High Court Judgement: Hilton International v Sun Travel and Tours

Summary of the Decision

On 6 July 2020, the Maldives High Court gave its judgment in the appeal filed by Hilton International Manage (Maldives) Pvt Ltd against Sun Travel and Tours Pvt Ltd. The Court struck down the Civil Court’s decision to award damages to Sun Travel & Tours.

The Background

  1. The High Court struck down the Civil Courts decision to award damages to Sun Travel and Tours Private Limited arising from alleged contract fraud committed by Hilton International Manage (Maldives) Private Limited.
  2. Sun Travel and Tours sought damages in the Civil Court against Hilton International alleging contract fraud by way of certain misrepresentations by Hilton International. Sun Travel & Tours argued that misrepresentations made by Hilton International in their revised projections for the 5-year financial projections of the tourist resort, Irufushi Beach & Spa, were grossly understated, which at the time of signing of the Hotel Management Agreement were presented by the defendant as true and accurate. The Civil Court held in favour of Sun Travel & Tours observing that Hilton International’s misrepresentations induced the contract, making the Hotel Management Agreement null and void under Section 13 of the Contract Act (Law Number 4/91).
  3. Civil court awarded damages pursuant to Section 23 of the Contract Act to the amount of USD 16,671,000.
  4. On Appeal, the Appellant, Hilton International argued that, inter alia, the disputed matter must be resolved in accordance with the agreement; in particular Clause 18.2 of the Agreement which stipulates that any dispute between the contracting parties must be resolved by appointing an arbitrator or arbitrators, and in accordance with the ‘Rules of Arbitration of the International Chamber of Commerce’ in which all proceedings must be carried on in English. Further the designated seat of arbitration, according to the contract, was Singapore International Arbitration Centre.
  5. The High Court observed that prior to the civil trial, Hilton International sought damages from Sun Travel & Tours alleging wrongful termination of contract submitting the matter to the Singapore International Arbitration Centre. The High Court noted that in the Arbitration case number 19482/TO, Sun Travel and Tours responded to Hilton Internationals claim, alleging contract fraud by misrepresentations made by Hilton International and further argued that damages must be awarded to Sun Travel and Tours under the Misrepresentation Act 1967 of the United Kingdom.

The Decision

The High Court held that as the contentions raised by Sun Travel and Tours in the Civil Court were already raised, and decided upon in the arbitral proceedings of case number 19482/TO of the Singapore Arbitration Centre, and thus the Civil Court does not have jurisdiction to decide upon those matters.