Blb v Blc

• Jurisdiction: Singapore
• Judgment Date: 30 September 2013
• Date: 30 September 2013
• Docket Number: Originating Summons No 1006 of 2012
• Court: High Court (Singapore)

BLB and another

Plaintiff

and

BLC and others

Defendant

[2013] SGHC 196

Belinda Ang Saw Ean J

Originating Summons No 1006 of 2012

High Court

Arbitration—Award—Setting aside application for arbitrator's purported failure to deal with counterclaim—Whether omission to make ruling on counterclaim constituted breach of rules of natural justice by which rights of parties had been prejudiced—Section 24 (b) International Arbitration Act (Cap 143A, 2002 Rev Ed)

Arbitration—Award—Whether award was in conflict with public policy of State—Article 34 (2) (b) (ii) UNCITRAL Model Law for International Commercial Arbitration 1985

Arbitration—Award—Whether omission to make ruling on counterclaim engaged Art 34 (2) (a) (iii) UNCITRAL Model Law for International Commercial Arbitration 1985—Article 34 (2) (a) (iii) UNCITRAL Model Law for International Commercial Arbitration 1985

This was the plaintiffs' application to set aside an arbitral award (‘the Award’) for the sole arbitrator's (‘the Tribunal's’) purported failure to decide a counterclaim that was submitted to arbitration (‘the Disputed Counterclaim’). The plaintiffs relied on, inter alia,s 24 (b) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (‘the IAA’), on grounds that a breach of the rules of natural justice had occurred in connection with the making of the Award by which the rights of parties had been prejudiced. The arbitration proceedings followed an unsuccessful joint venture in Malaysia between two groups of companies.

Held, allowing the application in part:

(1) The parties' opposing positions embodied a tension that was becoming increasingly apparent in the context of curial challenges to arbitral decisions. On one hand, the supervisory function of the court required it to step in to provide relief in cases of genuine challenges. On the other hand, the linked principles of minimal curial intervention and finality in proceedings demanded that this power of intervention be exercised warily and only in meritorious cases where statutorily prescribed grounds for setting aside had been established. This tension is further heightened when the losing party attempts to air its grievances before the court as complaints of breaches of natural justice or other established grounds of challenge and in doing so attempts to re-open the arbitration or traverse over the issues in the arbitration. The court had to firmly resist any such attempts, and in a borderline case the benefit of doubt would invariably favour the tribunal: at [2] and [3] .

(2) The appropriate degree of review in such cases was ultimately dependent on the type and nature of the challenge. Even so, the review should not involve a re-argument or re-trial of the arbitration. It was not the role of the court to rake through the award and the record fastidiously with the view to finding fault with the arbitral process. The present case was not complicated and it was sufficient to look at the Award, the pleadings, the evidence and the overall presentation of the parties' respective cases before the Tribunal. This approach was adopted because it was apparent, on the face of the Award, that something was amiss: at [35] and [36] .

(3) The Tribunal had omitted to make a ruling on the Disputed Counterclaim as it had slipped the Tribunal's notice that the Disputed Counterclaim was an independent and distinct claim as opposed to a relief sought by the plaintiffs if they succeeded on other grounds. It was highly likely that this oversight happened because the Tribunal had extensively adopted the defendants' list of issues to be determined: at [61] to [64] .

(4) An arbitral tribunal had the duty to deal with all essential issues in the arbitration, though it was not obliged as a matter of practicality to deal with every argument canvassed by the parties. In determining what was considered ‘essential’, tribunals should be given a fair amount of latitude and should be entitled to take the view that the dispute might be disposed of without further consideration of certain issues. Moreover, an issue need not be addressed expressly in an award but might be implicitly resolved. Nevertheless, it remained incumbent on the tribunal to address its mind to the various critical issues in the proceedings. There was a distinction as between a head of claim brought by the parties and an issue that was part of a head of claim. An issue that was part of a claim might be either an essential or subsidiary issue. An essential issue was likely to impact on the outcome of the claim whereas a subsidiary or peripheral issue would not: at [75] .

(5) The present case involved a clear oversight on the part of the Tribunal to consider a discrete head of counterclaim that was specifically referred to the Tribunal by the plaintiffs. This was not a case of logical inference in which it was clear from the face of the award that the Tribunal had actually considered and dismissed the claim, albeit without explicitly addressing the same. There was no corollary between the Tribunal's findings in the Award and the Disputed Counterclaim. The Tribunal had therefore breached the principle of natural justice reflected in the Latin maxim audi alteram partem: at [85] to [88] .

(6) Had the Tribunal applied his mind to the merits of the sum in issue in the Disputed Counterclaim, there was a possibility that he could have granted the counterclaim, which would have resulted in a material difference in the Award. The Tribunal's wholesale failure to consider the Disputed Counterclaim could not be said to be a merely ‘technical and inconsequential’ breach, but one which could have reasonably resulted in prejudice to the plaintiffs. There was therefore a breach of natural justice under s 24 (b) of the IAA: at [91] and [93] .

(7) Having reached the conclusion that there was a breach of natural justice, Art 34 (2) (a) (iii) of the UNCITRAL Model Law for International Commercial Arbitration 1985 (‘the Model Law’) would also be engaged on the facts. The Tribunal failed to exercise the authority granted to it by the parties and the doctrine of infra petitia clearly applied. Moreover, the test of prejudice was satisfied: at [94] and [99] .

(8) Having reached the above conclusions, it was not necessary to deal with the third ground, viz, Art 34 (2) (b) (ii) of the Model Law, which provided that an arbitral award might be set aside if the court found that ‘the award is in conflict with the publicpolicy of this State’. Suffice to say that in the present application, there were no indications or allegations of demonstrably ‘egregious circumstances such as corruption, bribery or fraud which would violate the most basic notions of morality and justice’. The Tribunal's omission to deal with the Disputed Counterclaim appeared to have been the result of pure oversight or inadvertence in the face of two differing lists of issues: at [100] .

(9) It was appropriate to remit the Disputed Counterclaim and costs thereof to a new tribunal for determination. The part of the Award that was set aside was limited to the Tribunal's finding that related to the Disputed Counterclaim: at [101] .

[Observation: This would have been the type of case that Art 33 (3) of the Model Law would have been intended to provide redress for. Article 33 (3) permitted parties to request (within a specified time period) the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award. It was to be hoped that parties in future cases of a similar nature would first attempt to avail themselves of any available opportunities to seek redress from the tribunal itself, before turning to the courts: at [103] .]

Brookhollow Pty Ltd v R&R Consultants Pty Ltd [2006] NSWSC 1 (refd)

CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK [2011] 4 SLR 305 (refd)

Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd [2010] SGHC 80 (refd)

L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2013] 1 SLR 125 (refd)

SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 (distd)

Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR (R) 86; [2007] 3 SLR 86 (refd)

Sui Southern Gas Co Ltd v Habibullah Coastal Power Co (Pte) Ltd [2010] 3 SLR 1 (refd)

TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972 (distd)

Arbitration Act (Cap 10, 2002 Rev Ed) s 48 (1) (a) (vii)

Building and Construction Industry Security of Payment Act (Cap 30 B, 2006 Rev Ed)

International Arbitration Act (Cap 143A, 2002 Rev Ed) s 24 (b) (consd)

Hri Kumar Nair SC and Teo Chun-Wei Benedict (Drew & Napier LLP) for theplaintiffs

Chenthil Kumar Kumarasingam and Aston Lai (Lawrence Quahe & Woo LLC) for the first, second and third defendants.

Judgment reserved.

Belinda Ang Saw Ean J

Introduction

1 This application vide Originating Summons No 1006 of 2012 (‘OS 1006/2012’) is to set aside an arbitral award dated 31 July 2012 (‘the Award’) for the sole arbitrator's purported failure to decide a counterclaim that was submitted to arbitration. The arbitration proceedings followed an unsuccessful joint venture in Malaysia between two groups of companies. For convenience, the parties have referred to the subject arbitration as ‘the BOA Arbitration’. The abbreviation ‘BOA’ stands for the ‘Business Operations Agreement’ as described in [12 (c) ] below.

2 The first to third defendants viewed OS 1006/2012 as an attempt by the plaintiffs to have the court interfere with and judicially review the merits of the findings of fact and law reached by the sole arbitrator (‘the Tribunal’). In such a case, there would be no recourse to the court, and the losing parties would remain contractually bound to accept the Tribunal's decision whether or not they think it right. In contrast, the plaintiffs' principal ground of complaint, viz,that...