Insigma Technology Co Ltd v Alstom Technology Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 14 August 2008
• Neutral Citation: [2008] SGHC 134
• Date: 14 August 2008
• Subject Matter: Whether tribunal in fact validly constituted under International Chamber of Commerce Rules,Validity of arbitration agreement,Arbitration,Whether clause providing for arbitration to be administered by one institution using procedural rules of another valid and enforceable,Arbitral tribunal
• Docket Number: Originating Summons No 13 of 2008
• Published date: 18 August 2008
• Defendant Counsel: Alvin Yeo SC, Nish Shetty and Richway Ponnampalam (WongPartnership LLP)
• Court: High Court (Singapore)
• Plaintiff Counsel: Goh Phai Cheng SC (Goh Phai Cheng LLC)

14 August 2008 Judgment reserved.

Judith Prakash J:

1 This is an application by the plaintiff under Order 69A rule 2(1)(c) of the Rules of Court (Cap 322, R5, 2004 Rev Ed) to set aside the Decision on Jurisdiction made on 10 December 2007 by the arbitral tribunal in SIAC Arbitration Case No. ARB 087 of 2006 (“the Arbitration”). Under Article 16(3) of the Model Law, incorporated into the International Arbitration Act (Cap 143A) (“IAA”):

The arbitral tribunal may rule on a plea referred to in paragraph (2) of this Article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in Article 6 to decide the matter …; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award.

2 The Arbitration was initiated by the defendant against the plaintiff for breach of a License Agreement dated 8 December 2004, governed by Singapore law, and under which the defendant granted the plaintiff a limited licence to use the defendant’s “wet flue gas desulfurisation” technology (designed to remove sulphur deposits from factory emissions) in China.

3 The arbitration agreement, set out in Article 18(c) of the License Agreement, provides:

(c) Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to executive representatives of the Parties for settlement through friendly consultations between the Parties. In case no agreement can be reached through consultation within 40 days from either Party’s notice to the other for commencement of such consultations, the dispute may be submitted to arbitration for settlement by either Party. Any and all such disputes shall be finally resolved by arbitration before the Singapore International Arbitration Centre in accordance with the Rules of Arbitration of the International Chamber of Commerce then in effect and the proceedings shall take place in Singapore and the official language shall be English. The tribunal shall consist of three arbitrator(s) to be appointed in accordance with the Rules which are hereby incorporated by reference into this clause. The arbitration award shall be final and binding on both Parties. Both Parties shall perform the award accordingly. … [Emphasis added]

It is the wording of the italicised portion of the Article 18(c) that has given rise to the main issues regarding jurisdiction that came before me.

4 In the course of the contract, a dispute arose between the defendant and the plaintiff regarding the calculation of annual royalties payable by the plaintiff under the License Agreement. A meeting between the parties on 24 February 2006 in China to discuss the issues but no agreement was reached. On 1 August 2006, the defendant made a request for arbitration before the International Chamber of Commerce (“ICC”), claiming unpaid royalties and damages for the plaintiff’s breach of the License Agreement. On 3 November 2006 the plaintiff filed its Answer, which included various counterclaims. The plaintiff disputed the jurisdiction of any arbitral tribunal constituted by the ICC, pleading that the defendant had submitted the arbitration to the wrong body, as the clear intent of the parties was that the Singapore International Arbitration Centre (“SIAC”) should administer the arbitration under the ICC Rules.

5 On 13 November 2006, before the tribunal had been constituted but after each party had nominated an arbitrator and agreed that the two arbitrators would nominate a third to act as Chairman, the defendant’s lawyers, Lovells, wrote to the SIAC as follows:

On 1 August 2006 the [defendant] submitted a Request for Arbitration to the ICC (to be administered under the ICC Rules) on the basis that this was the proper interpretation of the arbitration agreement between the parties. On 3 November 2006, the [plaintiff] submitted an Answer and Counterclaim in which it disputed the ICC’s jurisdiction. The [plaintiff] contended that the parties instead intended to submit the dispute to SIAC and have SIAC administer the arbitration in accordance with the ICC Rules.

Lovells requested the SIAC to confirm whether it would have jurisdiction to administer the arbitration, and if so, how the arbitration would be conducted and whether SIAC would accept the parties’ existing served documents and nominations of arbitrators.

6 The SIAC replied on 17 November 2006, having considered the language of Article 18(c):

We have considered the dispute resolution clause (Clause 18(c)) quoted and attached to your letter. We are of the view that there is prima facie jurisdiction for the SIAC to accept the request for arbitration and administer the arbitration under the said clause. While the clause is ambiguous as it brings into play both the SIAC Rules and the ICC Rules, some weight and meaning must be accorded to the reference to the ICC Rules.

If the case is submitted to the SIAC, the arbitration will be administered under the SIAC Rules with the ICC Rules to be applied as a guide to the essential features the parties would like to see in the conduct of the arbitration, e.g., use of the Terms of Reference procedure, the scrutiny of the awards. Accordingly, the SIAC is prepared and intends to undertake the Terms of Reference procedure and scrutiny of awards as contemplated under the ICC Rules. For purposes of performing these procedures, the equivalent functions of the “Secretary-General” and “Court” would, under the SIAC system, be the Registrar and the Chairman, respectively. The SIAC is also prepared to remunerate the Tribunal to be appointed in accordance with an ad valorem scale along similar lines to that applied by the ICC. As regards the other administrative and financial aspects of the arbitration, they would necessarily have to be done by the SIAC Secretariat in accordance with the SIAC practices and procedures.

The SIAC will accept the parties’ existing Request for Arbitration, Answer and Counterclaim and other documents already submitted and consider these documents served on the date they are received by the SIAC. Further, the SIAC will accept the parties’ existing nominations of arbitrators subject to confirmation of their appointment by the SIAC.

7 Lovells wrote to the plaintiff’s lawyers, Heller Ehrman LLP, on the same day, informing them of the SIAC’s position:

… In the Answer, your client proposed that this arbitration be submitted to SIAC (instead of the ICC) and enclosed a paper prepared by Ms Sabiha Shiraz of SIAC in support of its proposal. Having confirmed the position with SIAC, our client hereby agrees to your proposal.

8 Not surprisingly, Heller Ehrman took issue with this, objecting to the defendant’s request to the ICC to put the matter before it in abeyance (letter to ICC Secretariat from Heller Ehrman, dated 29 November 2006), and stating the view that “the correct procedure [was] for [the defendant] to first apply for a withdrawal of ICC Case No. 14511/JB before commencing arbitration before the SIAC” (letter to SIAC from Heller Ehrman, dated 27 November 2006).

9 Taking this cue, the defendant wrote to the ICC on 11 December 2006 to withdraw the ICC proceedings, reserving its right to bring proceedings before the ICC again if the SIAC or arbitral tribunal declined jurisdiction. In the event, the ICC arbitration was withdrawn by consent of the parties on 2 February 2007.

10 On 23 November 2006, the defendant commenced arbitration at the SIAC. The defendant appointed Professor Michael Pryles (“Prof Pryles”) as an arbitrator, and the plaintiff appointed Mr Michael Hwang SC (“Mr Hwang”). On 10 January 2007, SIAC wrote to the parties confirming these two appointments and informing them that the two arbitrators would choose a third to act as presiding arbitrator of the tribunal pursuant to Rule 8 of the SIAC Rules. The plaintiff replied the next day reiterating that the arbitration was to be “in accordance with the Rules of Arbitration of the International Chamber of Commerce then in effect”. On 24 January 2007, however, it acknowledged that “there was an agreement in previous correspondence that the third arbitrator be nominated by Mr Hwang and Professor Pryles jointly.” Neither party raised any objection to the arbitrators’ nomination of Dr Michael Moser (“Dr Moser”) as presiding arbitrator, though the plaintiff repeated its “serious concerns about SIAC constituting the Tribunal in accordance with Rule 8 of the SIAC Rules”. On 14 February 2007, the plaintiff finally confirmed that it “[agreed] to the appointment of Dr Moser as Chairman of the Arbitral Tribunal by agreement between the two co-arbitrators, Mr Hwang and Professor Pryles, pursuant to Article 8(4) of the ICC Rules”. [Emphasis added]

11 The tribunal was thus duly constituted (letter from SIAC to parties dated 23 February 2007) and heard arguments on the preliminary issues pertaining to its jurisdiction on 11 September 2007. After the hearing, the tribunal wrote to the SIAC to ask if it would be prepared to administer the arbitration in accordance with the ICC Rules and, if so, which bodies within SIAC would perform the functions assigned to the Secretary General, Secretariat and the International Court of Arbitration of the ICC (“ICC Court”) under the ICC Rules. On 25 October 2007, the SIAC responded to confirm that it would be prepared to administer the arbitration in accordance with the ICC Rules, with the SIAC Secretariat undertaking the role of the ICC Secretariat, the SIAC Registrar that of the ICC Secretary General and the SIAC Board of Directors the role of the ICC Court. The tribunal rendered its Decision on Jurisdiction (“Decision”) on 10 December 2007.

The tribunal's decision

12 The tribunal noted, at [87] of the Decision, the “strong...