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

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 10 April 2012
• Neutral Citation: [2012] SGHC 75
• Court: High Court (Singapore)
• Docket Number: Originating Summons No. 988/2011
• Published date: 09 April 2013
• Year: 2012
• Hearing Date: 24 February 2012
• Plaintiff Counsel: Kelvin Chia Swee Chye (Samuel Seow Law Corporation)
• Defendant Counsel: Tan Liam Beng and Soh Chun York (Drew & Napier LLC)
• Citation: [2012] SGHC 75

Lai Siu Chiu J:

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.

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

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.

The procedural history relating to the arbitration is a little complicated, and involved the Arbitrator rendering several awards. The Arbitrator rendered his 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”).

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 Justice Judith Prakash, 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.

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

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: 2. The [defendant] had made a claim for interest to be paid by the [plaintiff]. This is prayed for in the Points of Claim (Amendment No. 3). The claim for interest, as prayed for by the [defendant] would include both pre-award as well as post-award interest. 3. However, we note that the Tribunal had omitted from the Supplementary Award No. 2 (Remitted Issues) the award of pre-award interest on the sum of $603,608.90 to the [defendant]. The Tribunal had only awarded post-award interest on the sum of $603,608.90 in the Supplementary Award No. 2 (Remitted Issues). 4. It is provided in section 43(4) of the Arbitration Act (“the Act”) as follows:-

“Unless otherwise agreed by parties, a party may, within 30 days of receipt of the award and upon notice to the other party, request the arbitral tribunal to make an additional award as to claims presented during the arbitration proceedings but omitted from the award.”

5. Pursuant to section 43(4) of the Act, our clients hereby request the Tribunal to make an additional award as to a claim for pre-award interest presented during the arbitration proceedings but omitted from the Supplementary Award No. 2 (Remitted Issues). (emphasis original)

The Arbitrator’s reply dated 20 October 2011 was sent to both parties’ solicitors, and it stated: 1 I refer to the letter from M/s Drew & Napier LLC dated 17 Oct 2011. 2 I enclose herewith my Additional Award issued pursuant section 43(4)(sic) dealing with pre-award interest on the sum of $603,608.90 awarded.

The defendant’s solicitors in its letter above, at [7], claimed that the Arbitrator had awarded only post-award interest, and thus requested for pre-award interest pursuant to s 43(4) of the Act. The Arbitrator acceded to the request by making the Additional Award three days after receipt of the defendant’s solicitors’ letter. The Additional Award stated that the defendant was to be entitled to pre-award interest: 1 Pursuant to section 43(4) of the Arbitration Act, a party may within 30 days of receipt of the award and upon notice to the other party, request the arbitrator to make an additional award as to claims presented during the arbitration proceedings but omitted from the award. 2 In my Supplementary Award No. 2 (Remitted Issues), I had awarded post-award simple interest at the rate of 5.33% p.a. on the sum of $603,608.90 from the date of the Supplementary Award No. 2. I have overlooked and omitted to deal with the pre-award interest on the sum of $603,608.90. I now deal with the pre-award interest in this additional award.

The Arbitrator then proceeded to award a further sum of $274,114.61 to the defendant as pre-award interest calculated on the sum of $603,608.90 from 13 January 2003 to the date of the Second Supplementary Award. The Arbitrator stated that the date 13 January 2003 was selected because it was the date from which liquidated damages in the main arbitrated dispute accrued.

The plaintiff objected to the award of pre-award interest and filed the OS praying for the following reliefs: that the Additional Award be declared a nullity in that it was not an award made under or for the purposes of s 43 of the Arbitration Act; further or in the alternative, an order that the Additional Award be set aside under s 48(1)(a)(vii) of the Arbitration Act. As stated in [1], I only granted the plaintiff the relief in prayer (b) and made no order on prayer (a).

The plaintiff’s prayer (a) that the Additional Award was not an award made under s 43 of the Act

Given that the Arbitrator had issued the Additional Award pursuant to s 43(4) of the Act, the plaintiff’s references to s 43 were taken to refer to s 43(4) of the Act (and for completeness, s 43(5)), which states:

Correction or interpretation of award and additional award 43. – ...

(4) Unless otherwise agreed by the parties, a party may, within 30 days of receipt of the award and upon notice to the other party request the arbitral tribunal to make an additional award as to claims presented during the arbitration proceedings but omitted from the award. (5) If the arbitral tribunal considers the request in subsection (4) to be justified, the tribunal shall make the additional award within 60 days of the receipt of such request.

The plaintiff’s submissions on this point were very simple and were based on the plain reading of s 43(4) and the word “interest”. Kelvin Chia, (“Mr Chia”) counsel for the plaintiff, argued that the Arbitrator had become functus officio upon making his final award, which in this case would presumably be the Final Award as varied by the First and Second Supplementary Awards. Section 44(2) of the Act only permitted variation of the final award insofar as this was allowed by s 43 of the Act, and by its words, s 43(4) only supported an additional award for claims which were presented during the arbitration proceedings but omitted from the award.

Central to Mr Chia’s submissions on this point was that before the Arbitrator, the defendant had presented its claim for interest as a request for “interest”, rather than as a bifurcated claim for pre-award and post-award interest. According to Mr Chia, this meant that the defendant’s claim for and the Arbitrator’s subsequent grant of pre-award interest fell outside s 43(4). Since the defendant’s claim was for “interest”, the claim for pre-award interest specifically was not presented to the Arbitrator. Since the Arbitrator had awarded interest to the defendant in the Second Supplementary Award (although this was only for the period subsequent to the award), pre-award interest was therefore not omitted from the claim.

Mr Chia’s arguments were somewhat contradictory. If a claim for pre-award interest was not presented to the Arbitrator, how can it not have been omitted from the award? If pre-award interest is stated to be “not omitted”, the suggestion is that it was included. But if pre-award interest was not presented as a claim in the first place, how could it have been...