PT Central Investindo v Franciscus Wongso

• Jurisdiction: Singapore
• Judgment Date: 30 September 2014
• Date: 30 September 2014
• Docket Number: (1) Originating Summons No 510 of 2013; Summons No 317 of 2014 (2) Originating Summons No 48 of 2014
• Court: High Court (Singapore)

PT Central Investindo

Plaintiff

and

Franciscus Wongso and others and another matter

Defendant

[2014] SGHC 190

Belinda Ang Saw Ean J

(1) Originating Summons No 510 of 2013; Summons No 317 of 2014 (2) Originating Summons No 48 of 2014

High Court

Arbitration—Arbitral tribunal—Removal—Delay in rendering of award by arbitrator—Arbitrator accepting fresh submissions from one party after hearing—Other party claiming arbitrator affected by apparent bias—Whether arbitrator should be removed on ground of justifiable doubt as to impartiality or independence under Art 12 (2) of the UNCITRAL Model Law on International Commercial Arbitration 1985—Whether removal of arbitrator valid ground for setting aside award

Arbitration—Award—Setting aside—Arbitrator not dealing with one party's evidence in detail in award—Whether award should be set aside on ground of natural justice arising from apparent bias on part of arbitrator

This matter concerned two separate applications. The plaintiff and the defendants in both applications were the same. The first, Originating Summons No 510 of 2013 (‘OS 510/2013’) concerned an application to remove the sole arbitrator in an international arbitration between the plaintiff and the defendants administered by the Singapore International Arbitration Centre (‘SIAC’) under the 2007 SIAC Rules. The plaintiff, PTCentral Investindo (‘PTCI’), sought to remove the arbitrator on the ground that there was justifiable doubt as to his impartiality or independence under Art 12 (2) of the UNCITRAL Model Law on International Commercial Arbitration 1985 (‘the Model Law’). PTCI's main contention was that the conduct of the arbitrator showed that he was affected by apparent bias. It relied on the fact that the arbitrator had issued directions without first hearing the parties.

The arbitrator rendered the award in favour of the defendants prior to the determination of OS 510/2013. PTCI then filed Summons No 317 of 2014 (‘SUM 317/2014’) seeking a consequential order to set aside the award as of right in the event that PTCI succeeded in its application to remove the arbitrator. The defendants objected to SUM 317/2014, arguing that a removal order did not necessarily result in a setting aside of an award rendered prior to the issuance of the removal order. The defendants also argued that there was no further utility in hearing OS 510/2013 and that PTCI should instead file a fresh application to set aside the award.

PTCI duly filed a second application, Originating Summons No 48 of 2014 (‘OS 48/2014’) to set aside the award. PTCI's main contention in OS 48/2014 was that the arbitrator was affected by apparent bias. Other than the same complaints raised in OS 510/2013, PTCI also complained of, inter alia, the failure of the arbitrator to deal with its evidence in his award.

Held, dismissing the applications in OS 510/2013 and OS 48/2014:

OS 510/2013

(1) An arbitrator could be removed from the arbitration under Art 12 (2) of the Model Law if there had been actual, imputed or apparent bias that gave rise to justifiable doubt in relation to an arbitrator's impartiality or independence. In the context of PTCI's complaint of apparent bias, the relevant enquiry was whether a reasonable and fair-minded person with knowledge of all the relevant facts would entertain a reasonable suspicion that the circumstances surrounding PTCI's complaints might result in the arbitral proceedings against PTCI being affected by apparent bias if the arbitrator was not removed. The mere fact that PTCI had lost confidence in the arbitrator would not be justification for his removal: at [11] , [15] and [18] .

(2) The arbitrator could render his award pending determination of OS 510/2013 pursuant to Art 13 (3) of the Model Law. However, the removal application under OS 510/2013 would not be, ipso facto, rendered otiose by the rendering of the award prior to the determination of the removal application. There remained legal, procedural and practical utility in determining OS 510/2013 (see (a) to (d) below): at [45] and [49] .

1. (a) First, the hearing of the Art 13 challenge could continue as the intention was to disqualify for past breach and to, prospectively, ensure impartiality in the making of the award that was rendered pending the conclusion of OS 510/2013: at [50] .

2. (b) Secondly, a decision on an Art 13 challenge was likely to have an effect on any subsequent setting aside application. The requirement of impartiality or independence constituted one of the two pillars of natural justice and any breach thereof could lead to a setting aside of the award under s 24 (b) of the International Arbitration Act (Cap 143 A, 2002 Rev Ed) (‘the IAA’). Breach of such a requirement could also be a violation of the public policy of Singapore, another ground for setting aside an award under Art 34 (2) (b) (ii) of the Model Law. The requirement of impartiality and independence, implicit in Art 12 (2) of the Model Law, was mandatory under the Model Law, and was also provided for under r 9 of the 2007 SIAC Rules. The breach of this requirement could then be a separate ground for setting aside under Art 34 (2) (a) (iv) of the Model Law as such a breach would not be ‘in accordance with the Law’ or, in the alternative, ‘not in accordance with the agreement of the parties’: at [51] and [52] .

3. (c) Thirdly, a determination as to whether to remove an arbitrator was not appealable as stipulated in Art 13 (3) of the Model Law. A non-appealable decision upholding the challenge of an arbitrator provided a successful applicant a procedural advantage when the time came to set aside the award: the applicant only needed to furnish proof of the court order to support his setting-aside application. Conversely, a court decision dismissing the challenge of an arbitrator that was not appealable could well sieve out and limit subsequent setting-aside applications with the concomitant advantage and benefit of curtailing delays, dilatory tactics, disruption and additional costs regardless of whether the court dismissed the challenge before or after the rendering of an award: at [53] to [56] .

4. (d) Lastly, even though the arbitrator might be functus officio, the making of an award merely terminated the arbitral proceedings pursuant to Art 32 (1) of the Model Law. It would not terminate the arbitration agreement. A finding that the arbitrator should be removed would have had the practical effect of barring the arbitrator from sitting in future arbitrations between the parties under their arbitration agreement. The arbitrator would also be barred from sitting in the same arbitration if the court set aside the award on separate grounds but ordered the parties to recommence arbitral proceedings: at [58] .

(3) PTCI's complaints could not support a finding that the arbitrator was affected by apparent bias. Undue delay by itself would not suggest any form of partiality or bias against PTCI, for both parties were equally affected by the delay. The arbitrator was also exercising his wide case-management powers when dealing with the new submissions advanced by the defendants after the hearing and in issuing the timelines for PTCI to respond to the submissions. These case-management decisions, which simply reflected a desire on the part of the arbitrator to obtain more information, did not manifest any objective lack of impartiality. PTCI was also, in any event, provided a reasonable opportunity to be heard by the arbitrator. PTCI's application to remove the arbitrator under OS 510/2013 was therefore dismissed. There was consequently no need to rule on SUM 317/2014: at [68] to [81] .

OS 48/2014

(4) PTCI's setting-aside application was also baseless. Its attempt to recycle and weave its criticisms of the arbitrator in OS 510/2013 had to fail in light of the holding in OS 510/2013 that there was no apparent bias on the part of the arbitrator to justify his removal as an arbitrator. The arbitrator had also set out his reasons for rejecting PTCI's evidence and had provided extensive reasons why he made a finding contrary to PTCI's evidence. In any event, it was trite law that under the IAA, an error of law or erroneous finding of fact made in an arbitral award was not capable of establishing a ground for the award to be set aside: at [93] to [101] .

[Observation: Articles 12 and 13 of the Model Law were silent as to the effect of an order to remove an arbitrator issued after the rendering of an award. Article 34 (2) of the Model Law did not expressly list a successful challenge against an arbitrator under Art 13 as a ground to set aside an award: at [111] .

Even though a successful applicant might not obtain a consequential order upon a court order to remove the arbitrator, it could nevertheless set aside the award under Arts 34 (2) (a) (iv) and 34 (2) (b) (ii) of the Model Law by relying on the court order alone as proof of either ground of setting aside. Viewed in this light, the removal order (which was non-appealable) confirmed that the arbitrator was, at the very least, marred with apparent bias: at [136] and [143] .

The concern that an additional requirement of prejudice had to be proven in a setting-aside application was not applicable. A court order to remove the arbitrator was a serious matter. It signified that the breach of procedure was not technical or immaterial. From this perspective, an inference of bias could be drawn from the court order itself and hence the existence of prejudice in relation to any award made. In any event, prejudice was not a requirement for setting aside an award under Art 34 (2) (b) (ii) of the Model Law: at [145] to [148] .]

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BLC v BLB [2014] 4 SLR 79 (folld)

Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd [2010] SGHC 80 (refd)

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