Jurong Engineering Ltd v Black & Veatch Singapore Pte Ltd

• Jurisdiction: Singapore
• Judge: Lai Kew Chai J
• Judgment Date: 26 November 2003
• Neutral Citation: [2003] SGHC 292
• Docket Number: Originating Summons No 1205 of 2003
• Date: 26 November 2003
• Published date: 17 December 2003
• Year: 2003
• Plaintiff Counsel: Mohan Pillay, Christopher Chong and Martin Ng (Wong Partnership)
• Citation: [2003] SGHC 292
• Defendant Counsel: Warren Khoo and Ganesh Chandru,V K Rajah SC and Vivien Teng (Rajah and Tann),Steven Lim from Jones Day, instructing solicitors to Rajah and Tann
• Court: High Court (Singapore)
• Subject Matter: Rules not in existence at time of contract,Arbitration,Nature of the arbitration,Agreement,Whether parties to agreement had specified a particular regime,Dispute over arbitral regime to be applied,Arbitration commenced under SIAC Domestic Arbitration Rules,Whether domestic or international SIAC rules should apply,Whether arbitration should have commenced under rules existing at time of contract,Domestic,Whether rules applicable

Introduction

1 In this Originating Summons, the plaintiffs, a company incorporated in Singapore, sought (1) a declaration that on a true construction of clause GC42.2.1 of the General Conditions in contract Structural Steel 61.4001, the reference therein to any arbitration being conducted “under and in accordance with the rules of arbitration promulgated by the Singapore International Arbitration Centre” is a reference to the rules of arbitration of the Singapore International Arbitration Centre generally, at the time of the submission of the dispute to arbitration, and not an express reference to the Arbitration Rules of the Singapore International Arbitration Centre (the “SIAC”) and (2) an order that the defendants pay the plaintiffs’ costs of the application.

2 By a letter dated 23 September to the Registrar of the Supreme Court, the SIAC asked permission of the Court to file a brief, given that the issue raised is of general interest to the SIAC as an “arbitration administering institution”. I granted their request.

3 This matter first came up for hearing on 26 September 2003, but was adjourned after I had granted the defendants’ application in Summons-in-Chambers Entered no. 6008/2003/B for leave to file and serve the affidavit of Mr David Andrew Lampitt on 17 September 2003. The Originating Summons was heard on 22 October 2003, at the conclusion of which I granted the plaintiff’s application and ordered costs to be paid by the defendants to the plaintiffs, to be taxed if not agreed. There is an appeal against my decision. I set out the circumstances and the reasons for my decision.

Background

4 The parties, both of which are locally incorporated companies, entered into a contract known as Structural Steel 61.4001 dated 4 January 2000 (the “Contract”) under which the plaintiffs agreed to erect steel works for the Tuas II Combined Cycle Power Plant at Tuas South Avenue 9, Singapore. Differences then arose between the parties, as a result of which the plaintiffs issued their Notice of Arbitration on 10 July 2003.

5 The arbitration was commenced under the SIAC Domestic Arbitration Rules (the “SIAC Domestic Rules”). However, only the Arbitration Rules of the SIAC (the “SIAC Rules”) existed at the time the parties made the contract, i.e. on 4 January 2000. The SIAC Domestic Rules only came into existence on 1 May 2001, after the making of the contract but before the submission to arbitration. A further dispute thus arose as to whether the SIAC Domestic Rules or the SIAC Rules were to apply to the present arbitration between the parties.

6 I will add at this juncture that the SIAC Rules were drafted with international arbitrations in mind. However, parties in a domestic arbitration may adopt the SIAC Rules to govern their arbitration, in accordance with the principle of procedural autonomy prescribed by the Model Law.

Construction of the Arbitration Clause

7 The full text of the relevant clause, namely, GC 42.2.1 of the Contract (the “arbitration clause”) reads:

“GC42.2.1 Arbitration. If no settlement is achieved within sixty days, either party may submit its claim to arbitration before a single arbitrator to be agreed between the parties, or failing agreement within 14 calendar days after either party has given to the other written request to concur in the appointment of an Arbitrator; a person to be appointed on the request of either party by the Chairman or Vice-Chairman for the time being of the Singapore International Arbitration Center. Any arbitration will be conducted in English in Singapore under and in accordance with the rules of arbitration promulgated by the Singapore International Arbitration Center.” (my emphasis )

8 The plaintiffs’ contention was that the arbitration clause constituted a reference to arbitration under the rules of arbitration promulgated by the SIAC generally, i.e. it did not purport to make any choice or indicate any preference for any particular set of SIAC rules of arbitration. Furthermore, the plaintiffs relied on Rule 1.1(b) of the SIAC Domestic Rules (discussed below) to assert that the SIAC Domestic Rules apply, given that reference was made to the rules of the SIAC generally, and given that the case is a domestic case. On the other hand, the defendants contended that the words in the arbitration clause could only refer to the SIAC Rules since the SIAC Rules were the only rules of the SIAC in existence at the time of the Contract. The defendants therefore asserted that the plaintiffs were in breach in commencing arbitration under the SIAC Domestic Rules.

9 The interpretation of the clause, in a way, involved a two-stage consideration. The first question was whether the words were general or specific. Were there any specific reference to any rules? If not, the second question one had to consider was whether the circumstances were such that the parties were confined to only one set of applicable rules. In this case, the defendants contended that the only set of rules that the parties could possibly have intended were the SIAC Rules since those were the only set of rules which were existent at the time the contract was made.

10 Firstly, it was clear to me that the words of the arbitration clause were very general. If it had been intended that the SIAC Rules were to govern the arbitration, specific reference to the “Arbitration Rules of Singapore International Arbitration Centre” should have been made. This was and has been the full title of the SIAC Rules since they were issued in 1991, when the SIAC was established.

11 In this regard, the SIAC at all material times had clearly recommended that parties use a Model Clause if they wished their arbitration to be governed by the SIAC Rules. The Model Clause was set out on the first page of the SIAC Rules. As is well known, Model Clauses are offered by well established arbitral institutions, such as the ICC Court of Arbitration and the London Court of International Arbitration (“LCIA”).

12 The Model Clause, which appeared in both the 1991 and the 1997 edition of the SIAC Rules reads as follows:

“ Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in [Singapore] in accordance with the Arbitration Rules of Singapore International Arbitration Centre (“SIAC Rules”) for the time being in force which rules are deemed to be incorporated by reference to this clause.”

13 Parties were free to adopt the Model Clause, but they did not. In any event, the preamble to both the 1991 and the 1997 edition of the SIAC Rules provided:

“Where any agreement, submission or reference provides for arbitration under the Arbitration Rules of Singapore International Arbitration Centre (“Centre”), the parties thereto shall be taken to have agreed that the arbitration shall be conducted in accordance with the following Rules …….”

This suggested that the SIAC Rules would only apply if specific reference is made to the SIAC Rules, using the full title.

14 Secondly, I did not think that the natural and ordinary meaning of the phrase “promulgated by the Singapore International Arbitration Center” meant that the parties agreed to adopt only those rules that had already been promulgated by the SIAC at the time of the contract. I did not think the word “promulgated” appearing in the context of the arbitration clause, referred only to those rules and laws that had already been issued by the SIAC at the time of the contract. By reason of the text, viz. “…Any arbitration will be conducted in English in Singapore under and in accordance with the rules of arbitration promulgated by the Singapore International Arbitration Center….”, I took the view that the parties had agreed to submit to an SIAC arbitration, and generally, to the most appropriate institutional rules existing at the time of the submission, regardless of whether those rules were in existence at the time of the contract.

15 Where the parties agreed to adopt the rules of the SIAC generally, the SIAC Domestic Rules would apply to domestic cases and the SIAC Rules would apply to international cases.

16 The English Court of Appeal in Perez v John Mercer & Sons [1922] 10 LLLR 584, which the plaintiffs referred me to, took a similar view. The clause in question, which was similarly general, read: “ All disputes to be referred to the Tribunal of Arbitration of the Manchester Chamber of Commerce, to be determined in accordance with the rules of the Tribunal.” Were the rules which existed at the time of the contract or those which existed at the time of submission to arbitration to apply? The court construed the clause to read “ according to the rules for the time being of the Tribunal”, as opposed to the rules which already existed at the time of the contract.

17 If more specific words had been used in the arbitration clause, the defendants could possibly have effectively confined themselves to those rules that already existed at the time of the contract. But that was not the case here.

18 The defendants further contended that the structure of certain other clauses of the contract supported their position. They submitted that from the different expressions adopted in these other clauses, it was clear that the parties wanted to draw a distinction between rules and regulations, which were to be amended from time to time, as opposed to rules that were already promulgated. In particular, the defendants referred to the following clauses of the contract which they contended, referred to rules, regulations and/or laws which were to be promulgated in future, as opposed to those that had already been promulgated at the time of the contract:

GC5.2.1“ The Contractor shall comply with the provision of the Factories Act and its Regulations and any statutory amendment or re-enactment thereof”.

GC 5.2.2 “ It shall be the duty of the Contractor to comply with such...