Lim Chin San Contractors Pte Ltd v L W Infrastructure Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 10 April 2012
• Date: 10 April 2012
• Docket Number: Originating Summons No 988 of 2011
• Court: High Court (Singapore)

Lim Chin San Contractors Pte Ltd

Plaintiff

and

LW Infrastructure Pte Ltd

Defendant

[2012] SGHC 75

Lai Siu Chiu J

Originating Summons No 988 of 2011

High Court

Arbitration—Award—Additional award—Recourse against award—Setting aside—Arbitrator granted additional award within three days of request and without response from other party to arbitration—Whether additional award could be set aside on ground that it was not properly made under s 43 (4) Arbitration Act (Cap 10, 2002 Rev Ed)—Whether additional award could be set aside for breach of natural justice—Section 43 (4) Arbitration Act (Cap 10, 2002 Rev Ed)

The plaintiff was engaged in arbitration with the defendant. After the arbitrator rendered his final award which included a sum of post-award interest in favour of the defendant, the defendant wrote to the arbitrator, copying the plaintiff, to request an additional award of pre-award interest pursuant to s 43 (4) of the Arbitration Act (Cap 10, 2002 Rev Ed) (‘the Act’). The defendant claimed that the issue of pre-award interest was presented during the arbitration proceedings but omitted from the award. Three days from the defendant's request, and without receiving any response from the plaintiff, the arbitrator awarded the defendant a further sum of $274,114.61 as pre-award interest.

The plaintiff objected to the additional award of pre-award interest on two grounds: first, that the additional award should be declared a nullity as it did not fall within the scope of s 43 (4) of the Act and the arbitrator had thus exceeded his statutory powers in making it; second, that the additional award should be set aside under s 48 (1) (a) (vii) of the Act because a breach of the rule of natural justice audi alteram partem occurred in connection with the making of the additional award.

Held, allowing the application in part:

(1) Section 43 (4) of Act was not a ground upon which the court could set aside the additional award. The only grounds upon which the court had jurisdiction to set aside an arbitral award were contained in ss 48 and 49 (8) (d) of the Act. The court did not otherwise have inherent or residual discretion to do so. This was so because of the principle of minimal curial intervention in arbitration proceedings, both generally and as reflected in s 47 of the Act: at [21] and [22].

(2) Natural justice was an implied requirement of all arbitral proceedings, and its rules applied to each and every aspect of the same. The rules of natural justice aimed to protect parties from a miscarriage of justice, and applied whenever there was occasion for justice to be carried out. An arbitral tribunal was undoubtedly acting in a judicial capacity, being in a position to decide on the rights of the parties before it: at [35] to [37].

(3) The ability to make an additional award provided for in s 43 (4) of the Act supported the principle of minimal curial intervention because the arbitrator could correct his award for genuine oversights and fortify it against litigious challenges based on natural justice principles. This would uphold the autonomy of the arbitral process: at [38] to [41].

(4) The claim which was the subject of an additional award had to have been presented during the arbitral proceedings and all submissions and evidence necessary for an arbitrator to make an additional award had to have been placed before him during the main arbitral proceedings: at [42].

(5) Before an arbitrator could make an additional award under s 43 (4), he had to first correctly decide that s 43 (4) applied at all, and to do so he had to decide whether the subject of the claim was both presented during the arbitral proceedings and omitted from the final award. Section 43 (4) required the requesting party to give notice to the other party of the request made to the tribunal. This was to give the other party an opportunity to address the arbitrator on the applicability of s 43 (4). The application of natural justice was especially relevant at this point: at [43] and [44].

(6) The arbitrator in waiting a short three days before rendering his additional award failed to give the plaintiff adequate opportunity to respond to the defendant's request; especially in the light of the fact that s 43 (5) allowed the arbitrator sixty days in which to do so and the consequence of the additional award was to require the plaintiff to pay the defendant a further $274,114.61. The plaintiff was denied an opportunity to submit on the applicability of s 43 (4) and thus suffered prejudice. There was thus a breach of the rule audi alteram partem: at [49], [50] and [53].

(7) In every case, factors such as the time given for the other party's response, the consequences of the additional award, the manner in which the request was made and the timing of the request would be relevant in determining whether adequate opportunity had been given for the other party to respond: at [51].

Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd [2010] SGHC 80 (folld)

John Holland Pty Ltd v Toyo Engineering Corp (Japan) [2001] 1 SLR (R) 443; [2001] 2 SLR 262 (folld)

Leong Kum Whay v QBE Insurance (M) Sdn Bhd [2006] 1 MLJ 710 (refd)

LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2011] 4 SLR 477 (refd)

Panchaud Freres SA v RPagnan & Fratelli [1974] 1 Lloyd's Rep 394 (refd)

Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR (R) 86; [2007] 3 SLR 86 (folld)

Arbitration Act (Cap 10, 2002 Rev Ed) ss 43 (4) , 48 (1) (a) (vii) (consd) ;ss 22, 35 (2) , 39 (5) , 43, 43 (5) , 44 (2) , 47, 48, 48 (1) (a) (iv) , 49 (8) (d)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 15 r 16

Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) First Schedule para 14

Kelvin Chia Swee Chye (Samuel Seow Law Corporation) for the plaintiff

Tan Liam Beng and Soh Chun York (Drew & Napier LLC) for the defendant.

Lai Siu Chiu J

1 This originating summons (‘the OS’) was an application by Lim Chin San Contractors Pte Ltd (‘the plaintiff’) pursuant to s 48 (1) (a) (vii) of the Arbitration Act (Cap 10, 2002 Rev Ed) (‘the Act’) to set aside an arbitrator's award. The award dated 20 October 2011 (‘the Additional Award’) was an additional award given by the arbitrator under s 43 (4) of the Act to L W Infrastructure Pte Ltd (‘the defendant’) for pre-award interest. I granted the plaintiff's application with costs and ordered that the Additional Award be set aside. The defendant has appealed against my order (in Civil Appeal No 17 of 2012) while the plaintiff has cross-appealed (in Civil Appeal No 26 of 2012) against my refusal to grant a declaration that the Additional Award be declared a nullity and that it was not an award under s 43 of the Act. In the light of the appeals, I now set out the detailed grounds for my decision.

2 There is little case law on the operation of s 43 (4) of the Act, and the main questions at issue in this case related to whether the court had the power to set aside an additional arbitral award on the basis that it was not validly made under s 43 (4); and the extent to which the rules of natural justice applied to the operation of the same section.

Background

3 The parties were engaged in arbitration before an arbitrator, one Johnny Tan Cheng Hye (‘the Arbitrator’), pursuant to a notice of arbitration served on 22 June 2004 by the defendant on the plaintiff. In the arbitral proceedings, the defendant was the claimant while the plaintiff was the respondent. It was not disputed that the Act applied to these proceedings.

4 The procedural history relating to the arbitration is a little complicated, and involved the Arbitrator rendering several awards. The Arbitrator rendered his final award (‘Final Award’) on 29 June 2010, in which the plaintiff was awarded the sum of $341,391.10 with simple interest at the rate of 5.33% per annum from the date of the award. The Final Award took into consideration numerous claims and counterclaims, one of which was for liquidated damages to be paid by the plaintiff to the defendant. The Arbitrator made no award of liquidated damages in the Final Award. To correct some typographical errors in the Final Award, the Arbitrator then issued a supplementary award on 15 July 2010 (‘the First Supplementary Award’).

5 Both parties were dissatisfied with the Arbitrator's decision, and appealed against it on questions of law arising out of the Final Award. The defendant filed Originating Summons No 759 of 2010 while the plaintiff cross-appealed by way of Originating Summons No 769 of 2010. Both appeals were heard before Judith Prakash J, who in her decision of 5 July 2011 (see LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2011] 4 SLR 477) dismissed the plaintiff's appeal and substantially allowed the defendant's appeal. The Final Award was remitted to the Arbitrator for reconsideration of the issue of whether the defendant should be entitled to liquidated damages in the light of the court's orders.

6 Following this remittance, the Arbitrator rendered his Supplementary Award No 2 (Remitted Issues) on 21 September 2011 (‘the Second Supplementary Award’), in which the defendant was awarded the sum of $945,000 for liquidated damages. In satisfaction thereof, the plaintiff was ordered to pay the defendant the sum of $603,608.90, after setting off the sum of $341,391.10 due to the plaintiff in the Final Award. Interest was awarded at the rate of 5.33% per annum on the sum of $603,608.90 from the date of the Second Supplementary Award.

7 The dispute in the OS was sparked off when the defendant's solicitor wrote to the Arbitrator on 17 October 2011 with a request for ‘pre-award interest’. The letter was carbon copied to the plaintiff's solicitors. The pertinent portions of the letter are set out below:

1. 2. The [defendant] had made a claim for interest to be paid by the [plaintiff]. This is prayed for in the Points of...