.
 The flaw in that argument is that the award of 14 July 2014 purported to be final. On matters of quantum it left nothing further to be decided. Once an arbitrator has issued a decision on a particular topic an issue estoppel arises. Unless the parties agree otherwise the arbitrator is powerless to revisit that topic.” In technical terms, the arbitrator becomes “functus officio”, that is to say without any further function to perform. So even if the explanatory note had been intended to operate as another award, the Arbitrator would have been acting outside his jurisdiction by purporting to issue it as another award.  The relevant award here is the document of 14 July 2014.
The error of law had to appear on the face of that document.  The remaining three requirements are that the error appearing on the face of that document had to be one of law and not of fact, be one of express exposition rather than inference, and be material to the outcome.  The only criticism Ms Toailoa could advance based on the document of 14 July 2014 stemmed from the contrast between the quantum of the claim originally put forward by the appellant ($883,460.10) and the quantum as finally awarded by the Arbitrator ($2 million). Ms Toailoa suggested that this constituted an error of law as well as an indication that the award was excessive. The uplift in damages claimed is readily explainable on the basis that the appellant’s losses increased progressively over time. The appellant’s case was that following the first arbitration it continued to incur interest and legal costs to the point that its damages had reached $4,928,433.66 by the time the third Arbitrator came to consider quantum. The Arbitrator records the fact that distinct figures were claimed in 2011 and then in 2014. No error of law arises.
Conclusions  The respondent relied on a number of grounds for setting aside the award of 14 July 2014. The only ones capable of legal recognition were bias, excess of jurisdiction, and error on the face of the award. None can be sustained in this case. Consequently there was no basis for setting aside the award.
Costs The appellant seeks costs in the Supreme Court and in this Court. Its actual solicitor-client costs, including VAGST, amounted to $105,978 in the Supreme Court and $120,478 in this Court. It seeks two-thirds of the total.  We accept that party and party scale costs in both Courts are well out of date. In appropriate cases costs of up to two-thirds of actual and reasonable costs may be possible. However there is no rule to that effect and each case must be considered according to its own particular circumstances.  In this case the relevant invoices were produced. Having read them we can see no cause for thinking them unnecessary or unreasonable.
We accept that the proceedings in both courts were unusually complex and time-consuming. The respondent’s various challenges to the award were wide-ranging and diffuse. We have also had regard to the volume of the materials that had to be prepared and reviewed and the legal issues that had to be researched in Samoa and overseas jurisdictions. Engaging senior counsel from overseas was justified. The respondent itself incurred costs of $65,450 plus VAGST in the Supreme Court without overseas counsel and claimed two-thirds as a reasonable recovery rate.  In all the circumstances we uphold the appellant’s claim to costs.
 The appeal is allowed. The order setting aside part of the award of 14 July 2014 is rescinded. The award of 14 July 2014 is reinstated in its entirety.  The respondent must pay the appellant costs of $150,970 representing the total awarded for costs incurred in both courts.
Honourable Justice Fisher Honourable Justice Panckhurst Honourable Justice Hansen