P.T. Garuda Indonesia v Birgen Air

• Judge: Chao Hick Tin JA
• Judgment Date: 06 March 2002
• Neutral Citation: [2002] SGCA 12
• Citation: [2002] SGCA 12
• Defendant Counsel: Vangat Ramayah and Rajaram Ramiyah (Wee Ramayah & Partners)
• Published date: 19 September 2003
• Plaintiff Counsel: KS Rajah SC, Quahe Cheng Ann Lawrence, Saunthararajah Surenthiraraj and Michele Elias (Harry Elias Partnership)
• Date: 06 March 2002
• Docket Number: Civil Appeal No 600099 of
• Court: Court of Appeal (Singapore)
• Subject Matter: Leave to serve notice of originating motion out of jurisdiction,Conflict of Laws,Natural forum,Model Law on International Commercial Arbitration art 34,Award,Applicability of s 24 of International Arbitration Act (Cap 143A, 1995 Ed) and art 34 of Model Law to final award,Whether Singapore most appropriate forum to hear application,Arbitration,Final award,Out of jurisdiction,Agreement that place of arbitration at Jakarta and Indonesian law as governing law,Application for leave to serve out of jurisdiction,Whether proper case to grant leave,s 24 International Arbitration Act (Cap 143A, 1995 Ed),Delivery of final award in Jakarta although hearing in Singapore,O 69A r 4(2) Rules of Court,Distinction between place of arbitration and venue of hearing,Whether Singapore most clearly connected with arbitration,Service,Civil Procedure

Judgment

GROUNDS OF DECISION

1. This was an appeal against the decision of the High Court setting aside an order of the Assistant Registrar granting leave to the appellants to serve an Originating Motion out of jurisdiction on the respondents. At the conclusion of the hearing we dismissed the appeal. We now give our reasons

The background

2. The facts giving rise to the institution of this Originating Motion were largely undisputed. The appellant (Garuda), an Indonesian company, and the respondent (Birgen), a Belgium company, entered into an agreement dated 20 January 1996 whereby Birgen agreed to lease one DC 10-30 aircraft to Garuda for use by pilgrims to Saudi Arabia for the Hajj (the lease agreement). The lease agreement expressly provided that the governing law would be the law of Indonesia and that disputes arising therefrom were to be referred for arbitration in Jakarta.

3. Subsequently a dispute arose because Birgen proposed to substitute the aircraft under the lease agreement and the dispute was referred to arbitration in accordance with the terms thereof, with Garuda as the claimant and Birgen, the respondent.

4. The arbitral tribunal consisted of Dr Clyde Croft, as Chairman, and Professor Priyatna Abdurrasyid and Professor Nurkut Inan as co-arbitrators. From February 1999, the tribunal, through its Chairman, Dr Croft, sought to set dates for the hearing of the arbitration. As regards the place of hearing, the Chairman informed the parties on 24 February that the tribunal thought that Jakarta was not an appropriate place given the then situation prevailing in Indonesia and proposed that the tribunal should sit in Zurich. On 11 and 12 March 1999, Birgen and Garuda respectively responded but neither made any comment on the tribunal’s proposal to have the hearing in Zurich. On 30 March 1999, Dr Croft proposed that the hearing of the arbitration be carried out in Singapore rather than in Zurich.

5. On 7 April 1999, M/s Donald H Bunker and Associates (Donald Bunker), the lawyers for Birgen, replied requesting that the tribunal proceed to decide the case on the basis of the documents without any hearing but if that request were not granted then they were agreeable, inter alia, that "Jakarta is not an appropriate place for the hearing and accepts the tribunal’s proposal to sit in Singapore."

6. On 21 May 1999, Dr Croft wrote to the lawyers for the parties asking for their comments on certain matters, including Birgen’s application for "documents only arbitration". Nevertheless, he also notified the parties that "the tribunal had decided that this matter will be heard on 4, 5 and 6 August 1999 in Singapore". On 10 June 1999 Gani Djemat & Partners (Gani Djemat), lawyers for Garuda, wrote indicating, inter alia, that they agreed that "the hearing to take place on 4, 5 and 6 August 1999 in Singapore."

7. On 23 July 1999 by another letter to both Donald Bunker and Gani Djemat, the lawyers for the parties, Dr Croft reiterated that "a hearing will take place in Singapore" on the appointed dates.

8. The hearing was duly held in Singapore and a Final Award, dated 15 February 2000, was handed down which was signed by two members, Dr Croft and Prof Inan. The third member, Prof Abdurrasyid, declined to sign it and rendered a dissenting opinion.

9. The Final Award stated that it was delivered at Jakarta and the tribunal in 39 also made the following comments:-

"It had not been suggested by either of the parties, nor is it the view of the Arbitral Tribunal, that the use of Singapore as a convenient place for the hearing had any substantive or procedural impact on the proceedings."

10. On 18 May 2000, the majority of the tribunal handed down an Addendum to the Final Award on account of a computational error.

11. On 3 January 2001, Garuda filed a Notice of Originating Motion (OM) in the High Court in Singapore to set aside the Final Award and the Addendum, and for various other reliefs. The application was based on s 24 of the International Arbitration Act (IA Act) and Article 34 of the Model Law. Article 34 sets out the grounds upon which an award governed by the Model Law may be set aside by the court. Section 24 sets out grounds, additional to those in Article 34, upon which the High Court may set aside an award. In the view of the judge below, s 24 and Article 34 are closely linked – if Article 34 is not applicable to an arbitration, then s 24 will also not be applicable. We agree with this construction. Garuda did not appeal against this determination.

12. On 27 March 2001 Garuda applied ex-parte for leave to serve the Notice of OM on Birgen out of Singapore and also for leave to serve the Notice by substituted service within Singapore (i.e., on Birgen’s Singapore solicitors). On 30 March 2001, the Assistant Registrar made an order substantially in the terms prayed for by Garuda.

13. On 7 April 2001, Birgen applied to set aside the order of 30 March 2001 of the Assistant Registrar. On 26 July 2001, Woo Bih Li JC set aside the order and all proceedings taken pursuant thereof. Thus, this appeal by Garuda against the decision of Woo JC.

14. In coming to his decision, the judge below found –

(i) there was material non-disclosure on the part of Garuda and this ground alone was sufficient for him to set aside the leave to serve the Notice of OM out of jurisdiction. The non-disclosure related to terms in the lease agreement, clauses in the Terms of Reference for the arbitration, the exchange of correspondence and the views expressed by the tribunal on the question of the place of the arbitration as set out in the Award.

(ii) this was not a proper case to grant leave to Garuda to serve the papers out of jurisdiction as the place of arbitration remained at Jakarta.

15. We should further mention that the judge below had also set aside the leave granted to Garuda to serve the papers on Birgen in Singapore by substituted service. This aspect of the decision of Woo JC was not appealed against.

Issues on appeal

16. Garuda’s application for leave to serve out of jurisdiction was made pursuant to Order 69A r 4. Under r 4(2) it is stated that no leave shall be granted unless "it shall be made sufficiently to appear to the Court that the case is a proper one for service out of jurisdiction." This test is almost identical to the test prescribed in O 11 r 2, which relates to service in general out of jurisdiction: the test of a proper case. Accordingly, in arriving at his decision the judge below relied on cases relating to O 11 r 2(2) which required that the applicant must show, first, that there were merits in the case and, second, that Singapore was a forum conveniens. In this regard the judge also adopted the opinion of the Court of Appeal in Overseas Union Insurance Ltd v Incorporated General Insurance Ltd [1992] 1 Lloyd’s Rep 439.

17. Before us Garuda did not dispute that they must satisfy those two requirements. Birgen’s case was that Garuda failed to satisfy both requirements by reason of the fact that the place of arbitration was not Singapore but Jakarta and thus Singapore courts did not have jurisdiction in the matter. However, the position taken by Garuda was that the parties had subsequently agreed to change "the place of arbitration" to Singapore.

18. There were, therefore, three main issues before us. First, whether there was an agreement between the parties, in the light of the correspondence referred to above, followed by the actual hearing of the arbitration in Singapore, to alter the place of the arbitration from Jakarta to Singapore. Second, whether Singapore was the place most clearly connected with the arbitration and whether this was the most appropriate forum to hear the application in the OM. Third, whether there was a material non-disclosure on the part of Garuda in their application for leave to serve out of jurisdiction and, if this were the case, what should be the consequence thereof.

Place of Arbitration

19. In filing the OM, Garuda relied upon the International Arbitration Act (IA Act), an Act to make provision for the conduct of international commercial arbitrations based on the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (the Model Law) on 21 June 1985. By s 3(1) of the IA Act, the Model Law (except Chapter VIII thereof) shall have the force of law in Singapore. Section 24 empowers the Singapore High Court to set aside the award of an arbitral tribunal in certain specified circumstances, other than those described in Article 34 of the Model Law.

20. Some of the relevant provisions of the Model Law are the following:-

"Article 1(2): Scope of application

The...