Olympic Stationery Limited trading as PNG Stationery and Office Supplies v The Independent State of Papua New Guinea (2001) N2194

• Jurisdiction: Papua New Guinea
• Judge: Sevua J
• Judgment Date: 15 August 2001
• Court: National Court
• Citation: (2001) N2194
• Year: 2001
• Judgement Number: N2194

Full Title: Olympic Stationery Limited trading as PNG Stationery and Office Supplies v The Independent State of Papua New Guinea (2001) N2194

National Court: Sevua J

Judgment Delivered: 15 August 2001

N2194

PAPUA NEW GUINEA

[In the National Court of Justice]

OS 36 of 2001

BETWEEN

OLYMPIC STATIONERY LIMITED

trading as PNG STATIONERY & OFFICE SUPPLIES

Plaintiff

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Defendant

Waigani : Sevua, J

2001 : 14th & 15thAugust

Practice and Procedure – Arbitration clause in contract – Parties not submitted to arbitration-Clause mandatory – Parties must submit to arbitration.

Practice and Procedure – Notice of intention to make claim against State – Failure to give notice – Section 5, Claims By and Against the State Act.

Held:

1. Where a contract between parties contain an arbitration clause which stipulates that in the event of a dispute or disagreement, the parties should proceed to arbitration, the parties must, in accordance with that provision, submit to arbitration. A party cannot exercise its right to sue without exhausting that procedure.

2. The giving of a notice pursuant to Section 5 of the Claims By and Against the State Act is a condition precedent to instituting a court proceeding against the State. That requirement is mandatory and notice must be given to the State prior to issuing legal proceedings.

Cases referred to:-

Tau Liu v. Paul Tohian, N1615, unreported, 26th September 1997.

Paul Tohian v. Tau Liu, SC 566, unreported, 27th April 1998, applied.

Graham Rundle v. Motor Vehicle Insurance (PNG) Trust No. 1 [1998] PNGLR 20.

Mr Molloy & Mr Lightfoot for Plaintiff

Mr Henao, Mr Kua & Mr Haboic for Defendant

14th August 2001

SEVUA, J: There are two preliminary issues that arose this morning for the Court’s determination.

The substantive relief the plaintiff seeks are declaratory in nature and they relate to a “purported” contract to supply education materials for schools in the Momase, Highlands and New Guinea Islands region. I have used the word “purported” advisingly since the substantive issues are yet to be determined.

On 28th May 2001, I set this matter for trial today following appearance by Mr Shepherd, then counsel for the plaintiff. The defendant was not represented at that call-over.

The plaintiff is ready to proceed inspite of the Court raising the issue of arbitration, which is one of two preliminary issues raised by the defendant. I reiterate what was said in Court this morning when this issue was raised. And that is, when Mr Shepherd sought a hearing date at call-over on 28th May 2001, he did not inform the Court that there is an arbitration clause in the contract, the subject of this dispute. It was only this morning that the Court became aware after reading the file, that the contract contained an arbitration clause, Clause 33.

When the Court initially raised this issue, Mr Molloy of counsel for the plaintiff, submitted that the defendant had waived its right to arbitration by taking steps in this proceedings. He maintained that contention in his address following the defendant’s submissions.

Mr Henao, counsel for the defendant, said the defendant has not waived its right to arbitration. He produced a letter dated 9th August 2001, to the plaintiff’s lawyers in which the Solicitor General had referred to Clause 33, which provides for dispute to be referred to arbitration, and which course has not yet occurred. He also said that this issue would be raised at the hearing date.

Mr Molloy also produced a letter from his client dated 7th November 2000 to the Chairman of the Central Supply & Tenders Board, in which, he raised a number of matters including arbitration. Counsel said no response had been received to that letter. However, the Court notes that the letter was directed to Central Supply & Tenders Board, not the Solicitor General and there is no evidence that that letter was referred to the Solicitor General or to Henaos lawyers.

The pertinent point in both letters, in my view, is that, both parties had referred to arbitration. As I alluded to, Clause 33 relates to arbitration. In particular, sub-clause (2) provides:

“All differences or disputes, which have not been settled in accordance with the preceding sub-clause shall be finally settled by Arbitration in Papua New Guinea under the provision of the Arbitration Act of 1951 of Papua New Guinea.” (my emphasis)

Mr Molloy referred...