Sans Souci Ltd v VRL Services Ltd (Jamaica)

Factual and Procedural Background

Company A owned a hotel in The City. On 12 October 1993 it entered into a ten-year management agreement, with an optional further ten years, appointing Company B to manage the hotel. The contract entitled Company B to annual management fees calculated on gross revenue and profit, granted each party rights of termination (including for force majeure), and required arbitration of disputes.

In March 2003 Company A purported to terminate the contract for force majeure. Company B treated this as a repudiation and commenced arbitration. The arbitral tribunal held that Company A had unlawfully repudiated and awarded Company B approximately US $6 million, principally representing future management fees to 2014. The tribunal did not deduct “unrecoverable expenses” alleged by Company A.

Relying on Section 11 of the Jamaican Arbitration Act, Company A applied to the Supreme Court to set aside or remit the award. The application failed at first instance but succeeded in part on appeal: the Court of Appeal remitted “the issue of damages” to the arbitrators, citing the failure to address the unrecoverable-expenses issue. The order was perfected on 2 January 2009.

On remission, Company A attempted to introduce two additional matters—sale of the hotel in 2005 and post-termination economic downturn—but the arbitral tribunal ruled that the remission was limited to unrecoverable expenses. Courts below upheld that view. Company A appealed to the Privy Council. Company B cross-appealed on two costs issues: (1) apportionment of costs in the Section 11 proceedings and (2) expenses of a guarantee furnished while enforcement was stayed.

Legal Issues Presented

1. Whether the Court of Appeal’s order remitting “the issue of damages” empowered the arbitrators to reopen all aspects of damages or was confined to the question of unrecoverable expenses.
2. Whether the Court of Appeal erred in ordering Company B to pay one-half of Company A’s costs without hearing submissions and in subsequently refusing to vary that order (cross-appeal).
3. Whether costs incurred by Company B in procuring a guarantee during the stay of enforcement should be recoverable (cross-appeal).

Arguments of the Parties

Company A’s Arguments

• The unqualified wording “the issue of damages” in the remission order entitled the arbitral tribunal to reopen every element of damages, including fresh evidence on the hotel’s sale and industry downturn.
• The tribunal therefore erred in refusing to consider those additional matters.

Company B’s Arguments

• The Court of Appeal’s reasons make clear that remission was limited solely to unrecoverable expenses; reopening other issues would undermine the finality of the original award.
• On costs, Company B contended it had no real opportunity to address the Court of Appeal before the costs order was perfected and that it should not bear any of Company A’s costs.
• It also sought to recover guarantee expenses as part of its litigation costs.

Table of Precedents Cited

Court's Reasoning and Analysis

On the main appeal, the Board held that construing a remission order requires considering both its language and the judgment’s reasons. The Court of Appeal’s judgment clearly identified only one defect in the award: failure to address unrecoverable expenses. Although the order referred generally to “the issue of damages,” that phrase had to be read in context. Allowing a wider reconsideration would conflict with the limited statutory grounds for remittance and the principle of arbitral finality. Accordingly, the arbitral tribunal correctly confined its reconsideration to unrecoverable expenses.

On the first costs issue, the Board accepted that parties should have a reasonable opportunity to be heard. Nevertheless, the Court of Appeal found—and was entitled to find—that Company B had such an opportunity in the three weeks before the order was perfected. Applying the stringent post-perfection test from Taylor v Lawrence and Re Uddin, the Board concluded no special circumstances or miscarriage of justice warranted altering the costs order.

The second costs issue concerning guarantee expenses was contingent on success in reopening the costs order; because the first costs argument failed, the guarantee point did not arise.

Holding and Implications

APPEAL DISMISSED; CROSS-APPEAL DISMISSED.

Practically, the arbitral tribunal’s jurisdiction on remission remains limited to calculating any deduction for unrecoverable expenses; other aspects of damages are closed. The existing costs orders stand, and guarantee expenses are not recoverable. The decision turns on established principles of construing judicial orders and reinforces the narrow scope of judicial intervention in arbitration; it does not establish new precedent.