Galsworthy Ltd of the Republic of Liberia v Glory Wealth Shipping Pte Ltd

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 14 October 2010
• Neutral Citation: [2010] SGHC 304
• Plaintiff Counsel: Song Swee Lian Corina and Bryna Yeo Li Neng (Allen & Gledhill LLP)
• Docket Number: Originating Summons No 337 of 2010 (Registrar’s Appeal No 267 of 2010)
• Date: 14 October 2010
• Hearing Date: 29 July 2010,12 August 2010
• Subject Matter: Arbitration
• Published date: 15 November 2010
• Citation: [2010] SGHC 304
• Defendant Counsel: Kevin Kwek and Corrine Taylor (Legal Solutions LLC)
• Court: High Court (Singapore)
• Year: 2010

Choo Han Teck J:

This was an appeal by the defendants, Glory Wealth Shipping Pte Ltd (“GWS”), against the decision of Assistant Registrar Peh Aik Hin (the “AR”) dismissing their application made under ss 31(2) and 31(4) of the International Arbitration Act (Cap 143A, 2002 Rev Ed)(the “IAA”) to set aside an Order of Court dated 6 April 2010. That order gave the plaintiffs, Galsworthy Limited of the Republic of Liberia (“Galsworthy”), leave to enforce an arbitral award in Singapore. I dismissed the appeal and now give my reasons.

By a time charter dated 7 May 2008 (the “Head Charter”), GWS chartered a vessel “JIN TONG” (the “Vessel”) from Galsworthy for a period between 60 to 63 months and at a rate of US$35,500 per day. GWS in turn sub-chartered the Vessel to Worldlink Shipping Limited (“Worldlink”) under a time charter dated 11 July 2008 (the “Sub-Charter”) for a period between 14 to 16 months. Both charters were, however, not performed and this gave rise to the disputes that were referred to separate London Arbitrations; i.e. between Galsworthy and GWS pursuant to the Head Charter and between GWS and Worldlink pursuant to the Sub-Charter. The Tribunal (“the Tribunal”) constituted to hear each arbitration comprised the same set of arbitrators and although two final awards were issued by the Tribunal, only one set of reasons was issued because the Tribunal was of the view that many of the issues concerned were common to both arbitrations.

Galsworthy’s claim against GWS in the London Arbitration was for, inter alia, hire and damages arising from GWS’s failure to perform the Head Charter, with damages to be quantified by the difference between the charter party rate and the market rate at or around the date of termination for the remaining approximate charter period of four years and 10.5 months (17 December 2008 to 31 October 2013). The time charter and the dispute were governed by English law. No oral hearing was conducted and the arbitration was determined solely on written submissions. On 14 October 2009, the Tribunal issued the final award (the “Final Award”) against GWS for the sum of US$1,114,406.82 and US$39,393,745.03 for hire and damages respectively. These figures were derived from the Tribunal’s finding that that the applicable market rate for an equivalent fixture was US$11,000 per day.

On 23 December 2009, GWS applied to challenge the Final Award pursuant to ss 68(2)(a) – (c) and 69 of the Arbitration Act 1996 (c 23) (UK) (the “UK Act”) in the English court. In so far as the s 68 grounds were concerned, counsel for GWS argued that the Tribunal’s finding on the applicable market rate was wrong, and as a result, the Tribunal failed to comply with its general duty in s 33 (see s 68(2)(a)). Further, that the Tribunal exceeded its powers (see s 68(2)(b)), and finally, that the Tribunal did not conduct the proceedings in accordance with the procedure agreed by the parties (see s 68(2)(c)). In response to the application, Galsworthy applied on 26 January 2009 for security for costs, and its application was granted on 15 March 2010. GWS was ordered to provide £30,000 in security within eight days from the date of the order, GWS did not do so and their application was thus dismissed on 25 March 2010. There was no hearing on the merits. In so far as the s 69 grounds were concerned, GWS appealed against the Final Award on a point of law. That appeal was dismissed on 16 February 2010. The English High Court was of the view that the Tribunal’s decision was right.

On 6 April 2010, Galsworthy came to the Singapore courts and obtained leave to enforce the Final Award. On 5 May 2010, GWS applied to set aside the order granting leave to enforce. The application was heard on 23 June 2010 and dismissed by the AR on 2 July 2010.

GWS raised three grounds in the appeal before me. First, it argued that the Final Award contained a decision on the matter beyond the scope of the submissions to arbitration (see s 31(2)(d) of the IAA). Second, the arbitral procedure was not in accordance with the agreement of the parties (see s 31(2)(e) of the IAA). Third, the enforcement of the Final Award would be contrary to the public policy of Singapore (see s 31(4)(b) of the IAA).

In the hearing before the AR below, a preliminary dispute arose between the parties as to whether the defendant was entitled to apply to set aside the order granting leave to enforce the arbitration award since GWS had already made an application in the English courts; i.e. a s 68 application under the UK Act challenging the award on grounds of irregularity, and a s 69 application under the UK Act for an appeal on a point of law. As pointed out by the parties, a party seeking to challenge an arbitration award has two courses of action open to him; he can either apply to the supervising court to set aside the award, or, he can apply to the enforcement court to set aside any leave granted to the opposing party to enforce the award. These options were alternatives and not cumulative. See Newspeed International Ltd v Citus Trading Pte Ltd [2003] 3 SLR(R) 1, which was later cited with approval in Aloe Vera American v Asianic Food (S) Pte Ltd [2006] 3 SLR(R) 174 (“Aloe Vera”). In the present case, GWS chose to challenge the Final Award (see [4] above) and applied to set it aside before the supervising court. It was not disputed that the grounds stated in the s 68 application were similar to those in this appeal. That application before the English court was not heard because GWS did not furnish security. The s 69 application was dismissed. The AR at the hearing below was of the view that the GWS was still entitled to take up the application to set aside the leave to enforce the award and he proceeded to hear the application on the merits.

On this point, however, I was of the view that GWS was not entitled to make this application since it had elected to proceed in the English courts, and the application here to set aside the order granting leave to enforce amounted to an abuse of process. Although Galsworthy did not appeal against the AR’s findings on the preliminary dispute, I was entitled to review that decision de novo and furthermore during oral submissions, Galsworthy argued that this was an additional ground to dismiss GWS’s appeal. GWS had the opportunity in choosing either the supervisory or enforcement court to mount its challenge. It elected to proceed on the former. As it turned out, Galsworthy successfully applied and obtained an order for security for costs in the amount of £30,000. Since...