By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Baha Mar’s contractor is demanding that an “improperly” filed lawsuit relating to the Nassau Beach Hotel’s $7.643 million demolition be sent to arbitration.
Branding the allegations by Controlled Demolition Inc (CDI) as “far-fetched and factually deficient”, China Construction America (Bahamas) is urging the southern New York district court to compel its sub-contractor to go to arbitration.
CCA Bahamas argued that the contract between the two parties required that any disputes between them be sent to arbitration before any legal proceedings are initiated.
According to documents seen by Tribune Business, the Disputes Resolution Board that would hear any dispute between CCA Bahamas and Controlled Demolition Inc is exactly the same panel as the one that dealt with Baha Mar’s complaints against the Chinese contractor.
Tribune Business revealed in September how Controlled Demolition is suing CCA Bahamas for allegedly failing to pay the full $7.643 million contract price for demolishing Cable Beach’s former Nassau Beach Hotel, plus the ‘J’ and ‘K’ towers at the Wyndham.
It claims it is still awaiting an alleged outstanding balance of $754,704 despite invoicing CCA (Bahamas) for payment more than one year ago.
The Maryland-based firm is thus suing CCA (Bahamas) for alleged breach of contract and unjust enrichment, adding to the Chinese contractor’s many headaches stemming from the ongoing impasse over the $3.5 billion Baha Mar project.
However, in demanding that Controlled Demolition’s claim be sent to arbitration, CCA (Bahamas) accused the US contractor of seeking to “circumvent” the arbitration and dispute resolution provisions built into their contract.
“Controlled Demolition filed its complaint in circumvention of its obligation to arbitrate its claims, despite the clear and unambiguous dispute resolution terms of the parties’ contract,” CCA alleged.
“Indeed, the plaintiff, while asserting vague and wholly unsupported claims that seek contractual payments CCA Bahamas allegedly owes Controlled Demolition, completely ignores dispute resolution requirements under the same contract which are explicit conditions precedent to the commencement of any legal proceedings.”
Continuing with its counter-attack to the original lawsuit, CCA continued: “The parties’ relationship is governed by a contract that contains a broad provision requiring arbitration of all claims relating to, or arising under the contract, before a Dispute Resolution Board (DRB).
“Considering the breadth of this provision, the Federal Arbitration Act’s emphatic requirement that all doubts be settled in favour of arbitration, and the fact that each of the plaintiff’s claims seeks to enforce an allegedly due contractual payment, Controlled Demolition’s claims squarely fall within the scope of this provision and must be arbitrated.
“No matter how many far-fetched and factually deficient claims the plaintiff pleads, it cannot escape the requirements of the contract to which it agreed. Each of Controlled Demolition’s claims must be arbitrated and, accordingly, this court should compel arbitration and stay the proceeding.”
CCA Bahamas admitted that it had hired Controlled Demolition “to perform specified demolitions of pre-existing hotel structures” at Cable Beach, in order to facilitate construction of the $3.5 billion Baha Mar resort campus.
It added, though, that it had warned Controlled Demolition on October 9 that it would move “to compel arbitration” before the Baha Mar Disputes Resolution Board if its sub-contractor failed to abide by the alleged terms in their contract.
Demanding that the US court prevent Controlled Demolition from “circumventing its statutory and contractual obligations”, CCA Bahamas argued that the former was ignoring certain provisions of their contract while selectively attempting to enforce others.
“Despite Controlled Demolition’s unequivocal agreement to all the terms of the sub-contract, Controlled Demolition has ignored the dispute resolution provisions and instead filed the instant action with this court,” CCA Bahamas alleged.
“The plaintiff is bound by its agreement to arbitrate and cannot ignore the provisions it wishes while simultaneously seeking to enforce other provisions of the subcontract.”
CCA Bahamas added that the Disputes Resolution Board’s verdicts were binding, and cannot be appealed, until the Baha Mar project is completed via the Ministry of Works issuing an Occupancy Certificate.
“Despite the unequivocal existence of clear dispute resolution procedures, which are explicitly a condition precedent to filing any claims before this court, Controlled Demolition’s complaint provides no factual or legal support explaining its failure to submit its claims to the DRB,” CCA Bahamas claimed.
“The court should not allow Controlled Demolition to continue to waste judicial resources on claims that are expressly covered by broad, mandatory alternative dispute resolution procedures.”
CCA Bahamas added that the payments dispute with Controlled Demolition fell within the “all-encompassing” arbitration provisions, which covered every conceivable disagreement between the parties.
“These straightforward facts, combined with the strong [US] national policy favouring arbitration and the sub-contract’s broad arbitration clause, lead to a single conclusion: All of Controlled Demolition’s claims against CCA Bahamas are improperly before this court. Therefore, the court should compel Controlled Demolition to arbitrate its claims before the DRB.”
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