DJO v DJP and others

• Jurisdiction: Singapore
• Judge: Simon Thorley IJ
• Judgment Date: 15 August 2024
• Neutral Citation: [2024] SGHC(I) 24
• Court: International Commercial Court (Singapore)
• Docket Number: Originating Application No 8 of 2024
• Hearing Date: 11 July 2024
• Citation: [2024] SGHC(I) 24
• Year: 2024
• Plaintiff Counsel: Chan Leng Sun SC, Tham Lijing and Nathaniel Lai (Duxton Hill Chambers (Singapore Group Practice))
• Defendant Counsel: Ashish Chugh, Nicholas Tan and Darien The (Wong & Leow LLC)
• Published date: 19 August 2024

Simon Thorley IJ:Introduction

By this application, the claimant, DJO, seeks an order that the final award dated 24 November 2023 (the “Award”) issued by the arbitral tribunal in ICC Arbitration Case No 26733/HTG (the “Arbitration”) be set aside in its entirety pursuant to s 24(b) of the International Arbitration Act 1994 (2020 Rev Ed) (the “IAA”) and/or various sections of the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”), which is given force of law in Singapore by s 3 of the IAA.

This is an unusual and troubling case. International commercial arbitrations are an increasingly used means of resolving commercial disputes, often under the auspices of a body such as the International Chamber of Commerce (the “ICC”). The underlying objective is to resolve such disputes rapidly and in confidence, with the nominated arbitrator(s) being independent, impartial adjudicator(s) selected by the parties on the basis of their expertise in the legal and technical fields in question. Very often, these are either senior lawyers or retired judges experienced in the relevant law.

There is no wide-ranging right of appeal such as exists in the national laws. The proceedings are generally held in private and the award is a document confidential to the parties. It is thus essential that the parties can be assured that the process adopted will be thorough and fair and that the principles of natural justice will be applied.

This is reflected in the International Chamber of Commerce Arbitration Rules 2021 (the “ICC Rules”):Article 11 of the ICC Rules provides that:1Every arbitrator must be and remain impartial and independent of the parties involved in the arbitration.2Before appointment or confirmation, a prospective arbitrator shall sign a statement of acceptance, availability, impartiality and independence. The prospective arbitrator shall disclose in writing to the Secretariat any facts or circumstances which might be of such nature as to call into question the arbitrator’s independence in the eyes of the parties, as well as any circumstances that could give rise to reasonable doubts as to the arbitrator’s impartiality. The Secretariat shall provide such information to the parties in writing and fix a time limit for any comments from them.Article 22 of the ICC Rules, which addresses the “Conduct of the Arbitration” provides that:1The arbitral tribunal and the parties shall make every effort to conduct the arbitration in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute.

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4In all cases, the arbitral tribunal shall act fairly and impartially and ensure that each party has a reasonable opportunity to present its case.

These duties are amplified upon in Section III of the ICC’s “Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration Under the ICC Rules of Arbitration” (1 January 2021):

III – Arbitral Tribunal

A – Statement of Acceptance, Availability, Impartiality and Independence

22.All arbitrators, including emergency arbitrators, have the duty to act at all times in an impartial and independent manner (Articles 11 and 22(4) [of the ICC Rules])23.The Court requires all prospective arbitrators to complete and sign a Statement of Acceptance, Availability, Impartiality and Independence (“Statement”) (Article 11(2) [of the ICC Rules]).24.The parties have a legitimate interest in being fully informed of all facts or circumstances that may be relevant in their view to be satisfied that an arbitrator or prospective arbitrator is and remains independent and impartial or, if the parties so wish, to explore the matter further and/or take the initiatives contemplated by the Rules.

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27.Each arbitrator or prospective arbitrator must assess what circumstances, if any, are such as to call into question his or her independence in the eyes of the parties or give rise to reasonable doubts as to his or her impartiality. In making such assessment, an arbitrator or prospective arbitrator should consider all potentially relevant circumstances, including but not limited to the following:

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·The arbitrator or prospective arbitrator acts or has acted as arbitrator in a case involving one of the parties or one of its affiliates.·The arbitrator or prospective arbitrator acts or has acted as arbitrator in a related case.·The arbitrator or prospective arbitrator has in the past been appointed as arbitrator by one of the parties or one of its affiliates, or by counsel to one of the parties or the counsel’s law firm.

[emphasis in original]

The arbitral tribunal’s duty of fairness and the rules of natural justice require it to form its conclusions on the issues to be decided by independently and impartially reviewing the evidence and submissions presented to it, deliberating on the matters arising and determining the weight to be attributed to those matters. But it is only that evidence and those submissions that should be taken into account; extraneous matters must be ignored.

Background to the parties’ dispute

The claimant, DJO, who was the respondent in the Arbitration, is a special purpose vehicle set up in October 2006 responsible for the operation of a network of railway lines in India that serve only freight trains (the “Dedicated Freight Corridors”). In 2015, DJO was negotiating various contracts relating to the Western Dedicated Freight Corridors.

The defendants, who were the claimants in the Arbitration, are three companies which formed a consortium (“Consortium X”) for the purpose of tendering for one of those contracts. Two of the members of the Consortium, DJQ and DJR, are Indian companies, whereas the third, DJP, is a Japanese company.

On 18 August 2015, the parties entered into a contract (the “CPT-13 Contract”). The CPT-13 Contract incorporated the International Federation of Consulting Engineers Conditions of Contract (1st Ed, 1999) (“FIDIC” and the “FIDIC Conditions”), as amended by the Particular Conditions of Contract and the Appendix to Bid.¹

Clause 20.6 was one of the FIDIC Conditions² which was specifically amended by the parties³ so as to include an arbitration clause that provided for a different method of arbitration depending upon whether the contractor was a foreign or domestic contractor (as defined therein). It provided as follows:20.6Arbitration

Any dispute not settled amicably and in respect of which the DAB’s decision (if any) has not become final and binding shall be finally settled by arbitration. Unless otherwise agreed by both parties, arbitration shall be conducted as follows:

(a)For contract with foreign contractors(i)International arbitration in accordance with the rules of arbitration of the International Chamber of Commerce.(ii)The seat of arbitration shall be Singapore or Dubai or Delhi as decided mutually by both parties during the Contract Negotiations(iii)The number of Arbitrators shall be three (3) and the language of communication will be English.(b)For contract with domestic contractors (For the purpose of this sub-clause, the term “Domestic Contractor” means a Contractor who is registered in India and is juridic person created under Indian Law as well as a joint venture/Association/Consortium between an India partner and a foreign partner where Indian partner is authorized representative of the (JV)/Association/Consortium or Lead Member).(i)In accordance with the rules of Arbitration of the International Centre for Alternative Dispute Resolution, New Delhi or such other rule as may be mutually agreed by both parties and shall be subject to the provision Indian Arbitration and Conciliation Act, 1996(ii)The seat of arbitration shall be New Delhi.(iii)The number of Arbitrators shall be three (3) and language of communication will be English.

The arbitrator(s) shall have full power to open up, review, and revise any certificate, determination, instruction, opinion or valuation of the Engineer, and any decision of the DAB, relevant to the dispute. Nothing shall disqualify the Engineer from being called as a witness and giving evidence before the arbitrator(s) on any matter whatsoever relevant to the dispute.

Neither Party shall be limited in the proceedings before the arbitrator(s) to the evidence or arguments previously put before the DAB to obtain its decision, or to the reasons for dissatisfaction given in its notice of dissatisfaction. Any decision of the DAB shall be admissible in evidence in the arbitration.

Arbitration may be commenced prior to or after completion of the works. The obligations of the Parties the Engineer and the DAB shall not be altered by reason of any arbitration being conducted during the progress of the Works.

Since DJP, the Japanese company, was the “Lead Member” of Consortium X, any dispute fell to be resolved in accordance with the ICC Rules in Singapore, Dubai or Delhi. On 11 August 2015, Singapore was selected as the seat of the arbitration.⁴

The substantive contract was, however, governed by Indian law, such that any substantive issues arising would fall to be determined in accordance with Indian law.⁵

On 19 January 2017, the Indian Ministry of Labour issued a Notification No. S.O.188(E) under the Minimum Wages Act 1948, increasing the daily rates of minimum wages payable to working men with effect from 19 January 2017 (the “Notification”).⁶

The FIDIC Conditions contained two clauses applicable to adjustments of costs occasioned by a change of circumstances, being Clauses 13.7 and 13.8. One of the issues in dispute in the Arbitration was as to which of these clauses was applicable to the increase in labour costs resulting from the Notification.

Clause 13.7 of the FIDIC Conditions,⁷ as specifically amended by...