John Holland Pty Ltd (fka John Holland Construction & Engineering Pty Ltd) v Toyo Engineering Corp (Japan)

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeChoo Han Teck JC
Judgment Date14 March 2001
Neutral Citation[2001] SGHC 48
Citation[2001] SGHC 48
Date14 March 2001
Subject MatterArbitration,Whether grounds for setting aside award established,Express selection of ICC Rules to govern arbitration,Award,Whether parties elected to exclude application of Pt II and Model Law,s 15 International Arbitration Act (Cap 143A, 1995 Ed),Setting aside,s 24(b), Sch 1 Art 34 International Arbitration Act (Cap 143A, 1995 Ed)
Plaintiff CounselMichael Hwang SC, Tan Chuan Thye and Christopher Anand Daniel (Allen & Gledhill)
Docket NumberOriginating Motion No 30 of 2000
Defendant CounselWong Meng Meng SC and Nishith Kumar Shetty (Wong Partnership)
Published date19 September 2003
Background

This was an application by John Holland Pty Ltd (`JHPL`) to set aside an arbitration award given in favour of the respondent Toyo Engineering Corp (`TEC`). JHPL is an Australian company with its principal place of business in Australia. Its main business lay in the provision of building construction and engineering services. TEC is a Japanese company carrying on the business of providing engineering services. TEC was awarded a contract to upgrade an oil refining facility in Melbourne, and they entered into a sub-contract with JHPL on 5 April 1996 to construct a `fluidised catalytic converter` for the upgrading project. Subsequently, a dispute arose between TEC and JHPL which they referred to arbitration as required under their contract. The arbitration clause stipulated that the arbitration was to be held in Singapore according to the laws of Singapore. By mutual agreement, however, the actual proceedings took place principally in Vancouver. The final submissions were, however, conducted in Singapore.

In the arbitration JHPL claimed a sum of A$43m (alternatively A$16m) on a quantum meruit basis or A$43.8m as damages for breach of contract. TEC, in turn, claimed A$44.9m against JHPL. The arbitrators were John Tackaberry QC (appointed by JHPL), Vivian Ramsey QC (appointed by TEC), and Edward Chaisson QC (as chairman). Thirty-three witnesses testified and 150,000 documents were delivered to the arbitrators. The proceedings took place over four weeks in October-November 1998, and the resulting labour was wrapped in the 322 pages of the award published on 12 October 2000. A reviewing court must be undaunted by the intensity of such a massive arbitration, but it will remind itself that the deficiencies or defects which it is asked to review must be apparent on the record, and be slow to inquire into the nuances and perceptions that can only be appreciated at first instance.

Mr Michael Hwang, Senior Counsel, appearing on behalf of JHPL, saw a conflict between the provisions of the ICC Rules, which the parties had chosen, and the Model Law set out in the First Schedule of the International Arbitration Act (Cap 143A, 1995 Ed) (`IAA`). Counsel, therefore, argued that by reason of the conflict, the ICC Rules and not the Model Law applied. I will refer to this issue as the `fundamental issue` for convenience. Counsel further argued that when the Model Law does not apply, this application to set aside must be governed by the Arbitration Act (Cap 10) (`AA`). Thus, counsel`s second submission was that the award must, accordingly, be set aside by virtue of s 17(2) of the AA. Thirdly, counsel submitted that even if the Model Law is applicable for the purposes of setting aside the award, JHPL has satisfied the necessary requirements.

The fundamental issue

Mr Hwang conceded at the outset that JHPL was not proceeding by way of an appeal. The preliminary question in an application to set aside an international arbitration award is whether Pt II and the Model Law of the IAA apply. It was not disputed that the arbitration in question was an international arbitration as defined by s 5 of the IAA. Section 5(1) and (2)(a) of the IAA provide as follows:

(1) This Part and the Model Law shall not apply to an arbitration which is not an international arbitration unless the parties agree in writing that this Part or the Model Law shall apply to that arbitration.

(2) Notwithstanding Article 1(3) of the Model Law, an arbitration is international if -

(a) at least one of the parties to an arbitration agreement, at the time of the conclusion of the agreement, has its place of business in any State other than Singapore;



It is accepted that the parties to an international arbitration to which the IAA applies may, nonetheless, agree that Pt II or the Model Law shall not apply. The provision for this is found in s 15 of the IAA as follows:

If the parties to an arbitration agreement have (whether in the arbitration agreement or in any other document in writing) agreed that any dispute that has arisen or may arise between them is to be settled or resolved otherwise than in accordance with this Part or the Model Law, this Part and the Model Law shall not apply in relation to the settlement or resolution of that dispute.



It will now be appropriate to consider the relevant provisions in the arbitration agreement. First, General Condition 15.1 provides:

... if any dispute, difference of opinion or claim which the parties hereto are unable to resolve through amicable negotiation arises out of or in connection with the CONTRACT, either party may, after having the other party hereto so notified with a notice period of no less than one (1) month, refer the matter in question to arbitration for settlement under the rules of Conciliation and Arbitration of the International Chamber of Commerce.



Secondly, Special Condition 11.3 provides that `... the AGREEMENT shall be governed by and interpreted in accordance with the laws of Singapore`.

Mr Hwang contended that a proper interpretation of the above provisions leads to the conclusion that the parties had implicitly `opted out` of the IAA and the Model Law. Mr Wong Meng Meng, Senior Counsel, submitted that the Model Law applies notwithstanding that the parties had expressly selected the ICC Rules to govern the arbitration. There was no dispute that the AA will apply if the parties had excluded the IAA by agreement. Mr Hwang was not too concerned as to which of the two Acts apply because he was of the view that JHPL`s case satisfied both statutes. Mr Hwang submitted that should I find that the Model Law applies in this case, the relevant portions he would rely on are art 34(2)(a)(ii) and (iii) as well as (b)(ii), but if I should find that the Model Law does not apply, then he would rely on s 17(2) of the AA. Mr Wong, on the other hand, submitted that not only does the IAA apply, but that an application to set aside under the IAA is more onerous on the applicant than one under the AA because of the different philosophies of an international arbitration and a domestic one.

Mr Hwang drew my attention to two cases in which the court had taken the view that when the parties have chosen a set of arbitration rules the Model Law would consequently not apply notwithstanding that the parties had not expressly stipulated that the Model Law shall not apply. In the first of the two cases, namely, Coop International v Ebel SA [1998] 3 SLR 670 , 703, Chan Seng Onn JC held that:

... it is not necessary to have an explicit agreement stating that the Model Law or Part II will not apply, as counsel for the respondents had contended. Section 15 itself does not appear to require a clear express term of exclusion. On a plain and literal reading of that section, it can cover both express and implied exclusions. If the intention is to limit s 15 to an express ouster only, Parliament could easily have provided for it ([para ] 144).



In the other case, Eisenwerk v Aust Granites (Unreported) Australian case (No 5998 of 1998), Pincus JA of the Queensland Court of Appeal held (at para 12) that `the better view is that, by expressly opting for one well-known form of arbitration, the parties sufficiently showed an intention not to adopt or be bound by any quite different system of arbitration, such as the Model Law`. The judge also noted that it made little sense to agree to subject the arbitration to two different sets of rules (he was referring to the ICC Rules and the Model Law) which are irreconcilable in a number of aspects.

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