FINAL, INTERIM, INTERLOCUTORY OR PARTIAL AWARD: MISNOMERS APT TO MISLEAD
| Published date | 01 December 2001 |
| Author | CHIU HSE YU |
| Citation | (2001) 13 SAcLJ 467 |
| Date | 01 December 2001 |
( Jeffrey Tang v Stanley Tan and MCIS Insurance Sdn Bhd v Associated Cover Sdn Bhd)
A recent Court of Appeal case in Singapore1 and a High Court case in Malaysia2 dealt with the issue of the effect of arbitral awards, but have held in opposite directions the effect of an interim award made during the course of arbitral proceedings. This author submits that these two decisions have once again demonstrated the undesirability of the use of the terms “final, interim, interlocutory or partial award” to describe arbitral awards made at different points in time in arbitral proceedings, as they tend to create confusion as to the effect of arbitral awards.
In an arbitration, an arbitrator may make awards on issues in dispute throughout the course of the arbitration proceedings, unlike in litigation where a judgment on the issues in dispute is delivered at the end of proceedings. Such awards are usually known as “interim”, “interlocutory” or “partial” awards.3 For the purposes of this short note, I will not go into an academic discussion as to the exact differences between an interim, interlocutory and partial award. I will broadly categorise these awards as “interim” awards for the purpose of highlighting the common thread in these awards, ie that these awards are usually made in the course of arbitration proceedings, are not made in order to dispose of all the issues in the arbitration, and are not made last in time before the arbitral tribunal is considered to be totally functus officio.4 Of course an arbitrator may
choose not to make any interim awards and give one single award that disposes of all issues in the arbitration at the close of the arbitration. Such awards are usually known as “final awards”. This unique feature of award-making in the course of arbitration proceedings has, I shall discuss further, confused many as to the effect of such awards. I shall also discuss the “final award” vis-à-vis the term “interim award”, as the “final award” is also a term apt to mislead because of the loose usage attached to it.5
In the Malaysian case of MCIS Insurance Bhd v Associated Cover Sdn Bhd, an “interim” award was made in 1995 where the arbitrator decided that MCIS was liable to pay commissions to Associated Cover under an agreement. A final award was then made 4 years later, in 1999, to decide on the quantum of the liability.
MCIS Insurance appealed against the award relating to liability as well as the award relating to quantum of damages. Associated Cover argued that MCIS Insurance was out of time in their appeal against the award on liability made 4 years before. However, MCIS Insurance argued that the interim award made 4 years before was a temporary award which was not complete until the final award determining quantum of liability was made, and thus, they were not out of time when they appealed to set aside the “complete award” one month after the final award determining quantum of liability was made.
The court held otherwise, that the effect of an interim award is “final” in nature and thus, MCIS Insurance should have appealed 4 years ago after the interim award was made. Since they waited until the final award was made, they were out of time in appealing against the interim award. One notes in this case that MCIS Insurance lost no time in appealing against the final award and seemed to have always been under the impression that an interim award, although given and published duly, was not “final” in nature.
In Jeffrey Tang v Stanley Tan, the arbitrator made an award that was “final save as to costs”, dismissing Tang’s counterclaim against Tan. However the arbitrator later realised that he had omitted to deal with some matters related to the reference. He made an additional award subsequently. In that additional award, he affirmed his award last made in favour of Tan, Tang’s solicitors then sought to make further arguments before the arbitrator and that was allowed. The arbitrator, after hearing the further arguments, made an ‘Additional Award II’ reversing his earlier
award in favour of Tan and awarding the counterclaim in favour of Tang with interest. He also dealt with the issue of costs in the ‘Additional Award II’. Tan applied to the court to set aside the ‘Additional Award II’ arguing that the earlier award made in his favour was final and that the arbitrator was functus officio in respect of those issues he had earlier decided.
In the High Court,6 GP Selvam J agreed with Tan that the arbitrator could not revisit an award made, for it is final so far as the decision in that award was concerned. The learned judge took the view that the effect of an interim award is “final” in nature. The learned judge reasoned that an interim award which is final in nature rendered the arbitral tribunal functus officio in respect of the issues decided therein. Thus, the tribunal could not revisit the award as no provision in the International Arbitration Act or the UNCITRAL Model Law adopted by the Act allowed it to do so. Proper recourse against an award lay in an application to the court to set aside the award, not in allowing an arbitral tribunal to recall and reconsider its award.
In the Court of Appeal, however, it was held that as the arbitration fell within the International Arbitration Act which adopted the UNCITRAL Model Law, and Article 32(1) of the Model Law provides that a final award terminates arbitral proceedings and the mandate of an arbitrator, the arbitrator is not functus officio until the final award is made which disposes of all issues in an arbitration. Thus, an arbitrator may revisit his interim awards and amend them in the final award. This is tantamount to holding that under the Singapore International Arbitration Act and the UNCITRAL Model Law, an interim award has no final effect, and the only award capable of having a final effect is the last award that disposes of all issues in an arbitration.
This author agrees with the decision and reasoning of Selvam J in the High Court and the Kuala Lumpur High Court decision in MCIS Insurance and respectfully submits that the decision in Jeffrey Tang may result in uncertainty over the finality of interim awards made in the course of arbitral proceedings.7 The fact that this case is based on the Court’s interpretation of Article 32(1) of the UNCITRAL Model Law in International Commercial Arbitration, which is a regime adopted by many jurisdictions in international commercial arbitration, may result in a negative impact on the attractiveness of Singapore as an international arbitration centre.
Although MCIS Insurance affirms once again the practice of making “interim” awards and that the effect of such awards is final and binding, it is submitted that for the sake of clarity to users of arbitration, arbitrators and courts, it would be desirable for terms such as “interim” or “final” to be discarded from the vocabulary of arbitration altogether. It is more desirable to use the term “award” to describe any award made in the course of an arbitration, even if such award is not the last in time that disposes of all the issues in the arbitration. The use of a streamlined term of “award” in legislation and practice will also make clear that the effect of awards is consistent, and does not vary according to the different descriptions of awards which are actually based on the point in time they are made and not on the effect of such awards.
The power of an arbitrator to make awards during the course of proceedings may be provided in the empowering statute, such as the Malaysian Arbitration Act in the MCIS Insurance case which was based on the UK Arbitration Act 1952. More often than not, such a power is so well-established in law that there is no need to expressly provide that arbitrators may make these interim awards.
In the UNCITRAL Model Law which is adopted in the Singapore International Arbitration Act (Cap. 143A, 1995 Rev Ed), there is no reference at all to interim awards. However, in Holtzman and Newhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration (1989 Ed), it is documented that in the legislative history of the drafting of the UNCITRAL Model Law, the concepts of interim, partial or interlocutory awards were contemplated but the drafters felt it loo cumbersome to define each type of award and specify their effect. The Model Law is silent on whether the arbitral tribunal can make such awards. There is indeed nothing to prevent an arbitrator from doing so. So prevalent is the practice that it seems that the right of an arbitrator to make an interim award is implicit and entrenched in the law and practice of arbitration.
Case law has hitherto been quite settled8 on the effect of an “interim award”, “interlocutory award”9 or “partial award”.10 In Robert Goff J’s (as he then was) celebrated judgment in
SL Sethia Lines Ltd v Naviagro Maritime Corporation (“The Kostas Melas”),11 the effect of an “interim award” is beyond doubt, ie that the effect of such award is “final” as far as the award is concerned. In that case, the relevant English legislative provision on interim awards before the Judge is the same as the current Malaysian provision before Justice Vohrah in the MCIS Insurance12 case,13ie that interim awards may be made by an arbitrator even if the arbitration agreement did not expressly confer such a power.
Interim awards may also be made on any issue in an arbitration at any time of the proceedings. In The Kostas Melas, it was held that an interim award may be made to determine that a party is liable to pay a minimum sum of damages to the other, although the exact quantum is to be determined further during the arbitration. Such an award is a good final (as in determinative of the issue concerned) award as long as it specifies the issue or claim to which it relates and is a decision...
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