NCC International AB v Land Transport Authority of Singapore

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang J
• Judgment Date: 28 October 2008
• Neutral Citation: [2008] SGHC 186
• Docket Number: Originating Summons No 1602 of 2007
• Date: 28 October 2008
• Published date: 03 November 2008
• Year: 2008
• Plaintiff Counsel: Sundaresh Menon SC and Chua Kee Loon (Rajah & Tann LLP)
• Citation: [2008] SGHC 186
• Defendant Counsel: Alvin Yeo SC and Chan Hock Keng (WongPartnership LLP)
• Court: High Court (Singapore)
• Subject Matter: Contract,Arbitration clause,Interpretation of arbitration clause,Rule 5.1 2007 SIAC Rules,Singapore International Arbitration Centre ("SIAC"),Arbitration clause provided for an arbitrator to be appointed,Contractual terms,Appointment of arbitrator,Arbitral tribunal,Whether r 5.1 would override agreement of parties on number of arbitrators,Discretion of Registrar of SIAC under r 5.1 of 2007 SIAC Rules to appoint three arbitrators,Arbitration,Whether parties had agreed on number of arbitrators to be appointed,Whether r 5.1 of 2007 SIAC Rules would override agreement of parties on number of arbitrators,Whether discretion of Registrar under r 5.1 exercisable when parties had agreed on number of arbitrators

28 October 2008

Tay Yong Kwang J:

The application

1 In this Originating Summons, the plaintiff seeks the following orders:

(a) a declaration that Rule 5.1 of the Singapore International Arbitration Centre Rules (“SIAC Rules”) is incorporated into Contract 822 by way of clause 71.4 of the Conditions of Contract 822;

(b) declarations that on a true construction of clause 71.4 of the Conditions of Contract 822 read with the SIAC Rules, including Rule 5.1 of the SIAC Rules:

(i) the parties have not already agreed to appoint a sole arbitrator;

(ii) in any event, the Registrar of the Singapore International Arbitration Centre (“SIAC”) is empowered to appoint three arbitrators if, having given due regard to proposals from the parties, the complexity, the quantum involved or other relevant circumstances of the disputes, it appears to the Registrar of the SIAC that the disputes warrant the appointment of three arbitrators;

(c) an order that the defendant pay the plaintiff’s costs of this application; and

(d) such further or other relief be given or made as the Court deems fit.

The facts

2 The plaintiff, a company incorporated in Sweden, is the contractor for the construction of the MacPherson and Upper Paya Lebar MRT stations, including tunnelling, forming part of stage 2 of the Mass Rapid Transit Circle Line, a project of the defendant. In 2002, this contract (“Contract 822”) was originally awarded to a joint venture comprising the plaintiff and a local company. When the local company went into liquidation, the contract was novated to the plaintiff as sole contractor.

3 Clause 71.4 of the conditions of Contract 822 (“clause 71.4’) has an arbitration agreement in the following terms:

In the event that mediation is unsuccessful, the dispute or difference between the parties shall be referred to an Arbitrator to be agreed upon between the parties, or failing agreement, to be nominated on the application of either party by the Chairman of the Singapore International Arbitration Centre (SIAC) and any such reference shall be a submission on arbitration in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC Rules”) for the time being in force which rules are deemed to be incorporated by reference to this clause.

It is not in dispute that the relevant SIAC Rules in force at the time of commencement of the arbitration proceedings were the 3rd Edition of the said Rules dated 1 July 2007.

4 On 21 August 2007, the plaintiff commenced arbitration proceedings against the defendant. On 28 August 2007, the solicitors for the plaintiff wrote to the solicitors for the defendant seeking their agreement for three arbitrators to be appointed for the proceedings. Thereafter the solicitors for the parties held discussions on this issue but were unable to agree on the constitution of the arbitration tribunal. The defendant therefore applied to the Chairman of the SIAC to nominate a sole arbitrator pursuant to clause 71.4. However, the plaintiff applied to the Registrar of the SIAC pursuant to Rule 5.1 of the 2007 SIAC Rules (“Rule 5.1”) to exercise her discretion to appoint three arbitrators.

5 Rule 5.1 provides:

Unless the parties have agreed otherwise or unless it appears to the Registrar giving due regard to any proposals by the parties, the complexity, the quantum involved or other relevant circumstances of the dispute, that the dispute warrants the appointment of three arbitrators, a sole arbitrator shall be appointed.

6 The plaintiff’s application to the Registrar of the SIAC was contested by the defendant which took the position that clause 71.4 provided expressly for a sole arbitrator, leaving the Registrar of the SIAC no discretion under Rule 5.1 to appoint three arbitrators. On 15 October 2007, the Registrar of the SIAC directed the parties to file written submissions on the following three issues:

(1) whether clause 71.4 provides for a sole arbitrator;

(2) if clause 71.4 provides for a sole arbitrator, whether the Registrar of the SIAC under Rule 5.1 still has the power to appoint a three-member tribunal; and

(3) if there is such a power, whether the complexity and circumstances warrant the Registrar of the SIAC to exercise this discretion.

7 After considering the submissions made by the parties, the Registrar of the SIAC made the following findings:

(a) Clause 71.4 of the Conditions of Contract 822 provides for a single member Tribunal to hear this dispute.

(b) Rule 5.1 of the SIAC Rules is not intended to fetter party autonomy and therefore does not grant discretion to the Registrar to vary the number of arbitrators where parties have agreed to the number.

(c) In view of my finding in (2) above, the issue of exercising the Registrar’s discretion to vary the number of arbitrators in the constitution of the Tribunal does not arise.

8 This originating summons, in seeking the proper interpretation of clause 71.4 and Rule 5.1, is therefore essentially seeking to overturn the findings of the Registrar of the SIAC set out above.

The plaintiff’s submissions

9 The plaintiff is of the view that the Registrar of the SIAC has misconstrued clause 71.4 read with Rule 5.1. The plaintiff argues that Rule 5.1 is expressly incorporated into the arbitration agreement between the parties and that the effect of such incorporation means that Rule 5.1 must be read with, rather than subject to, clause 71.4, particularly when construing the parties’ agreement on the number of arbitrators to be appointed.

10 Reading clause 71.4 with Rule 5.1, it is clear that the parties did not agree on any particular number of arbitrators as the words “an Arbitrator” have the same meaning as “a Tribunal” and refer to a body of persons or persons having authority to act as an arbitrator over disputes referred to it. The words “an Arbitrator” are quite different from the phrases “a sole arbitrator”, “a single arbitrator” or “one arbitrator”. The parties did not intend themselves to be bound to appoint only one arbitrator.

11 While the parties could have adopted the specific wording in the SIAC’s model arbitration clause to expressly provide for a specific number of arbitrators, they chose not to do so. For instance, the SIAC model arbitration clause recommends the insertion of the following:

The Tribunal shall consist of ____ * arbitrator(s) to be appointed by the Chairman of the SIAC.

…

*State an odd number. Either state one or state three.

Similarly, the model clause suggested by the Hong Kong International Arbitration Centre is as follows:

“There shall be only one arbitrator.*

…

Notes:

*This sentence must be amended if a panel of three arbitrators is required.

The very fact that the parties chose not to include such a provision, recommended by the SIAC for use should the parties adopt the SIAC Rules, must mean that they intended the number of arbitrators to be left open for agreement between themselves, or failing such agreement, to be decided in accordance with the SIAC Rules.

12 Further, clause 1.2 of Contract 822 explains that “words importing the singular also include the plural and vice-versa where the context requires”. There can be no doubt that the parties intended flexibility on the issue of arbitrators and that the words “an Arbitrator” can be read equally as a plural reference. The plain language of the provisions in issue shows that instead of agreeing on a number which would apply to all circumstances, the parties chose to agree on a mechanism for deciding the number of arbitrators. If there was no agreement between the parties, the Registrar of the SIAC would have the power to operate this mechanism. This is a sensible approach given the nature of large engineering projects since the number, quantum and complexity of the disputes in such projects may vary substantially at any given time. For instance, it would not make sense to have three arbitrators for a relatively small dispute of $10,000.

13 The position taken by the plaintiff in its notice of arbitration dated 21 August 2007, in particular, paragraph 26, is consistent with clause 71.4 not expressly specifying the number of arbitrators to be appointed. Immediately after the defendant’s solicitors came on record in the arbitration proceedings, the plaintiff’s solicitors wrote to them to state that the plaintiff’s position is that the circumstances of the case warrant the appointment of a three-member tribunal. The defendant’s response is noteworthy in its use of the term “arbitrator(s)”, denoting that the issue of whether a sole arbitrator or a three-member tribunal ought to be appointed remains open.

14 At its highest, the words “an Arbitrator” are ambiguous, in which event:

(1) the ambiguity is such as to lead to the irresistible conclusion that no agreement was reached (or can be said to have been reached) between the parties on the number of arbitrators. All that was agreed was the mechanism to decide on the number of arbitrators;

(2) even if an agreement can be implied, the ambiguity in clause 71.4 must be resolved in the plaintiff’s favour by applying the contra proferentum rule since Contract 822 was drafted by the defendant.

15 Even if clause 71.4 can be read to indicate the parties’ agreement on a sole arbitrator, Rule 5.1 nevertheless confers the discretion on the Registrar of the SIAC to decide whether a three-member arbitral tribunal is warranted in the circumstances of the particular case. If those circumstances mandate that a three-member tribunal is more appropriate, the Registrar of the SIAC is empowered to override the default position of a sole arbitrator.

16 Far from fettering party autonomy, such a reading of the provisions endorses and affirms party autonomy. The indisputable fact is that the parties agreed to incorporate Rule 5.1 into their arbitration agreement and effect should be given to this rule in a manner consistent with its incorporation. Any other interpretation would render its incorporation...