CJA v CIZ

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 17 May 2022
• Neutral Citation: [2022] SGCA 41
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 35 of 2021
• Published date: 20 May 2022
• Year: 2022
• Hearing Date: 20 January 2022
• Plaintiff Counsel: Tan Wei Ser Venetia and Ong Rui Qi Edwyna (CNPLaw LLP)
• Defendant Counsel: Ajinderpal Singh, Toh Wei Qing Geraldine and Seow Ling Neng Lyndon (Dentons Rodyk & Davidson LLP)
• Citation: [2022] SGCA 41

Judith Prakash JCA (delivering the judgment of the court): Introduction

It is well established that the grounds for curial intervention in arbitration proceedings are narrowly circumscribed: parties to an arbitration do not have the right to a “correct” decision from an arbitral tribunal that can be vindicated by the courts, but only the right to a decision that is within the ambit of their agreement to arbitrate, and that is arrived at following a fair process. Furthermore, in ascertaining whether that has been the case, the courts accord a margin of deference to the tribunal, which is generally expected to have some independence in controlling the arbitral proceedings and considering the issues before it. The present case underscores the care that needs to be exercised in determining whether the threshold for curial intervention has been reached. It demonstrates in particular, in regard to challenges to jurisdiction, the importance of looking at the arbitration in the round to see whether or not an issue was live, and in relation to challenges based on natural justice, the question of whether an issue had been sufficiently raised by or to the parties.

The present appeal arises out of the decision of the judge in the General Division of the High Court (the “Judge”) in CIZ v CJA [2021] SGHC 178 (the “GD”) to set aside part of an arbitral award (the “Award”) on the basis that the tribunal (the “Tribunal”) had exceeded its jurisdiction. The Judge held that the Tribunal had, in finding in favour of the appellant on one of its two claims, interpreted certain articles in an agreement in a manner contrary to the case advanced by the appellant in the arbitration. In particular, he held that since the appellant had run its entire case on the premise that there was a subsisting agreement and therefore no issue of expiry of the original agreement arose, it was an excess of jurisdiction for the Tribunal to have found that there was no subsisting agreement, but that the original agreement could be interpreted in a manner which allowed the appellant’s claim.

The main issue in this appeal is therefore whether the Judge had correctly held that the Tribunal’s findings and in particular its interpretations of these articles were not within the scope of submission to the Tribunal. The respondent has also sought to affirm the Judge’s decision on the grounds of a breach of natural justice in the making of the Award, an argument which it had canvassed at the proceedings below. Having considered the parties’ arguments, we are of the view that the Judge erred in characterising the appellant’s case in the arbitration as entirely run on the basis of a subsisting agreement. Further, the Tribunal had sufficiently apprised the parties of its provisional thinking. That indication was also picked up in part by the appellant in its closing submissions in the arbitration. The respondent therefore had the opportunity to address these points. We accordingly arrive at a different conclusion from the Judge and allow the appeal. We give our reasons below.

Facts Background to commencement of arbitration

In this judgment, all names and identifying details of the parties have been changed to protect the confidentiality of the parties.

Three corporate entities, incorporated in three different jurisdictions, were involved in the transactions that led up to the arbitration. First, there was Z Co, which initially transacted with the respondent, a state-owned company. Then, the appellant, a company in the business of providing business and management consultancy services came onto the scene at the request of one Mr PM, who is the person who controls Z Co and the appellant.

On or around 7 September 2012, the respondent and Z Co entered into a consultancy agreement (the “Consultancy Agreement”). Pursuant to the Consultancy Agreement, Z Co was to provide consultancy services to the respondent in relation to mergers and acquisitions of oil and gas fields around the world. In exchange, the respondent would pay Z Co a fee (“Success Fee”) upon the latter’s presentation of an “Opportunity” and the respondent’s completion of an acquisition of an interest in an oil field pursuant to a sale and purchase agreement or similar document (“SPA”).

On or around 21 October 2013, the respondent, Z Co and the appellant executed a Deed of Novation, pursuant to which the Consultancy Agreement was novated to the appellant and the respondent and its term extended from 31 December 2012 to 31 December 2013. By the Deed of Novation, the appellant undertook to perform the terms of the Consultancy Agreement as if it were Z Co, and the respondent agreed to perform the terms of the Consultancy Agreement as if the appellant had been an original party thereto in place of Z Co. Additionally, the appellant and the respondent entered into an Assignment, Amended and Restated Consultancy Agreement (the “Amended Agreement”). The terms of the Amended Agreement were, in substance, the same as those of the Consultancy Agreement and, like the Consultancy Agreement, it was to expire at the end of 2013. The three contracts all provided for disputes to be finally resolved by arbitration before the Singapore International Arbitration Centre (“SIAC”).

Thereafter, a dispute arose over whether the appellant was entitled to payment of Success Fees under the Amended Agreement. The appellant sought payment for the following opportunities which it contended it had presented to the respondent: The acquisition of shares by the respondent in X Co, an operator and owner of oil fields (the “X Opportunity”); and A collaboration between the respondent with Y Co, an integrated energy company. (collectively, the “Opportunities”).

The respondent rebuffed the appellant’s claim on the basis that the Consultancy Agreement and the Amended Agreement had expired and nothing was due thereunder.

By way of a Notice of Arbitration dated 17 April 2018, the appellant commenced arbitration proceedings against the respondent in the SIAC. The appellant alleged that “[d]espite the successful completion of the Opportunities, and repeated requests … [the respondent] ha[d] failed, refused, and/or neglected to pay [it] the corresponding Success Fees under Article 2” of the Consultancy Agreement. The three-member Tribunal was constituted on 1 October 2018. It comprised Mr Lok Vi Ming SC, Mr Christopher Lau SC and Mr VK Rajah SC (Presiding Arbitrator).

The arbitral proceedings

In order to appreciate the respective cases put forward by the parties in the arbitration, one must be familiar with the provisions of the Consultancy Agreement that were in issue. We therefore set out the relevant articles below:

ARTICLE 1

SCOPE OF SERVICES

1.1 [The appellant] will, at its own cost and expense, provide to [the respondent] information with respect to opportunities that are available to [the respondent] to acquire an interest in producing oil and gas fields around the world where the API gravity of the oil is in excess of 20 degrees (“Opportunity”). ...

…

1.3 Any Opportunity presented to [the respondent] by [the appellant] shall be in writing and signed by a representative of [the appellant] and shall contain the following information:

…

…

ARTICLE 2

SUCCESS FEE

2.1 Subject to the conditions in Article 2.3, if following the presentation of an Opportunity, [the respondent] Completes an acquisition for an interest in an oil field that has been identified by [the appellant] pursuant to Article 1.3 (“Acquired Interest”), [the respondent] shall pay to [the appellant] the fee described in Article 2.2 below (“Success Fee”). 2.2 The Success Fee shall be calculated as follows:

…

2.3 The Success Fee will only be payable to [the appellant] if: 2.3.1 [The appellant] has presented the Opportunity in the manner described in Article 1.3 (“Opportunity Notice”); 2.3.2 [The respondent] has not advised [the appellant] in writing within ten (10) business days of receiving notice of the Opportunity that it is already aware of the Opportunity and plans to pursue the Opportunity on its own without the assistance of [the appellant] (“Rejection Notice”); 2.3.3 [The respondent] or an affiliate or third party designated by [the respondent] has entered into a sale and purchase agreement (or similar form of acquisition document howsoever titled) (“SPA”) with respect to the Opportunity; 2.3.4 The SPA that includes the acquisition of the Opportunity by [the respondent] has Completed; and 2.3.5 [The appellant] has performed all the Services in the manner requested by [the respondent] and prior to the time the SPA has Completed. 2.4 Notwithstanding the foregoing, [the respondent] shall have no obligation to pay the Success Fee or any other form of compensation to [the appellant] (including without limitation compensation based on any claim of merit or effort by [the appellant]) under the following circumstances: 2.4.1 [The respondent] provides a Rejection Notice to [the appellant] …; or 2.4.2 the SPA that is the subject of the Opportunity does not Complete for any reason … 2.5 The Success Fee shall be payable by [the respondent] upon Completion of the SPA. 2.6 [The respondent] shall have no obligation to reimburse [the appellant] for any out-of-pocket expenses incurred by [the appellant] in connection with the presentation of an Opportunity or its performance of the Services.

…

ARTICLE 3

EXCLUSIVITY

3.1 During the term of this Agreement, the Parties shall not enter into the same or similar arrangements with any third parties regarding the subject matter of this Agreement, provided however, such requirement shall not prevent [the respondent] from pursuing the acquisition of any interest that may be the subject of this Agreement if such interest is presented to [the...