Prometheus Marine Pte Ltd v King, Ann Rita and another appeal

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 24 October 2017
• Neutral Citation: [2017] SGCA 61
• Plaintiff Counsel: Arvind Daas Naaidu (Arvind Law LLC)
• Date: 24 October 2017
• Docket Number: Civil Appeal Nos 181 and 182 of 2016; Summons Nos 45 and 46 of 2017
• Hearing Date: 04 September 2017
• Subject Matter: Arbitration,Bias,Setting aside,Challenge against arbitrator,Court,Legal profession,Duties,Recourse against award
• Published date: 28 October 2017
• Defendant Counsel: and Murali Rajaram and Tan Kai Ning Claire (Straits Law Practice LLC)
• Court: Court of Appeal (Singapore)
• Citation: [2017] SGCA 61
• Year: 2017

Sundaresh Menon CJ (delivering the grounds of decision of the court): Introduction

These appeals arose out of two applications made by Prometheus Marine Pte Ltd (“the Appellant”) to set aside the arbitration award dated 5 April 2016 (“the Award”) issued in ARB No 24 of 2013 (“the Arbitration”), which was administered by the Singapore International Arbitration Centre (“SIAC”). The Judicial Commissioner (“the Judge”) who heard the applications took the view that there were no grounds to set aside the Award and dismissed both applications. Having considered the oral and written arguments of the parties, we agreed with the learned Judge’s decision and dismissed the appeals. We delivered our oral grounds at the hearing, but having regard to the importance of the issues raised and the unsatisfactory manner in which the appeals were conducted, we now set out the fuller grounds for our decision.

The appeals and applications before us

The grounds for the Judge’s decision can be found in Prometheus Marine Pte Ltd v Ann Rita King [2017] SGHC 36 (“the GD”). Civil Appeal No 181 of 2016 (“CA 181/2016”) and Civil Appeal No 182 of 2016 (“CA 182/2016”) (collectively “the Appeals”) essentially sought the same relief, namely, the setting aside of the Award. The only distinction between the two appeals was that CA 181/2016 was filed in respect of the Judge’s decision dismissing the Appellant’s application to set aside the Award under the Arbitration Act (Cap 10, 2002 Rev Ed) (“the AA”) while CA 182/2016 was filed in respect of the Judge’s decision dismissing the corresponding application brought under the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“the IAA”). The Appellant had proceeded in this way because it took the position that the lex arbitri or the law governing the Arbitration was unknown. There were also two applications, Court of Appeal Summons Nos 45 and 46 of 2017 (“the CA Summonses”), made by the Appellant, which sought to set aside the Judge’s decision on the ground of apparent bias against the Appellant.

The facts

The Appellant is a company incorporated in Singapore, which is primarily involved in the marine engineering and yacht brokerage business. It is also involved in the business of yacht charter, yacht support and management and marina development.

The respondent in the Appeals, Mrs Ann Rita King (“the Respondent”), is a British national who is the managing director of a company based in Singapore with regional interests.

The Respondent contracted to purchase a yacht, a Clipper Cardova 60 (Hull #5) (“the Yacht”), later named the Santé, from the Appellant pursuant to a signed sale and purchase agreement entitled “Order Contract” dated 21 February 2011 (“the Contract”). The Contract was governed by Singapore law and had a dispute resolution clause referring disputes to arbitration at the SIAC in accordance with its Domestic Arbitration Rules.

The Yacht was manufactured by Clipper Motor Yachts International Ltd (“Clipper”), a company incorporated in Belize, and its parts were assembled by Ningbo FuHua Shipbuilding Industry Co Ltd (“the Shipyard”), a company incorporated in China. The Yacht was due to be delivered to the Respondent in June 2012. On 10 June 2012, while being loaded onto a barge at the Shipyard for shipment to Singapore, the Yacht was dropped. This caused extensive damage to the Yacht.

The Respondent hired a maritime surveyor, Mr Donald Richard Lamble (“Lamble”), to survey the Yacht. Lamble produced a report that identified a preliminary list of 19 items of damage (“the Lamble Report”). The parties reached an oral agreement that the Appellant would repair the Yacht at its own cost and to Lamble’s satisfaction (“the Repair Contract”). The Appellant then carried out repairs to the Yacht that purportedly remedied the damage enumerated in the Lamble Report.

On 25 July 2012, the Yacht was delivered to the Respondent purportedly repaired. Lamble inspected the Yacht again and prepared another report enumerating 120 defects (“the Lamble Defects List”). Dissatisfied with the repairs done by the Appellant, the Respondent brought the Yacht to Phuket, Thailand on 24 August 2012 for further assessment and repairs at her own cost. At the request of the Respondent, Siam Surveyors International surveyed the Yacht on 7 and 8 September 2012 and prepared a comprehensive inspection report of the Yacht (“the Siam Surveyors Report”). The Siam Surveyors Report identified an additional 109 defects and concluded that the Yacht: did not meet (a) the requisite Conformité Européenne (“CE”) standards for sailing and docking in Europe; did not meet the requisite International Organization for Standardization (“ISO”) standard; was not CE Category A compliant; and was not fully in conformity with the Recreational Craft Directive (“RCD”) 94/25/EC as amended by 2003/44/EC. Further work and repairs were carried out on the Yacht in Phuket, at the Respondent’s expense, to address the defects enumerated in the Lamble Defects List and the Siam Surveyors Report.

The Respondent commenced proceedings against the Appellant by way of a Notice of Arbitration dated 23 January 2013 seeking a full refund of the purchase price of the Yacht as well as damages and/or the cost of repairs. The sole arbitrator (“the Arbitrator”) was appointed by consent.

The pleadings

The Respondent claimed that the parties had agreed on, among others, the following:

Term	Description
The Specifications Term	It was an express term of the Contract that the Yacht would conform to the description stated at para 19(a) to (i) of the Statement of Claim.
The New Vessel Term	It was an express term of the Contract that the Yacht would be a new vessel
The Residence Term	The parties orally agreed that the Yacht would be made suitable as a high quality place of residence
The European Compliance Term	The parties orally agreed that the Yacht would be suitable for sailing in Europe and docking at ports in Europe
The Marine Standards Term	The parties orally agreed that the Yacht would (i) meet the requisite ISO Standard; (ii) be CE Category A compliant; and (iii) fully conform with RCD 94/25/EC as amended by 2003/44/EC.
The Correspondence with Description Term	The Yacht would correspond with the description of the vessel in the Contract, as implied by s 13 of the Sale of Goods Act (Cap 393, 1999 Rev Ed) (“SGA”)
The Satisfactory Quality Term	The Yacht would be of satisfactory quality, as implied by s 14 of the SGA
The Fit for Purpose Term	The Yacht would be fit for its intended purposes, as implied by s 14 of the SGA

The Respondent pleaded that the Residence Term, the European Compliance Term and the Marine Standards Term (“the Oral Terms”) were agreed on in the course of discussions between the parties around mid-2010. The Respondent pleaded that the Appellant had breached all the above express and/or implied terms of the Contract (except for the Specifications Term, the breach of which was not expressly pleaded, though as noted below at [59]-[60] this was not material). The Respondent also claimed that the Appellant had made false representations regarding the Oral Terms, thereby inducing the Respondent to enter into the Contract. The Respondent sought damages arising from the Appellant’s breaches of the Contract and the Appellant’s misrepresentations.

The Respondent further pleaded that the parties had entered into the Repair Contract (see [6] above) sometime in or around late June 2012, and that too had been breached because the Appellant failed to repair the Yacht to the satisfaction of Lamble, and also failed to conduct sea trials to the satisfaction of Lamble prior to the delivery of the Yacht. The Respondent therefore also sought damages arising from the breach of the Repair Contract.

The Appellant contended that it was a “distributor/broker for yachts built by Clipper and other builders” in its Statement of Defence. Paragraph 11 of the Respondent’s Statement of Claim, in which it was pleaded that “[the Appellant] is the vendor of the Santé”, was admitted by the Appellant in its Statement of Defence. It should be noted that the Appellant did not plead in its Statement of Defence that it was acting as an agent of Clipper or that the proper party to the Arbitration was Clipper. The Appellant denied all of the Respondent’s claims, and explicitly stated that it was “[reserving] its rights to rely on the Contract for its full terms and effect”.

The parties also agreed on a Statement of Issues, which was reproduced in full by the Arbitrator in the Award (at [89]), and served as the framework around which the Arbitrator organized his findings.

The Award

At the outset, the Arbitrator identified the SIAC Rules and Singapore law as the applicable rules and law governing the arbitration, pursuant to cll 12 and 14 of the Contract (at [11] of the Award). He did not state the applicable statute under Singapore law for the Arbitration, that is to say, whether it was the IAA or the AA. The effect of this omission became an issue in the applications before the Judge and in these appeals.

The Arbitrator noted that the Appellant did not specifically plead that it was only Clipper’s agent and not the seller under the Contract, and that this point was not identified in the Statement of Issues (at [90] of the Award). Nevertheless, the Arbitrator first considered the Appellant’s claim that it was not the seller of the Yacht under the Contract, because he recognized that this was a “threshold issue” which had an impact on his jurisdiction (at [90] of the Award). The Arbitrator held that the Appellant was not acting as an agent of Clipper. He arrived at this conclusion after having considered a number of matters including the testimonies of witnesses, the letter from Clipper’s solicitors taking the...