OF INTERIM AWARDS: THEIR EFFECT PRIOR TO AND AFTER THE INTERNATIONAL ARBITRATION (AMENDMENT) ACT 2001
| Published date | 01 December 2002 |
| Author | TAN KAY KHENG |
| Citation | (2002) 14 SAcLJ 143 |
| Date | 01 December 2002 |
1 The International Arbitration (Amendment) Act 2001 has added (inter alia) new sections 19A and 19B to the main Act. The amendments took effect on 1 November 2001 (commencement date). Section 19A essentially allows for interim awards, as “the arbitral tribunal may make more than one award at different points in time during the arbitration proceedings on different aspects of the matters to be determined”.
2 Section 19B deals with the effect of an arbitral award by providing that it is “final and binding” on the parties, and that the award cannot be varied, amended, corrected, reviewed, added to or revoked by the arbitral tribunal, except as provided in Articles 33 and 34(4) of the UNCITRAL Model Law (i.e. the First Schedule of the main Act). In summary form, as regards amendments and additions to an award, Article 33 of the Model Law incorporates the equivalent of the slip rule known in civil proceedings, i.e. it allows the arbitral tribunal to correct “any errors in computation, any clerical or typographical errors or any errors of similar nature”. Article 33 also permits the making of an additional award “as to claims presented in the arbitral proceedings but omitted from the award”.
3 The Explanatory Statement to the amendment Bill introduced in Parliament on 25 September 2001 states that these amendments would provide for clarifications on the making of more than one award in the course of the arbitral proceedings and on how an award cannot be revisited by an arbitral tribunal except as provided in the Model Law.
4 Although the Explanatory Statement does not say so, the amendments in fact reversed the effect of the Court of Appeal’s recent decision in Tang Boon Jek Jeffrey v Tan Poh Leng Stanley1 (“Jeffrey Tang case”) delivered on 22 June 2001. In this case, the Court upheld an additional award made by an arbitrator to correct a wrong finding reached in his earlier award. This additional award was made by the arbitrator who, after hearing further arguments requested by Jeffrey Tang, reached the conclusion that there were no direct authorities on the issue of an arbitrator’s power to correct an award in an arbitration under the Model Law. The arbitrator was also of the view that great injustice would be caused if there were no power to
amend the earlier award, and that it was inconceivable that the law or public policy would permit such a situation.2
5 The Court of Appeal upheld the additional award on the basis that under Article 32 of the Model Law, the arbitrator is not functus officio until the final award has been made, and “final award” refers to the award which constitutes or completes the disposition of all claims submitted in the arbitration.
6 It is necessary to discuss the Jeffrey Tang case in order to understand the old position and how this has changed under the amendments to the International Arbitration Act (“IAA”). Criticisms of this Court of Appeal decision have been heard. There is also an article by Chiu Hse Yu3 (“Chiu”), in an earlier issue of this Journal, criticising this decision.
7 In this article, this writer will seek to defend the Court of Appeal’s decision, but before doing so, it would be appropriate to disclose that this writer was a member of the team of solicitors who had represented the successful appellant in the Jeffrey Tang case.
8 The main issue in the Jeffrey Tang case was whether the arbitrator was functus officio when he made his earlier award which was stated to be “final save as to costs”. It was an interim award in that besides the issue of costs, there were certain claims which were omitted in the award. The arbitrator then proceeded to issue an additional award which dealt with the omitted claims and affirming the earlier award which had dismissed Jeffrey Tang’s counterclaim. At the request of the solicitors for Jeffrey Tang, the arbitrator heard further arguments, and subsequently reversed his finding on a counterclaim for some A$1.3 million by issuing an “Additional Award II”. The Additional Award II also dealt with the issue of costs.
9 Stanley Tan then proceeded to apply to the High Court to set aside the Additional Award II, and this was allowed by G P Selvam J on the ground that the arbitrator was functus officio and there was nothing in the Model Law or the IAA to allow him to recall and reverse the initial award.
In so deciding, the learned Judge relied on the English position under their Arbitration Acts, and the decisions in The Monta n4 and Fidelitas Shipping Co Ltd v V/O Exportchleb.5
10 On appeal, the Court of Appeal disagreed with the Judge. Their reasons will now be discussed, together with the writer’s comments on the criticisms which have been levelled against this decision.
11 The Court of Appeal’s ratio decidendi relates to its interpretation of Article 32 of the Model Law, which provides that the arbitral proceedings are terminated by the final award and that the arbitral tribunal’s mandate terminates with the termination of the arbitral proceedings, subject to the provisions of Articles 33 and 34(4). The Court did “not think there could be any doubt that the ‘final award’ must be the one that completes everything that the arbitral tribunal is expected to decide, including the question of costs” and that “it is clear that until such a final award is given, the arbitral tribunal’s mandate still continues; it is not fimctus officio”.6
12 Chiu has expressed the view that the Jeffrey Tang decision leads to uncertainty and confusion, as parties may misconstrue the effect of interim awards as being temporary or incomplete in nature, just because they are not final awards.7 She, however, appears to accept that this view does not mean that the Court of Appeal was wrong, as she notes that two meanings can be ascribed to the word “final”.
13 It is clear that an award (like a court order) can be final in more than one sense. An award can be final in the sense of making the arbitral tribunal functus officio (which, according to the Jeffrey Tang case, an interim award is not final in this sense). It can also be final in the sense that it is not an interlocutory order. The mere fact therefore that an interim award can be varied or amended and thereby not attract finality in the first sense, does not make it a valid criticism of the Court of Appeal’s holding as it can still be final in the second sense. First, amendments are already allowed by Article 33 of the Model Law which means that an interim...
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