National Oilwell Varco Norway as v Keppel FELS Ltd
| Jurisdiction | Singapore |
| Judge | Sundaresh Menon CJ,Judith Prakash JCA,Quentin Loh JAD |
| Judgment Date | 16 March 2022 |
| Court | Court of Appeal (Singapore) |
| Docket Number | Civil Appeal No 188 of 2020 |
Sundaresh Menon CJ, Judith Prakash JCA and Quentin Loh JAD
Civil Appeal No 188 of 2020
Court of Appeal
Arbitration — Enforcement — Setting aside leave to enforce — Misnomer — Arbitral award made in favour of party which no longer existed — Party seeking to enforce arbitral award on basis of misnomer — Whether arbitral award should be enforced — Section 19 International Arbitration Act (Cap 143A, 2002 Rev Ed)
Held, allowing the appeal:
(1) The critical question was whether the legal personality of Hydralift was effectively merged into and assumed by NOV Norway such that they were, for all intents and purposes, the same entity. If this was not the case, NOV Norway could not enforce the Award since it was made in favour of another entity: at [24].
(2) The effect of the 2004 mergers was to be determined under Norwegian law. This was so because, under Singapore law, all matters relating to the status of corporations including the existence and incidents of its personhood fell to be determined by the law of the place of incorporation: at [25].
(3) Considering the expert evidence on Norwegian law on the substantive effect of the 2004 mergers under Chapter 13 of the Norwegian Private Limited Liability Companies Act (Act of 13 June 1997 No 44) (Norway) (the “Norwegian Companies Act”), NOV Norway was, in law, the same legal person as Hydralift: at [32] to [39].
(4) The preparatory materials of the Norwegian Companies Act strongly suggested the continuity of the transferring company's legal personality in the transferee company. The materials emphasised the “continuity … [of] the business of the company” in the context of a merger and stated that “the assigning company is considered to be carried on in the assignee company”: at [40] to [44].
(5) Under s 13-16 of the Norwegian Companies Act, it was provided that “the assigning company is deemed liquidated” [emphasis added] when the merger had been registered. By operation of law, the transferring company ceased to exist as a separate entity. In legal proceedings where the claimant had been dissolved following a merger, Norwegian law recognised that the claimant's name could be rectified and substituted by the transferee's name. This recognition indicated that the legal personality of the transferring company continued in the transferee company and all that had to be done was to correctly reflect its new name: at [45] and [46].
(6) A transfer of obligations in breach of a contractual prohibition of transfer under Norwegian law “will not result in the termination of the liability”, but a transfer of rights in breach of a contractual prohibition of transfer might result in a situation where these rights could not be enforced. This analysis was consistent with the notion that the legal personality of the transferring company continued in the transferee. Even if some procedural steps might have to be taken under s 13-17 of the Norwegian Companies Act in order to give formal effect to the substantive rights acquired by the transferee following a merger, the fact remained that those substantive rights and/or obligations would have been transferred automatically by operation of law: at [47] to [52].
(7) Clause 21.1 of the Contract did not prohibit the transfer or transmission of Hydralift's rights under the arbitration agreement to NOV Norway through the 2004 mergers: at [61].
(8) As contended by NOV Norway, any stipulation against transferability or transmissibility had to be interpreted in the light of the principle of continuity so that a “specific basis” would be required to prohibit transferability or transmissibility in a situation of a merger. The wording of cl 21.1, which simply prohibited assignment, was not specific enough to be a sufficiently clear regulation to displace the presumption of continuity under Norwegian law: at [62] and [66].
(9) The power to enforce an arbitral award in a misnomer situation was not inconsistent with the mechanical approach to enforcement or s 19 of the International Arbitration Act (Cap 143A, 2002 Rev Ed). A misnomer situation was one where all that had happened was that an actual party to the arbitration had been described or referred to by an incorrect name. Where that was so, the enforcing court could deviate from the name used in the dispositive terms of an award and instead enforce the award in favour of the correct party even if it was not named as such in the award: at [76] and [79].
(10) The court endeavoured to facilitate the enforcement of arbitral awards. An unduly rigid approach towards enforcement would be antithetical to this aim: at [95].
(11) Enforcing the Award in favour of NOV Norway would not be to give effect to the Award otherwise than in accordance with its terms. It would only be accommodating a change of name for a mistakenly named party albeit at a very late stage but remaining faithful to the substance of the Award: at [96].
(12) The test of whether there was a misnomer was whether the name stated in the award, seen objectively against the relevant factual and legal background, was nothing more than the incorrect name of the legal person the award was in fact and in law to be enforced in favour of or against: at [104].
(13) In law, NOV Norway was the same legal person as Hydralift. While there were two entities once, Hydralift and NOV Norway, there was throughout the course of the arbitration in substance only one legal entity because the legal personality of Hydralift continued in NOV Norway following the 2004 mergers. The fact that the 2004 mergers were concealed from both KFELS and the Tribunal did not change that analysis. Hydralift was a misnomer for NOV Norway and the Award should be enforced: at [97], [105] and [108].
(14) There was no strict necessity for a misnomer to be corrected within the arbitration proceedings itself: at [115].
(15) While KFELS relied on NOV Norway's representations that Hydralift existed as a legal person and that Hydralift was the respondent in the arbitration when it proceeded to prosecute the claim and defend against the counterclaim in the arbitration, it did not suffer detriment in so doing: at [121] and [125].
(16) Once it was appreciated that Hydralift's legal personality continued in NOV Norway, none of the alleged detriment suffered by KFELS withstood scrutiny. NOV Norway was not estopped by its representations from denying either that the respondent in the arbitration was Hydralift or that Hydralift was a separate entity altogether: at [126] and [131].
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On 7 May 1996, Keppel FELS Ltd (“KFELS”) (then known as Far East Levingston Shipbuilding Ltd) and A/S Hydralift (“Hydralift”) entered into a contract (“the Contract”). Hydralift was a company incorporated in Norway while KFELS was a company incorporated in Singapore. The Contract was governed by Singapore law and contained an agreement for disputes to be resolved by arbitration in Singapore.
After a dispute arose under the Contract, KFELS commenced arbitration proceedings against Hydralift on 27 June 2007 seeking damages for breach of contract. An arbitral tribunal was constituted in 2008 (“the Tribunal”).
However, by this time, Hydralift was no longer in existence as a separate entity. Through two mergers in 2004 as part of a corporate restructuring exercise (“the 2004 mergers”), National Oilwell Varco Norway AS (“NOV Norway”) assumed all the assets, rights, obligations and liabilities of Hydralift and Hydralift was struck off the Norwegian register of companies.
NOV Norway, in the name of Hydralift, appeared, defended the claim and succeeded in its counterclaim in the arbitration. NOV Norway never disclosed the fact that the 2004 mergers had occurred or that Hydralift no longer existed. Additionally, in several applications commenced by KFELS against the Tribunal members and Hydralift before the High Court and Court of Appeal, NOV Norway represented itself as Hydralift and the High Court and Court of Appeal dismissed the applications with costs awarded ostensibly in favour of Hydralift. The Tribunal eventually issued a final award in favour of Hydralift (“Award”).
On 6 January 2020, an assistant registrar granted leave for NOV Norway to enforce the Award. Before the High Court judge (“the Judge”), KFELS sought to set aside the decision of the assistant registrar. The Judge found in favour of KFELS on three independent grounds. First, since the Tribunal intended to and did issue the Award in favour of Hydralift and not NOV Norway, the court would...
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