Sui Southern Gas Co Ltd v Habibullah Coastal Power Co (Pte) Ltd
Court | High Court (Singapore) |
Judge | Judith Prakash J |
Judgment Date | 23 February 2010 |
Neutral Citation | [2010] SGHC 62 |
Citation | [2010] SGHC 62 |
Defendant Counsel | Sundraresh Menon SC and Tammy Low Wan Jun(Rajah & Tann LLP) |
Published date | 26 February 2010 |
Plaintiff Counsel | Kenneth Tan SC (counsel instructed), Prakash Mulani and Aftab Ahmad Khan (M&A Law Corporation) |
Hearing Date | 28 August 2009,30 September 2009 |
Docket Number | Originating Summons No 248 of 2009 |
Date | 23 February 2010 |
Subject Matter | Arbitration |
The plaintiff, Sui Southern Gas Company Limited (“SSGC”), is a public sector limited company incorporated under the laws of Pakistan, whose principal business is that of a supplier of gas throughout the South Pakistan provinces of Sindh and Balochistan. The defendant, Habibullah Coastal Power Company (Private) Limited (“HCPC”), is a corporation organised under the laws of Pakistan.
By an Amended and Restated Gas Supply Agreement dated 31 March 1996 (“the Agreement”) between SSGC and HCPC (collectively “the parties”), relating to a power generation complex (“the Plant”) in Skeikh Manda near Quetta, in the Balochistan province of Pakistan, SSGC agreed to supply natural gas to HCPC in order to allow HCPC to generate electricity at the Plant. Pursuant to a Power Purchase Agreement with the Pakistan Water and Power Development Authority (“the Authority”), HCPC agreed to supply all the electricity produced at the Plant to the Authority.
Unfortunately, a dispute arose between SSGC and HCPC which they referred to arbitration, as required by the Agreement. Essentially, HCPC claimed that SSGC had breached the terms of the Agreement by failing to supply sufficient quantities of gas, causing HCPC to suffer a loss and thereby entitling it to damages under the Agreement. SSGC disputed this claim and averred that it had at all times complied with its obligations under the Agreement, and thus it had incurred no liability thereunder. Under the Agreement, the seat of arbitration was to be in Singapore and English law governed the conduct of the arbitration. The three-member Arbitral Tribunal (“the Tribunal”) rendered its award (“the Award”) on 1 December 2008. The Award was in all material respects in HCPC’s favour.
This originating summons was taken out by SSGC in March 2009, SSGC sought an order that the Award be set aside pursuant to s 24(
However, in written and oral submissions, counsel for SSGC rightly chose not to rely on the natural justice argument, and I shall say no more about that aspect of the application.
HCPC contested the application. After hearing the parties, I held that the application was to be dismissed, with costs as taxed or agreed to be paid by SSGC to HCPC, and the Award upheld because SSGC had not convinced me that any of its complaints was well-founded. I now set out the grounds of my decision.
BackgroundIn December 1995, the Government of Pakistan increased the gas allocation to HCPC (“Gas Allocation”) for the purposes of allowing HCPC to generate electricity at the Plant, which HCPC would then supply to the Authority. The Gas Allocation was to be 21 million standard cubic feet (“MMCF”) of natural gas on a “firm basis” and an additional 4 MMCF on an “as and when available basis”.
The Agreement was the means by which the Gas Allocation was to be implemented. Pursuant to arts 3.1 and 3.2 of the Agreement, SSGC was obliged to supply all of the Plant’s requirements for natural gas, to the extent of the “Daily Contract Quantity”. Pursuant to art 1.23 of the Agreement, the “Daily Contract Quantity” was 21 MMCF of natural gas per day, plus the “Additional Allocation Gas”, subject to availability, of 4 MMCF per day.
The delivery of all such quantities of natural gas was pursuant to the “Delivery Priority”, which was defined in art 1.25 as:
The term “pipeline system” was not, however, defined in the Agreement, and was one of the disputed matters before the Tribunal.[HCPC’s] right to receive and [SSGC’s] obligation to deliver Gas on a priority basis, consistent with [HCPC’s] Gas Allocation, such that deliveries to the [Plant] will be the last non-residential deliveries on [SSGC’s] pipeline system to be curtailed or reduced in the event of a reduction or curtailment of deliveries on [SSGC’s] pipeline system; provided, further, [HCPC] will be the first non-residential customer to have deliveries restored when the conditions which caused the reduction or curtailment are abated or remedied.
Since 2000, SSGC had on a number of occasions limited (or “curtailed”) the amount of gas supplied to the Plant, which caused HCPC to have to burn alternative fuel in order to meet its obligations to the Authority and, on occasion, to pay liquidated damages to the Authority. It was as a result of these events that HCPC had claimed damages for breach of contract against SSGC in the arbitration.
The Award The Tribunal, in para 4.6 of the Award, set out a list of 8 issues which it had to determine:
The Tribunal ruled in favour of HCPC, and it is necessary to set out a summary of the material aspects of the Award which SSGC sought to impugn. In para 12 of the Award, the Tribunal declared that:
In the Award, the Tribunal expressed a view as to whether the practical limitations imposed by the pipelines and equipment SSGC had chosen to employ excused its failure to meet its obligations under the Agreement (as interpreted by the Tribunal). The Tribunal was satisfied that no practical limitations excused such failure, and at para 7.3 of the Award, the Tribunal declared that:
On the evidence, the following steps could also be taken to increase the system’s capacity:
SSGC contended that the Award, and in particular the declaration set out in
In its submissions, SSGC relied heavily on the contention that the Award was perverse, manifestly unreasonable and irrational, and should therefore be set aside. SSGC deployed this argument in two ways.
In oral arguments before me, SSGC relied on it as an independent ground on which the Award could be challenged: counsel for SSGC submitted that the various circuits of the United States courts of appeal had...
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