Case Note

Citation(2014) 26 SAcLJ 269
Published date01 December 2014
Date01 December 2014

SETTING ASIDE PRELIMINARY RULINGS ON JURISDICTION

International Research Corp plc v Lufthansa Systems Asia Pacific Pte Ltd [2014] 1 Slr 130

and pt Asuransi Jasa Indonesia (persero) V Dexia Bank Sa[2007] 1 SLR(R) 597

Following PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA[2007] 1 SLR(R) 597, it has been assumed that preliminary rulings on jurisdictions are incapable of being set aside in the same way that an arbitral award can because such rulings are not on the substance of the dispute which is what an award is defined as. However, this assumption came under some scrutiny recently in the High Court and Court of Appeal's decisions in International Research Corp plc v Lufthansa Systems Asia Pacific Pte Ltd[2014] 1 SLR 130. The aftermath of the Court of Appeal's decision leaves no doubt that the court has the power to overturn a tribunal's preliminary ruling. However, it arguably left open the question of whether a preliminary ruling can be set aside in the same way that an award can. This note suggests that the better view is that such preliminary rulings can be characterised as awards so-called with the corollary that it can be set aside in the conventional sense as understood in arbitration lingua franca.

I. Introduction

1 The Singapore Court of Appeal's recent decision in International Research Corp plc v Lufthansa Systems Asia Pacific Pte Ltd1 (“IRC”) will no doubt be remembered for its departure from the strict rule that incorporation of an arbitration agreement in one contract into

another will only be recognised if there is specific mention in the latter contract of the arbitration agreement.2 Prior to IRC, the law in Singapore as expressed by the Court of Appeal in Star-Trans Far East Pte Ltd v Norske-Tech Ltd3 was that clear and express reference to an arbitration clause contained in one contract was required before a court would find that the clause had been incorporated into a separate contract in “two-contract” cases. The impact of this decision on the drafting of agreements in two-contract relationships will be significant. Commentaries analysing this aspect of the court's decision can be expected. However, an aspect which may not receive as much attention is the court's decision on the extent of its powers to deal with an arbitral tribunal's preliminary ruling on jurisdiction made pursuant to Art 16(3) of the 1985 United Nations Commission of International Trade Law (“UNCITRAL”) Model Law on International Commercial Arbitration4 (“Model Law”). Although the effect of this issue might at first blush seem less significant than the main holding on incorporation, it should not be. Any decision which pronounces on the extent of a court's power to intervene in an arbitration is always noteworthy because of the contribution to the understanding of the arbitration architecture in Singapore that governs the courts' interaction with arbitral tribunals which such decisions will inevitably make.
II. Summary of issue

2 At the High Court, the judge noted that while parties had a right to apply to the court to challenge a preliminary ruling on jurisdiction pursuant to s 10 of the International Arbitration Act5 (“IAA”), it was unclear whether the court has the power to “set aside” the tribunal's ruling on jurisdiction should the court disagree with the tribunal's decision.6 This was an issue because the applicant who was challenging the tribunal's decision that it had jurisdiction had sought an order that the tribunal's preliminary ruling be set aside. The judge's concern was that s 10(3) only states that the High Court may “decide the [application]”; nowhere in the section nor the IAA prescribes the remedy which the court could give in the event that it disagreed with the tribunal's decision. That, on its own, may not be a bar to the exercise of a power to set aside the tribunal's preliminary ruling. However, there was one other complication acting on the High Court. In another Court of Appeal decision which was binding on the High Court,

PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA7 (“PT Asuransi”), it was held that for an instrument made by an arbitral tribunal to be capable of being set aside as an award under the IAA, it must “deal with the substance of the dispute”. If it does not, it cannot be characterised as an award with the corollary that the instrument will not be subject to the usual recourses against an award which includes setting aside. The Court of Appeal agreed with the amicus curiae who had submitted that the travaux préparatoires of the Model Law demonstrated than an award does not include a preliminary ruling on jurisdiction. It followed therefore that even if the court disagreed with the tribunal's decision, it could not set aside the tribunal's ruling.8 The High Court in IRC thus observed that the applicant's relief of setting aside was a term of art which applied only to awards and not preliminary rulings. Ultimately, this did not have any bearing on the High Court's decision as the judge agreed with the tribunal's preliminary ruling that it had jurisdiction.

3 This, however, was an issue for the Court of Appeal because it overturned the judge's decision on the facts and held that the tribunal did not have jurisdiction. Although both parties accepted that the court could give such a relief and more importantly declined to invite the court to revisit its decision in PT Asuransi,9 it is self-evident that parties cannot confer on a court of law a power which the court does not have. Thus, the question of whether the Court of Appeal could set aside the tribunal's preliminary ruling remained live. The court answered this in the affirmative, albeit only briefly:10

The expression ‘set aside’ or ‘setting aside’ is used in many different contexts. Understandably, it does not always mean the same thing. As with so many things, its meaning must depend on the context in which it is used and, in particular in this case, on what is being set aside. An application to the court to decide on the jurisdiction of an arbitral tribunal pursuant to s 10 of the IAA read with Art 16(3) of the Model Law 1985 is a perfectly legitimate means of challenging an arbitral tribunal's preliminary ruling on jurisdiction. It is immaterial in this context that, as a matter of form, the relief sought is expressed in terms of setting aside the arbitral tribunal's decision on jurisdiction.

It was evident to us that in praying for the Tribunal's positive ruling on jurisdiction to be set aside, the Appellant was merely asking that the Tribunal's positive ruling be reversed and that the court decide otherwise than the Tribunal had done. This much, it is clear, the court

is empowered to do under the rubric of ‘decid[ing] the matter' in Art 16(3) of the Model Law 1985 …

[emphasis in original]

In effect, the court was saying that in giving the court the power to “decide the matter”, ie, determine challenges to tribunal's preliminary rulings on jurisdiction, the IAA had conferred on the court the power to set aside those preliminary rulings. The holding in PT Asuransi that only awards which did not include preliminary rulings could be set aside was not directly on point because the application there was to set aside pursuant to s 24 of the IAA, a provision which deals with the setting aside of awards. Following IRC and PT Asuransi, it would appear that a party can possibly make two different types of setting aside applications: (a) preliminary rulings, pursuant to s 10; and (b) awards, pursuant to s 24.

III. Comments

4 As both sets of lawyers in IRC took the position that a preliminary ruling could be set aside, it may be surmised that the court was not given very much assistance in terms of authorities and background to s 10 and the key phrase, “decide the matter”. It is respectfully suggested that the phrase “decide the matter” in s 10(3), which can be traced to Art 16(3) of the Model Law, does not expressly confer on the court the power to set aside preliminary rulings sim...

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