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Enforcing Tribunal-Ordered Interim Measures: Insights from Eurobank Ergasias v. Bombardier Inc.
Enforcing Tribunal-Ordered Interim Measures: Insights from Eurobank Ergasias v. Bombardier Inc.
The recent Supreme Court of Canada (SCC) judgment in Eurobank Ergasias v. Bombardier Inc. has spotlighted the complexities surrounding the enforceability of tribunal-ordered interim measures. This case, primarily focused on bank guarantees, offers valuable insights into a Paris-seated ICC arbitration between Canadian aircraft manufacturer Bombardier Inc. and the Hellenic Ministry of Defense (HMOD). The ruling underscores the necessity of educating national courts about arbitration processes and ensuring the enforceability of interim measures.
The Contracts and the Conflict:
In the late 1990s, Bombardier and HMOD entered into two agreements: a Procurement Contract for amphibious aircraft and an Offsets Contract aimed at benefiting the Greek economy. The Offsets Contract included a clause for liquidated damages, capped at nearly USD 28 million, secured by a letter of guarantee (LC) issued by Eurobank and counter-guaranteed by the National Bank of Canada (NBC). In 2008, HMOD demanded payment under the LC after Bombardier failed to fulfil subcontracting obligations. Bombardier initiated arbitration, and HMOD agreed not to demand payment during the arbitration. Despite this, HMOD demanded payment from Eurobank in August 2013. The arbitral tribunal issued an interim order (PO No. 11) restraining HMOD from demanding payment until a final award was issued. In December 2013, the tribunal ruled in Bombardier's favour, but Eurobank had already paid HMOD, leading to a series of legal battles.
Legal Battles Across Borders:
The case led to parallel proceedings in Canadian and Greek courts. In Quebec, Bombardier obtained a provisional injunction preventing Eurobank and NBC from honouring the LC. The Superior Court later homologated the arbitral award, nullified the counter-guarantee, and enjoined NBC from paying Eurobank. The Quebec Court of Appeal largely upheld this decision, emphasizing that Quebec courts need not recognize foreign judgments that contradict public order in international relations. The SCC dismissed Eurobank's appeal, supporting the lower courts' stance. In Greece, Eurobank's petition to restrain HMOD from demanding payment was initially granted but later dismissed. Subsequent Greek court rulings concluded that Greece was not bound by the arbitral tribunal’s interim order or final award, highlighting the disparity in enforcing tribunal-ordered measures across jurisdictions.
Canadian Court Judgments:
The Canadian courts condemned HMOD's conduct as fraudulent and in bad faith. The SCC's majority opinion stressed that disregarding arbitral tribunal orders undermines international arbitration’s efficacy. The court refused to give weight to the Greek decisions, citing their inconsistency with the principles of international arbitration.
Enforceability of Interim Measures:
The Eurobank case demonstrates the critical need for clear legislative frameworks to enforce tribunal-ordered interim measures. The 2006 UNCITRAL Model Law (ML) offers a solution by recognizing interim measures as binding and enforceable. Quebec's new Code of Civil Procedure (CCP) incorporates similar provisions, which were absent during the Eurobank case, potentially preventing such complications in the future.
Conclusion:
The Eurobank Ergasias v. Bombardier Inc. case underscores the importance of enforceable tribunal-ordered interim measures to maintain arbitration's efficiency and confidentiality. While Canadian courts support the enforceability of such measures, disparities in international enforcement can complicate proceedings. Future arbitration reforms should address these issues to prevent similar situations and enhance arbitration’s role as an effective dispute-resolution method. The case highlights the need for a uniform approach to enforce interim measures, ensuring that arbitration remains a viable and efficient alternative to litigation.
- In Greece, Eurobank's petition to restrain HMOD from demanding payment was initially granted but later dismissed.
- The Canadian courts condemned HMOD's conduct as fraudulent and in bad faith.
- The court refused to give weight to the Greek decisions, citing their inconsistency with the principles of international arbitration.
