Shanghai Tunnel Engineering Co Ltd v Econ-NCC Joint Venture

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 26 August 2010
• Neutral Citation: [2010] SGHC 252
• Plaintiff Counsel: Tan Chee Meng SC, Josephine Choo and Lesley Tan (WongPartnership LLP)
• Docket Number: Originating Summons No 226 of 2009
• Date: 26 August 2010
• Hearing Date: 13 January 2010,14 January 2010,08 September 2009,07 September 2009
• Subject Matter: Arbitration,Building and construction law
• Year: 2010
• Citation: [2010] SGHC 252
• Defendant Counsel: P Balachandran (Robert Wang & Woo LLC)
• Court: High Court (Singapore)
• Published date: 06 April 2011

Judith Prakash J: Introduction

This originating summons is one of two appeals arising out of arbitration proceedings between Shanghai Tunnel Engineering Co Ltd (“STEC”) and Econ-NCC Joint Venture (“ENJV”) which resulted in a partial award dated 29 December 2008 (“Partial Award”) and a correction award dated 28 January 2009 (“Correction Award”). Both parties were dissatisfied with certain aspects of the arbitrator’s decision, albeit on different grounds, and therefore agreed pursuant to s 49(3)(a) of the Arbitration Act (Cap 10, 2002 Rev Ed) (“the Act”) to appeal to the court on the questions of law they considered to arise from the decision. This originating summons (“OS 226/2009”) is STEC’s appeal and ENJV’s appeal is encompassed in Originating Summons No 235 of 2009 (“OS 235/2009”).

STEC is a Chinese public company which carries out engineering and construction activities. At all material times during its dealings with STEC, ENJV was a joint-venture registered in Singapore as a partnership between a Singapore construction company, Econ Corporation Pte. Ltd (now known as Econ Piling Pte Ltd) (“ECON”), and a Swedish company, NCC International Aktiebolag. By the time OS 235/2009 was filed, the joint-venture had been terminated. As both sets of proceedings relate to events that occurred during the subsistence of the joint-venture, however, it is convenient to refer to ENJV rather than to the individual partners.

The parties were engaged in works relating to the construction of part of the Circle Line of the Mass Rapid Transit System. ENJV was the main contractor employed by the Land Transport Authority (“LTA”) and it in turn employed STEC as a sub-contractor for part of the works. The disputes that arose subsequently were, in accordance with the contract, referred to arbitration by a sole arbitrator, Mr George Tan (“the Arbitrator”). STEC was the claimant in the arbitration but ENJV both defended the proceedings and put in a counter-claim.

The Background

The main contract between LTA and ENJV was dated 1 August 2002 (“Main Contract”). It was ENJV’s task to construct and complete the MRT stations at MacPherson and Upper Paya Lebar as well as the tunnels at this section of the Circle Line (“Main Contract works”). There were 13 phases under the Main Contract. In Phase 3, the basic structure of the rail tunnels should have been completed. The completion date stipulated in the Main Contract for Phase 3 was 31 December 2004.

By a Letter of Award dated 5 December 2002 (“LA”), STEC was awarded a sub-contract by ENJV for the bored tunnelling works in Phase 3 of the Main Contract at the price of $20,172,966.00 (“Sub-Contract”). By virtue of cl 2.0 of the LA, the following documents were incorporated into the Sub-Contract: (a) The LA; (b) General Terms and Conditions for Domestic Subcontract Work (“GTC”); and (c) Main Contractor’s Programme, referred to in the arbitration proceedings as the “22B3 Programme”. Broadly speaking, the works under the Sub-Contract (“the Sub-Contract works”) comprised tunnelling works for both north-bound (“NB”) and south-bound (“SB”) tunnels, including the installation of precast reinforced concrete segments in strict compliance with, inter alia, the 22B3 Programme.

The commencement and completion dates for the Sub-Contract works were stipulated at cl 4.0 of the LA as 15 December 2002 and 31 December 2004 respectively. In particular, STEC was to complete the installation of tunnelling works including First Stage Concrete by 16 November 2004. As the issues arising in this appeal relate to the completion of the Sub-Contract works, the clauses in the LA and GTC which are pertinent to completion are reproduced below. Clause 4.0 of the LA states:

4.0 Commencement Date and Completion Date

The Domestic Subcontract shall commence on 15 December 2002 and shall complete on 31 December 2004. However, the completion dates for each part or section of the Domestic Subcontract Works shall be in accordance with the Main Contractor’s Programme as revised from time to time or as instructed by the Main Contractor.

In particular the Domestic Subcontractor shall complete the installation of the tunnelling works (last segment lining) including First Stage Concrete by 16 Nov 04. The Domestic Subcontractor shall then demobilize within 2 weeks, all plant, equipment, tools, surplus materials, temporary works out of the tunnels & shafts including cleaning the tunnels and shafts.

In the event of a revision of the Main Contractor’s Programme, the original duration of the programmed activity of the Domestic Subcontractor shall not be diminished.

[emphasis in original]

Clause 17.0 of the LA provides for completion, delay and time extension as follows:

17.0 Completion, Delay & Time Extension

The Domestic Subcontractor is fully aware that liquidated damages for the Basic Structure Completion in the Main Contract is $49,000 per day and Completion of the Whole of the Main Contract Works is $66,000 per day.

In the event that the Domestic Subcontractor delays the completion of the tunnelling works beyond the 16 November 2004, the Main Contractor shall retain the following additional sums:

Delay	First 10 Days	Next 10 Days	Final 10 Days
Retention Per Day	$20,000	$30,000	$50,000

The total additional amount retained shall be limited to $1,000,000 after which the Main Contractor reserves the right to terminate the Domestic Subcontract in accordance with clause 14 of the General Terms and Conditions for Domestic Subcontract Work. The Main Contractor shall have the right to recover whatever costs from the Domestic Subcontractor.

The Domestic Subcontractor’s attention is also directed [sic] Clause 15, 16, 17 and 18 of the General Terms and Conditions for Domestic Subcontract Work.

Clauses 17 and 18 of the GTC impose the following terms for completion:

17 Completion

Should the Domestic Subcontractor fail to complete the Domestic Subcontract Works by the completion date or any extended date or dates as may be granted under this Domestic Subcontract and such delay results in delay to the completion of the Main Contract Works, then the Domestic Subcontractor shall pay or allow to the Main Contractor a sum equivalent to any loss or damage suffered or incurred by the Main Contractor which is attributable to the delay caused by the Domestic Subcontract Works. Such sum or sums shall be deducted or recovered by the Main Contractor from monies due or which may become due to the Domestic Subcontractor under this or any other subcontract.

When the whole of the Domestic Subcontract works have been substantially completed in accordance with the Domestic Subcontract, the Main Contractor shall issue a Certificate of Substantial Completion to the effect that the Domestic Subcontract Works shall be deemed for all purposes of the Domestic Subcontract to have been completed on the day named in the Certificate. The Main Contractor shall not unreasonably delay or withhold the issue of the Certificate of Substantial Completion. The issue of the Certificate of Substantial Completion for the Domestic Subcontract Works shall be on a “Back-to-Back” basis i.e. it shall be subject to the issue of a similar certificate by the Engineer to the Main Contract unless otherwise provided in the Letter of Award.

…

Any Certificate of Substantial Completion issued shall not relieve the Domestic Subcontractor of his obligations under the Domestic Subcontract for the completion of all of the Domestic Subcontract Works relating to or ancillary to that section or part. The Defects Liability shall commence from the date named in the Certificate of Substantial Completion for the whole of the Main Contract Works and not for any section or part thereof unless otherwise provided in the Letter of Award.

18 Rate of Progress

If for any reason which does not entitle the Domestic Subcontractor to an extension of time, the rate of the progress of the Domestic Subcontract Works or any section is [sic] at any time in the opinion of the Main Contractor is too slow to ensure completion by the time for completion or any extended time or further extended time, the Main Contractor shall so notify the Domestic Subcontractor in writing and the Domestic Subcontractor shall thereupon take such measures and actions as are necessary and as the Main Contractor may require to expedite progress so as to complete the Domestic Subcontract Works or such section by the time for completion of extended time or further extended time. The Domestic Subcontractor shall not be entitled to claim for any additional payment for taking such measures or actions.

Should the Domestic Subcontractor fail to complete the Domestic Subcontract Works by the completion date or any extended date or dates as may be granted under this Domestic Subcontract and such delay results in delay to the completion of the Main Contract Works, then the Domestic Subcontractor shall pay or allow to the Main Contractor a sum equivalent to any loss or damage suffered or incurred by the Main Contractor which is attributable to the delay caused by the Domestic Subcontract Works. Such sum or sums shall be deducted or recovered by the Main Contractor from monies due or which may become due to the Domestic Subcontractor under this or any other subcontract.

Pursuant to cl 9.0 of the LA and Appendix V of the GTC, ENJV was to complete preparatory works before STEC could carry out the boring works. These preparatory works included: (a) design and construction of launch shaft; (b) construction and preparation of launch shaft surface area for STEC to construct the crane foundation and to assemble the gantry crane; and (c) casting of base slab in the launch shaft and removal of temporary struts to enable STEC to lower the tunnel boring machine (“TBM”) cradle into the launch shaft...