BXS v BXT

• Jurisdiction: Singapore
• Judge: Anselmo Reyes IJ
• Judgment Date: 20 June 2019
• Neutral Citation: [2019] SGHC(I) 10
• Court: International Commercial Court (Singapore)
• Docket Number: Originating Summons No 1 of 2019 and Summons No 1035 of 2019
• Published date: 26 June 2019
• Year: 2019
• Hearing Date: 30 May 2019
• Plaintiff Counsel: Koh Choon Guan Daniel, Er Hwee Lee Danna Dolly (Yu Huili), Ng Wei Ying (Eldan Law LLP)
• Defendant Counsel: Tan Beng Hwee Paul, Pang Yi Ching, Alessa and David Isidore Tan Huang Loong (Rajah & Tann Singapore LLP)
• Subject Matter: Arbitration,Award,Recourse against award,Setting aside,Whether three-month time limit under Article 34(3) extendable by court
• Citation: [2019] SGHC(I) 10

Anselmo Reyes IJ: Introduction

There are two applications before me. First, the Plaintiff has applied to set aside an award dated 12 June 2018 (“the Final Award”) in an arbitration between itself and the Defendant. Second, the Defendant has applied to strike out the Plaintiff’s setting aside application as an abuse of process. In support of its setting aside application, the Plaintiff relies on three grounds. First, it complains that the Final Award was made by a sole arbitrator, instead of by a tribunal of three arbitrators, contrary to the arbitration agreement. Second, it says that the Final Award deals with matters which are outside the terms of the submission to arbitration. Third, it alleges that the Final Award conflicts with Singapore public policy. In support of its striking out application, the Defendant relies on the ground that the Plaintiff’s challenge to the Final Award was brought long after the expiry of the three-month time limit for recourse against an arbitral award imposed by Article 34(3) of the UNCITRAL Model Law. That provides:

An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award ...

Most of the Model Law (including Article 34(3)) has the force of law in Singapore by reason of s 3(1) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”). See also O 69A r 2(4) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”), which states that an application to set aside an award under Article 34:

[M]ay not be made more than 3 months after the later of the following dates: (a) the date on which the plaintiff received the award; (b) if a request is made under Article 33 of the Model Law, the date on which that request is disposed of by the arbitral tribunal.

The Defendant says that I have no power to extend the time limit stipulated in Article 34(3). The Plaintiff accepts that its setting aside application was brought nearly two months out of time. But the Defendant submits that it is entitled to a retrospective extension of the three-month period in Article 34(3) and that I have power to extend that time.

Both parties’ applications were originally made before the Singapore High Court, but they have since been transferred to the Singapore International Commercial Court. Following a case management conference before me on 22 March 2019, the parties agreed that, in the interests of saving time and cost, the two applications would be heard together.

Background

The Plaintiff is a Thai listed company. The Defendant is a Mauritius-registered investment company. On 11 December 2012 the Defendant entered into an Agreement (“the SPA”) for the sale of its shares in two companies to certain purchasers. In due course, through novation and merger, the rights and obligations of the purchasers under the SPA came to be vested in the Plaintiff.

Under clause 10.1(f) of the SPA, the Plaintiff as purchaser was entitled to an indemnity from the Defendant against tax claims by the Thai tax authority. When the SPA was being negotiated, the parties were aware of a pending case before the Thai Supreme Court between the Thai tax authority and an unrelated company which, depending on its outcome, could trigger the Defendant’s liability to indemnify the Plaintiff under the SPA. On 14 October 2014 the Plaintiff notified the Defendant that there was a possibility that the Defendant may have to indemnify the Plaintiff against additional tax pursuant to the indemnity provision in the SPA. On 16 May 2016 the Thai Supreme Court decided the pending case against the taxpayer. Consequently, on 16 June 2016 the Thai tax authority demanded that the Plaintiff pay additional tax of THB 102,550,664 (about S$3,737,280.52 at an exchange rate of THB 1 = S$0.041). The Plaintiff paid the additional tax on 29 July 2016. But, when the Plaintiff sought an indemnity from the Defendant, the latter refused on the ground that, by operation of SPA clause 8.6, its liability under clause 10.1(f) had expired on 11 December 2015. Clause 8.6, entitled “Time limits” provides:

The liability of the Seller in respect of all Claims shall terminate: (a) on the third anniversary of the date of this agreement in respect of the Tax Warranties and Claims relating to Tax; and (b) on the first anniversary of the date of this agreement in respect of all other Claims,

except in respect of any Claim of which notice is given to the Seller as described in this agreement before the relevant date in paragraph (a) and (b) above. The liability of the Seller in respect of any Claim shall in any event terminate if proceedings in respect of it have not been commenced within six months after the giving of notice of that Claim as described in this agreement.

There being a dispute as to the Defendant’s liability to indemnify under the SPA, on 25 May 2017 the Plaintiff commenced an arbitration under the auspices of the Singapore International Arbitration Centre (“SIAC”) against the Defendant pursuant to clause 19 of the SPA. Clause 19, entitled “Disputes” provides:

Except where the parties have agreed to refer a dispute to the Independent Accounts pursuant to Schedule 4, all disputes arising out of or in connection with this agreement (including a dispute relating to any non-contractual obligations arising out of or in connection with this agreement) shall be exclusively and definitively settled by arbitration pursuant to the rules of the Singapore International Arbitration Centre (the Rules), by three arbitrators appointed according to the Rules. The language of the arbitration shall be English. The place of arbitration shall be Singapore. The parties waive any right of application or appeal to any court, insofar as such waiver can validly be made. Nothing contained in this clause shall limit the right of any party to seek from any court of competent jurisdiction, pending appointment of an arbitral tribunal, interim relief in aid of arbitration or to protect or enforce its rights under this agreement.

The Defendant submitted its Response to the Plaintiff’s Notice of Arbitration on 6 June 2017. In an Annex to its Response, the Defendant applied for the arbitration to be conducted by a sole arbitrator under the Expedited Procedure pursuant to Rule 5 of the SIAC Arbitration Rules (6th Ed, 1 August 2016) (“the 2016 Rules”). Rule 5, entitled “Expedited Procedure”, provides: 5.1 Prior to the constitution of the Tribunal, a party may file an application with the Registrar for the arbitral proceedings to be conducted in accordance with the Expedited Procedure under this Rule, provided that any of the following criteria is satisfied: a. the amount in dispute does not exceed the equivalent amount of S$6,000,000, representing the aggregate of the claim, counterclaim and any defence of set-off; b. the parties so agree; or c. in cases of exceptional urgency.

The party applying for the arbitral proceedings to be conducted in accordance with the Expedited Procedure under this Rule 5.1 shall, at the same time as it files an application for the proceedings to be conducted in accordance with the Expedited Procedure with the Registrar, send a copy of the application to the other party and shall notify the Registrar that it has done so, specifying the mode of service employed and the date of service.

5.2 Where a party has filed an application with the Registrar under Rule 5.1, and where the President determines, after considering the views of the parties, and having regard to the circumstances of the case, that the arbitral proceedings shall be conducted in accordance with the Expedited Procedure, the following procedure shall apply: a. the Registrar may abbreviate any time limits under these Rules; b. the case shall be referred to a sole arbitrator, unless the President determines otherwise; c. the Tribunal may, in consultation with the parties, decide if the dispute is to be decided on the basis of documentary evidence only, or if a hearing is required for the examination of any witness and expert witness as well as for any oral argument; d. the final Award shall be made within six months from the date when the Tribunal is constituted unless, in exceptional circumstances, the Registrar extends the time for making such final Award; and e. the Tribunal may state the reasons upon which the final Award is based in summary form, unless the parties have agreed that no reasons are to be given. 5.3 By agreeing to arbitration under these Rules, the parties agree that, where arbitral proceedings are conducted in accordance with the Expedited Procedure under this Rule 5, the rules and procedures set forth in Rule 5.2 shall apply even in cases where the arbitration agreement contains contrary terms.

…

The Defendant submitted that the Expedited Procedure under a sole arbitrator was warranted as there was only one issue between the parties (namely, whether the Defendant’s liability under SPA clause 10.1(f) had lapsed by reason of SPA clause 8.6) and resort to the Expedited Procedure could lead to substantial savings in time and cost. Insofar as a sole arbitrator was concerned, the Defendant noted that the average SIAC fee for a sole arbitrator was S$103,880 (with a maximum limit of S$138,506.66), while the average SIAC fee for a tribunal of three arbitrators was S$271,501.05 (with a maximum of S$223,494.74) or about 6% of the amount in dispute. The Defendant also observed that it would be easier to fix a hearing date and avoid unnecessary delay, if there was only one arbitrator.

There was no dispute between the parties that the substantive part of the SPA was governed by Thai law, while the arbitration agreement was governed by Singapore law. Neither was there a dispute between the parties as to Singapore being the seat...