VV and Another v VW

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeJudith Prakash J
Judgment Date24 January 2008
Neutral Citation[2008] SGHC 11
Citation[2008] SGHC 11
Subject MatterArbitration,Whether costs award in conflict with public policy in that it offended against principle of proportionality,Costs,Whether arbitrator breaching rules of natural justice in deciding costs on scale on which no evidence was given,Whether arbitrator having jurisdiction to award costs in respect of counterclaims put forth as set-off defences when arbitrator had declined to assert jurisdiction over them as counterclaims,Application to set aside costs award
Plaintiff CounselPhilip Jeyaretnam SC (Rodyk & Davidson LLP), Naresh Mahtani and Elizabeth Xue (Alban Tay Mahtani & de Silva LLP)
Defendant CounselDavinder Singh SC, Tan Siu Lin and Ankur Gupta (Drew & Napier LLC)
Published date30 January 2008
Date24 January 2008
Docket NumberOriginating Summons No 2160 of 2006

24 January 2008

Judgment reserved.

Judith Prakash J

1 This is an application by the plaintiffs to set aside an award made in an international arbitration governed by the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“the Act”). The plaintiffs were the claimants in the arbitration and the defendant was the respondent and had also put forward a counterclaim. Three awards were issued in the proceedings. The first was the main award which was made on 11 April 2006 (“the Main Award”) and dealt with the substantive issues in dispute, the second was a corrective award made on 11 May 2006 and the third was the award on costs made on 23 April 2006 (“the Costs Award”). This application concerns the Costs Award and, as far as I am aware, it is the first time in Singapore that any party to an international arbitration has tried to set aside an award on costs under the Act.

2 By the Costs Award, the defendant was awarded a total sum of $2,805,498.52 as legal costs and expenses for the arbitration. The plaintiffs consider that award to be completely out of proportion to the amount of time spent in the arbitration proceedings, the issues that were submitted for the decision of the Arbitrator and the amount involved. The arbitration took approximately nine months from the appointment of the Arbitrator to the issue of the Main Award and the amount claimed by the plaintiffs in the arbitration was just under $1m.

Background

3 The course of events leading to the Costs Award is as follows. The plaintiffs are an unincorporated joint venture comprising an Australian company and a South-east Asian firm. The defendant is an Asian government. The dispute that was the subject of the arbitration arose from a contract made between the parties in December 1996 (“the Contract”) by which the defendant engaged the plaintiffs to plan, design and provide work supervision services for an infrastructure project in the defendant’s country. The Contract provided for disputes under the Contract to be referred to arbitration and prescribed two alternative modes for choosing the sole arbitrator and further provided that, if both those methods failed, “the dispute shall be referred to arbitration as prescribed by the Arbitration Act in force in Singapore”.

4 A dispute arose between the parties over the plaintiffs’ claim for payment under cl 17.1(c) of one of the contractual documents, the Conditions of Engagement (“the Conditions”) and on 10 March 2005, the plaintiffs issued to the defendant a notice of arbitration. By this notice, the plaintiffs referred to arbitration:

(a) the question as to what was the amount due and payable to the defendant under cl 17 of the Conditions in connection with a 15-month period during which work under the Contract had been suspended; and

(b) the question as to whether the plaintiffs were entitled to terminate the Contract (or alternatively, terminate their appointment under the Contract) as a result of the defendant’s failure to comply with its obligations under cl 17 of the Conditions.

The plaintiffs stressed that in paras 9 and 10 of the notice for arbitration, they had stated specifically that the request for arbitration related only to the two questions set out in the notice and that they expressly reserved all their rights in respect of all other claims and issues. According to an affidavit filed by one DD on behalf of the plaintiffs, the plaintiffs had deliberately opted to pursue their claim under cl 17 in a limited reference in a “limited arbitration” as they had been claiming that sum since July 1999 and desired a quick and relatively inexpensive way to recover it. The amount claimed by the plaintiffs as a disruption charge payable under cl 17 was approximately $927,000.

5 The parties were unable to agree on an arbitrator. The plaintiffs therefore asked the Singapore International Arbitration Centre (“SIAC”) to appoint an arbitrator. On 30 June 2005, the Deputy Chairman of the SIAC appointed Mr Alan J Thambiayah as the sole arbitrator in the arbitration. Subsequently, the parties confirmed in writing that the procedural law governing the arbitration was Singapore law and that the Act would apply to the arbitration.

6 On 5 July 2005, the defendant appointed M/s Drew & Napier to represent it in the arbitration. The first preliminary meeting before the Arbitrator to deal with procedural issues was held on 7 July 2005. In accordance with the timetable established at that meeting, the plaintiffs filed their statement of case on 22 July 2005 and the defendant filed its defence and counterclaim on 19 August 2005. Another preliminary meeting was held on 21 September 2005 which directed witness statements to be exchanged by 15 December 2005. The hearing was scheduled to commence on 13 February 2006.

7 In the meantime, there was considerable correspondence between the parties. The plaintiffs objected to the defendant’s introduction of extensive counterclaims in the arbitration and maintained that the Arbitrator had no jurisdiction to hear these counterclaims. They were concerned that an arbitration which they thought could be decided mainly by reference to, and construction of, documents was being turned, by the defendant, into a much broader case that would involve extensive factual and expert witness evidence relating to the defendant’s counterclaims. Accordingly, on 24 October 2005, the plaintiffs filed a “Jurisdictional Objections Application”. The parties then exchanged submissions. After hearing the application on 21 November 2005, the Arbitrator decided that at that stage of the proceedings, with hardly any evidential material relating to the defendant’s cross-claims available to him, he was not in a position to decide whether he had or lacked jurisdiction over the cross-claims. He held that he could only decide this question after completing the substantive hearing the following year. In the letter of 5 December 2005 in which he conveyed this decision, the Arbitrator also stated:

I am of the view that a determination of the question whether an equitable set-off has been established does go to jurisdiction. In other words, whether the [defendant] succeeds in this arbitration on the cross-claims pleaded depends ultimately on whether I find, on the facts, that these amount to permissible set-offs … If, on the other hand, I find that the [defendant] cannot avail itself of the cross-claims as a set-off, then, whether [or] not such cross-claims are meritorious, the Tribunal constituted for this arbitration does not have jurisdiction in respect of the cross-claims.

It can be seen from the above that the Arbitrator’s view was that he had no jurisdiction to consider the defendant’s cross-claims as independent claims or causes of action but that he might, depending on the facts, have jurisdiction to consider the defendant’s cross-claims as permissible set-offs and defences to the plaintiffs’ claim. Accordingly, by this time, the Arbitrator had held that he had no jurisdiction to award the defendant payment of any money as any cross-claim established by the defendant would only go to diminish or extinguish the amount to be awarded to the plaintiffs if they were successful in their claim.

8 By its defence and counterclaim, the defendant had raised two main defences and a host of counterclaims:

(a) the defendant’s first defence was that the plaintiffs were not contractually entitled to the payment of a disruption charge under the Contract;

(b) the second defence was that even if this disruption charge was payable, the defendant had a defence of equitable set-off arising from losses caused by the plaintiffs’ various breaches of the Contract (counterclaims) which operated to extinguish the plaintiffs’ claim;

(c) the defendant also advanced the counterclaims as independent counterclaims to claim damages against the plaintiffs.

The total value of the defendant’s counterclaims amounted to the equivalent of $20m. There were ten counterclaims in all and the amounts of these ranged from $12,500 to about $6.1m. Six of these counterclaims exceeded the plaintiffs’ claim.

9 The hearing of the arbitration took place as scheduled. The defendant led evidence on its counterclaims and adduced the opinions of experts as part of this evidence. Despite the Arbitrator having made known his views on 5 December 2005, it continued to submit in the proceedings that an award could be made on the counterclaims as independent claims. Ultimately, the Arbitrator decided in the defendant’s favour that the plaintiffs were not entitled to a disruption charge pursuant to cl 17 of the Conditions. He therefore dismissed the plaintiffs’ claim. The Arbitrator also considered the jurisdictional points again and repeated his ruling that he had no jurisdiction over the counterclaims as counterclaims and that the only dispute in respect of which he had jurisdiction to hear and determine was the plaintiffs’ claim. He concluded that the defendant’s counterclaims did not fall to be determined in the arbitration because, first, insofar as they constituted substantive defences of equitable set-off, it was unnecessary to consider them since the plaintiffs’ claim had been dismissed, and second, insofar as they were independent claims, no jurisdiction had been conferred on him to decide them.

The proceedings on costs

10 From the time of the Arbitrator’s decision not to make a ruling on jurisdiction until after the substantive hearing, the plaintiffs were concerned about the costs that would be involved in that hearing arising from the presentation of the counterclaims. When they opened their case therefore, the plaintiffs stated that they reserved their rights on costs and, at the end of the hearing, they requested that costs be determined at a subsequent hearing held after the substantive award was issued. In the Main Award, the Arbitrator thus directed that there should be an inquiry as to which party should bear the costs incurred with reference to...

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6 cases
  • Sui Southern Gas Co Ltd v Habibullah Coastal Power Co (Pte) Ltd
    • Singapore
    • High Court (Singapore)
    • 23 February 2010
    ...I did not accept that the Award could be set aside on the basis of art 34(2)(b)(ii), Sch 1 of the Act. The law As I stated in VV v VW [2008] 2 SLR(R) 929 at [17], assertions of breach of public policy cannot be vague and generalised. It is incumbent on a party seeking to challenge an award ......
  • Lin Jian Wei v Lim Eng Hock Peter
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    • Court of Three Judges (Singapore)
    • 31 May 2011
    ...Raffles Town Club Pte Ltd [2003] 3 SLR (R) 307; [2003] 3 SLR 307 (refd) Treasury Solicitor v Regester [1978] 1 WLR 446 (folld) VV v VW [2008] 2 SLR (R) 929; [2008] 2 SLR 929 (refd) Companies Act (Cap 50,1994 Rev Ed) ss 210, 211 (1) Legal Profession Act (Cap 161,2009 Rev Ed) ss 108 (1) , 108......
  • Ting Kang Chung John v Teo Hee Lai Building Constructions Pte Ltd
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    • High Court (Singapore)
    • 18 January 2010
    ...Pirtek (UK) Ltd v Deanswood Ltd [2005] EWHC 2301 (refd) Techno Ltd v Allied Dunbar Assurance plc [1993] 22 EG 109 (refd) VV v VW [2008] 2 SLR (R) 929; [2008] 2 SLR 929 (refd) Arbitration Act (Cap 10,1985 Rev Ed) s 15 Arbitration Act 2001 (Act 37 of 2001) ss 36, 36 (1) ,36 (2) , 36 (3) ,36 (......
  • Ajt v Aju
    • Singapore
    • High Court (Singapore)
    • 16 July 2010
    ...Gas Co Ltd v Habibullah Coastal Power Co (Pte) Ltd [2010] 3 SLR 1 (refd) Teo Yong Seng v Lim Bweng Tuck [1998] SGHC 70 (folld) VV v VW [2008] 2 SLR (R) 929; [2008] 2 SLR 929 (refd) Westacre Investments Inc v Jugoimport-SDPR Holding Co Ltd [2000] QB 288 (refd) Windhill Local Board of Health ......
  • Request a trial to view additional results
3 books & journal articles
  • Arbitration
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2008, December 2008
    • 1 December 2008
    ...under Art 34 of the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration. In VV v VW[2008] 2 SLR 929, the plaintiffs, which had failed in its principal claims in the arbitration, applied to set aside the award on the basis that the tribunal ......
  • INTERIM MEASURES IN AID OF FOREIGN ARBITRATIONS
    • Singapore
    • Singapore Academy of Law Journal Nbr. 2009, December 2009
    • 1 December 2009
    ...Singapore Pte Ltd[2008] 2 SLR 565. 83 See, for example, Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd[2007] 3 SLR 86; VW v VW[2008] 2 SLR 929. 84 See paras 106—111 of this article. 85 See para 36 of this article. 86 See the discussion at para 38 of this article. 87 See para 39 o......
  • PROPORTIONALITY IN COSTS
    • Singapore
    • Singapore Academy of Law Journal Nbr. 2011, December 2011
    • 1 December 2011
    ...(S 504/2010). 12 See Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 59 r 31(2). 13 This was acknowledged by Judith Prakash J in VV v VW [2008] 2 SLR(R) 929 at [28]. 14 Rules of Court (Cap 322, R 5, 2006 Rev Ed). 15 Rules of Court (Cap 322, R 5, 2006 Rev Ed). See para 4 of this article. 16 Of ......

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