Insigma Technology Co Ltd v Alstom Technology Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 02 June 2009
• Neutral Citation: [2009] SGCA 24
• Date: 02 June 2009
• Subject Matter: Arbitration,Agreement,Validity of arbitration agreement,Whether arbitration agreement providing for arbitration to be administered by one arbitration institution under the procedural rules of another arbitration institution valid and enforceable
• Docket Number: Civil Appeal No 155 of 2008
• Published date: 08 June 2009
• Defendant Counsel: Alvin Yeo SC, Nish Shetty and Richway Ponnampalam (WongPartnership LLP)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Goh Phai Cheng SC (Goh Phai Cheng LLC)

2 June 2009

Chan Sek Keong CJ (delivering the grounds of decision of the court):

Introduction

1 This was an appeal against the decision of the High Court in Originating Summons No 13 of 2008 on the novel and important legal issue of whether an arbitration agreement may validly provide for one arbitral institution to administer an arbitration under the rules of another arbitral institution (see Insigma Technology Co Ltd v Alstom Technology Ltd [2009] 1 SLR 23 (“the Judgment”)).

2 In those proceedings, Insigma Technology Co Limited (“Insigma”) had applied to set aside the decision of the arbitral tribunal (“the Tribunal”) constituted by the Singapore International Arbitration Centre (“SIAC”) (see [20] below) in Arbitration No 087 of 2006 (“the Decision”), that it had jurisdiction to hear the arbitration between Alstom Technology Limited (“Alstom”) and Insigma, on the grounds that the Tribunal lacked such jurisdiction and that the arbitration agreement between the parties was inoperative for uncertainty. The High Court dismissed Insigma’s application, leading to this appeal. At the end of the hearing before us, we dismissed the appeal and awarded indemnity costs against Insigma. We now give our reasons for doing so.

Background facts

The licence agreement and the arbitration agreement

3 Insigma and Alstom were parties to a licence agreement dated 8 December 2004 (“the Licence Agreement”). The Licence Agreement was governed by Singapore law. Under the Licence Agreement, Insigma was granted a limited licence to use Alstom’s “wet flue gas desulfurisation” technology in China.

4 The Licence Agreement provided for the arbitration of any disputes between the parties in Art 18(c) (“the Arbitration Agreement”) which read as follows:

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 …

5 Sometime between late 2005 and early 2006, a dispute arose between Insigma and Alstom over the proper basis of calculating the annual royalties payable by Insigma to Alstom under the Licence Agreement. Alstom attempted to resolve the dispute by amicable means but failed. Alstom then sought to refer the dispute to arbitration.

The International Chamber of Commerce arbitration and its withdrawal

6 On 1 August 2006, Alstom filed a request for arbitration (“Request”) with the International Chamber of Commerce (“ICC”) in Paris, under the ICC Rules of Arbitration (1 January 1998) (“the ICC Rules”). Alstom claimed, inter alia, unpaid royalties and damages for breach of the Licence Agreement by Insigma. Alstom requested that the arbitral proceedings (“the ICC Arbitration”) be conducted in Singapore, under the ICC Rules, at the premises of the SIAC.

7 On 3 November 2006, Insigma filed its answer and counterclaim (“Answer”) to Alstom’s Request, disputing, inter alia, the jurisdiction of any arbitral tribunal constituted by the ICC. Insigma contended that the parties had agreed, under the Arbitration Agreement, to submit the dispute to the SIAC and have the SIAC administer the arbitration under the ICC Rules, that Alstom had breached the Arbitration Agreement by invoking the jurisdiction of the ICC, and that the International Court of Arbitration (“the ICC Court”) should not proceed with the ICC Arbitration. Insigma further stated that the SIAC was able to administer the arbitration under the ICC Rules (and in support of its statement, enclosed a paper prepared by the SIAC on its position in administering international arbitrations, see Sabiha Shiraz, “Interpretation and Execution of Arbitration Agreements: The SIAC Experience” (11 April 2006)). In its Answer, Insigma also noted that the parties had agreed to arbitration before the SIAC because of its lower administration costs.

8 On 13 November 2006, before the Tribunal was constituted but after each party had nominated an arbitrator and agreed that the two nominated arbitrators would subsequently nominate a third arbitrator to preside at the hearing of the ICC Arbitration, Alstom wrote to the SIAC and requested the SIAC to confirm whether it would accept jurisdiction over the dispute, and, if so, how the SIAC would administer the arbitration pursuant to the Arbitration Agreement if the dispute was submitted to it. This letter was not copied to Insigma.

9 On 17 November 2006, the SIAC replied to Alstom as follows:

We have considered [the Arbitration Agreement] ... 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 Arbitration Agreement]. While [the Arbitration Agreement] 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.

10 On receipt of this reply, Alstom wrote to inform Insigma of the SIAC’s confirmation on the same day:

… In the Answer, [Insigma] 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, [Alstom] hereby agrees to [Insigma’s] proposal [to submit the dispute to the SIAC].

In that same letter, Alstom also informed Insigma that it would request the ICC to put the ICC Arbitration in abeyance.

11 Insigma, however, replied to object to Alstom’s request to put the ICC Arbitration in abeyance and stated that if Alstom were minded to have the dispute submitted to the SIAC, it should first withdraw the ICC Arbitration from the ICC and then commence arbitration proceedings before the SIAC. Following this objection, Alstom wrote to the ICC on 11 December 2006 to withdraw the ICC Arbitration, reserving its right to bring proceedings before the ICC again if the SIAC or the Tribunal declined jurisdiction. The ICC Arbitration was eventually withdrawn by consent of the parties on 2 February 2007.

Commencement of arbitration proceedings at the SIAC

12 On 23 November 2006, Alstom commenced the arbitration at the SIAC. On the same day, Alstom also notified Prof Michael Pryles (“Prof Pryles”) and Mr Michael Hwang SC (“Mr Hwang”) (ie, the arbitrators nominated by Alstom and Insigma, respectively, under the Arbitration Agreement: see [8] above) of the transfer of the arbitration proceedings from the ICC to the SIAC. Alstom also informed Prof Pryles and Mr Hwang that their nominations as arbitrators would now be subject to the confirmation of the SIAC.

13 On 13 December 2006, the SIAC wrote to Insigma and Alstom confirming Alstom’s commencement of arbitration proceedings under r 3 of the Arbitration Rules of the SIAC (2nd Ed, 22 October 1997) (“the SIAC Rules”). The SIAC also called the parties’ attention to, inter alia, the appointment of the members of the Tribunal. On 18 December 2006, the SIAC then wrote separately to Alstom and Insigma, requesting confirmation of their respective nominations of Prof Pryles and Mr Hwang as co-arbitrators. Alstom and Insigma confirmed their respective nominations with the SIAC on 21 December 2006.

Constitution of the Tribunal

14 On 10 January 2007, the SIAC wrote to both parties confirming their appointments of Prof Pryles and Mr Hwang as co-arbitrators. The SIAC then invited the co-arbitrators to choose the third and presiding arbitrator pursuant to r 8 of the SIAC Rules. Insigma, however, replied on 11 January 2007, stating that, contrary to the SIAC’s letter of 10 January 2007, the applicable rules were the ICC Rules, and not the SIAC Rules, as provided under the Arbitration Agreement. On 23 January 2007, Alstom wrote to the SIAC stating that it would agree to the appointment of the third arbitrator being determined in accordance with the manner envisaged in the ICC Rules. Alstom’s letter further noted that:

Article 8(4) of the ICC Rules provides that, in the absence of the parties’ agreement upon another procedure, the ICC Court makes the appointment. [Alstom] and [Insigma] did in fact agree in previous correspondence, while the proceedings [were] before the ICC, that the third arbitrator would be jointly nominated by Professor Pryles and Mr Hwang. We informed SIAC of such agreement in our letter to you dated 23 November 2006. However, it would appear from [Insigma’s] 11 January fax that [Insigma] has now resiled from that agreement.

15 On 24 January 2007, Insigma wrote to the SIAC stating:

While it is true that there was an...