Turner (East Asia) Pte Ltd v Builders Federal (Hong Kong) Ltd & Another (No 2)

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JC
• Judgment Date: 27 May 1988
• Neutral Citation: [1988] SGHC 47
• Docket Number: Originating Motion No 91 of 1987
• Date: 27 May 1988
• Year: 1988
• Published date: 19 September 2003
• Plaintiff Counsel: Wong Meng Meng and Sundaresh Menon (Shook Lin & Bok)
• Citation: [1988] SGHC 47
• Defendant Counsel: M Karthigesu and Alan Thambiayah (Cooma Lau Loh & M Karthigesu)
• Court: High Court (Singapore)
• Subject Matter: Whether arbitrator biased,Whether arbitrator misconducted proceedings,ss 17 & 32 Arbitration Act (Cap 10),Test of whether bias exists,Test of 'reasonable suspicion' test,Removal of arbitrator for misconduct,Removal,Arbitral tribunal,Arbitration

Cur Adv Vult

The applicants (Turner) were the main contractors of a building project known as the `Gateway`, off Beach Road, Singapore. The respondents were the sub-contractors for the construction of curtain walls and entrances of the project. Disputes arose between Turner and the owners of the project which led to both parties purporting to terminate the main contract. The dispute between Turner and the owners has been referred to arbitration. As a result, the respondents (BF-JG) commenced proceedings against Turner to seek payment. Those proceedings were stayed pursuant to s 7 of the Arbitration Act (Cap 10). All the other sub-contractors have joined Turner in pursuing their claims against the owners.

Under cl 22 of the sub-contract between Turner and BF-JG, disputes between the parties are to be referred to arbitration. As the parties could not agree on an arbitrator, BF-FG by Originating Summons No 513 of 1986 applied to court for the appointment of one Mr Douglas Smith as the sole arbitrator. The law firm Freshfields represented BF-JG in that originating summons. Turner, through Shook Lin & Bok (SLB), counter-proposed Mr David Gardam, who is also the arbitrator hearing the dispute between Turner and the owners under the main contract. By an order of court of 9 April 1987, Mr Smith was appointed the sole arbitrator.

By this motion, Turner seeks an order of court, pursuant to s 17 of the Arbitration Act (Cap 10), to remove Mr Smith as arbitrator on the grounds that he has misconducted himself and/or the proceedings. Specifically, Turner alleges that Mr Smith did not conduct himself impartially, threatened to or has in fact exceeded his jurisdiction by purporting to make a ruling on a matter falling outside his jurisdiction and conducting the proceedings in total disregard of Singapore law.

Background and complaints

I will now briefly set out the main events leading to this application. The communications between the parties and between them and Mr Smith are voluminous and I will only refer to those which I think are most critical to the present application. I should add that the communications were conducted mainly through facsimile which should explain why in some instances the reply to a letter occurred on the same day or the day after.

As stated above, the court appointed Mr Smith as arbitrator on 9 April 1987. On 25 June 1987, Debevoise & Plimpton (D&P), an American law firm in New York, wrote to Mr Smith, and copied to SLB and the American attorney of Turner, Messrs Seyfarth Shaw Fairweather & Geraldson (Messrs Seyfarth), as follows:

We represent claimants Builders Federal (Hong Kong) Ltd and Josef Gartner & Co, in the above arbitration.

We are informed that Justice Lai in Singapore ruled a few days ago that no further arguments would be heard by him regarding the order filed on 20 May 1987, appointing you as arbitrator in this matter. Accordingly, notwithstanding the appeal of that order by Turner East Asia, your appointment is presently effective.

We expect to file with you claimants` statement of claim towards the end of next week or early the following week. You may consider it appropriate thereafter to schedule g preliminary meeting of the parties with you to discuss procedures and scheduling for the arbitration.

All communications in this matter should be sent to us at our New York office.

We anticipate moving forward promptly in the presentation of this matter to you.

In his reply of 1 July 1987, Mr Smith said, inter alia, that `a preliminary meeting is clearly essential at an early date and some indications of parties` preferences as to possible dates and location would be helpful`. Mr Smith also asked for a copy of the arbitration clause and enclosed a note of the terms and conditions which he would require to be fulfilled before he would set aside or engage time on the case. One of the terms was that the parties must pay an initial acceptance fee of £10,000 towards account.

On 6 July 1987, SLB wrote to Mr Smith acknowledging Mr Smith`s letter of 1 July 1987 and commented that in their record, Messrs Freshfields were acting for BF-JG. On the fees laid down by Mr Smith, SLB stated that they would seek instructions from their clients.

On the next day, 7 July 1987, D&P wrote and despatched to Mr Smith the claimants` statement of claim, which statement was also despatched to Turner, SLB and Messrs Seyfarth. D&P also referred to the preliminary meeting and said that `we would be prepared to attend such a meeting, either before or after the filing by Turner of a response to this statement of claim, although we think that a response from Turner prior to that meeting might make the meeting more productive`.

On 8 July 1987, Mr Richard Preston of Messrs Seyfarth acknowledged the receipt of Mr Smith`s letter of 1 July 1987 and stated `as this is a Singapore arbitration, I will leave substantive responses to your letters to our Singapore solicitors, Shook Lin & Bok.`

On 11 July 1987, SLB wrote to Mr Smith and it is important for me to set out this letter in full:

We refer to the letter dated 7 July 1987 from M/s Debevoise & Plimpton, and to our letter dated 6 July 1987.

We regret that we are unable to recognize and accept the role of M/s Debevoise & Plimpton in the arbitration proceedings between our clients Turner (East Asia) Pte Ltd and Builders Federal (Hong Kong) Ltd/Josef Gartner & Co (BG/JG).

Under the Legal Profession Act, lawyers acting for parties in the domestic arbitration must be admitted to the Singapore bar. The dispute between our clients and BF/JG is such a domestic dispute, governed by Singapore law, and arising out of events in Singapore. It will also be necessary to conduct the proceedings in Singapore, unless the parties waive this requirement.

M/s Freshfields have been acting for BF/JG. Until recently we had no knowledge that M/s Debevoise & Plimpton would be conducting the arbitration on behalf of BF/JG.

Further, we do believe that you have not formally accepted the appointment as arbitrator or have given any directions for the filing of any pleadings, and for the future conduct of the proceedings.

In the circumstances, we do not accept the service of the statement of claim by M/s Debevoise & Plimpton on us and on our clients. We are taking steps to return the copies of the statement of claim.

On that same day, SLB wrote and returned the statement of claim to Messrs Freshfields who had served it on behalf of D&P. Besides commenting on the locus of D&P, SLB also stated, inter alia, `we regard the service to be wholly improper and unacceptable given the absence of any direction by the arbitrator to the parties and any agreement between the parties as to the rules governing the arbitration.`

On 13 July 1987, Mr Smith acknowledged receipt of the correspondence and stated that `clearly a preliminary meeting is now required but I shall postpone attempting to make any arrangements as to time and place pending clarification of the matters raised in Shook Lin & Bok`s letters to me.` (Emphasis added.)

On 14 July 1987, D&P, after having been notified by Messrs Freshfields that Turner had returned the statement of claim served on them, stated in a memorandum to Mr Smith that BF-JG`s `position is that the position taken on behalf of Turner under the Legal Profession Act of Singapore is incorrect and put forward merely as a delaying tactic.` I note that this memorandum does not appear to have been copied to SLB or Turner.

Then on 16 July 1987, Mr Smith wrote and made comments which Turner now complain of. While admitting that he was not familiar with the Legal Profession Act of Singapore, Mr Smith nevertheless remarked `all I can say at present is that it would seem very strange to me if a dispute involving three parties all of differing nationalities could possibly be categorized as a domestic one no matter which law applies.` Reversing what he said three days earlier on 13 July 1987, Mr Smith further stated:

Debevoise & Plimpton suggested last week that a preliminary meeting would be more productive if held following receipt of a response to the statement of claim and with this view, I would have tended to agree. However, I now perceive there to be no question of events happening in such sensible sequence. I am therefore minded to fix a date for a preliminary meeting and in the circumstances the only practicable location has to be Singapore. I therefore propose either Thursday 13, 20 or 27 August for such meeting and invite each party to notify their preference. I will provide in advance of such meeting an agenda and draft directions. Should the question of validity or entitlement to represent claimants by Debevoise & Plimpton not have been resolved between the respective lawyers prior to the preliminary meeting I will rule upon it then after inviting submissions from both sides. (Emphasis added.)

Mr Smith also asked for a copy of the Arbitration Act and the Legal Profession Act.

Also on 16 July 1987, D&P, in response to Mr Smith, informed the latter that D&P would be submitting a QC`s opinion on the point of the Legal Profession Act. They expressed the view that the preliminary meeting need not be held in Singapore though they were prepared to go to Singapore for the meeting if Mr Smith so decided. D&P also accepted the date 20 August 1987 for the meeting.

The next day, 17 July 1987, SLB wrote to Mr Smith stating, among others, the following:

M/s Debevoise & Plimpton appear to take the position that only the issue of venue is in question. That is not so. The additional, and very important issue, is that counsel appearing in a Singapore arbitration must be admitted to the Singapore bar.

We are therefore unable to agree to any meeting or hearing with M/s Debevoise & Plimpton to argue this issue before you. We reserve the right to raise such other issue as may be necessary to protect our clients` interests or to ensure due compliance with Singapore law ...