Yee Hong Pte Ltd v Powen Electrical Engineering Pte Ltd

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 01 July 2005
• Neutral Citation: [2005] SGHC 114
• Docket Number: Originating Motion No 1 of 2005
• Date: 01 July 2005
• Published date: 01 August 2005
• Year: 2005
• Plaintiff Counsel: Edwin Lee and Looi Ming Ming (Rajah and Tann)
• Citation: [2005] SGHC 114
• Defendant Counsel: P Jeya Putra and Wendy Leong (AsiaLegal LLC)
• Court: High Court (Singapore)
• Subject Matter: Section 22 Arbitration Act (Cap 10, 2002 Rev Ed),Arbitrator ordering exchange of affidavits by certain date failing which hearing to proceed as scheduled,Articles 5.1, 12.1(c) Singapore Institute of Architects Arbitration Rules,Improper conduct,Party to arbitration proceedings seeking further discovery,Whether improper conduct or loss of confidence in arbitrator sufficient to justify removal of arbitrator,Whether substantial injustice caused to party seeking removal of arbitrator,Whether arbitrator acting in excess of power by making such order,Section 16(1)(b) Arbitration Act (Cap 10, 2002 Rev Ed),Arbitral tribunal,Powers,Whether application for discovery necessary,Removal,Whether arbitrator's failure to call for hearing of application before making order amounting to improper conduct of arbitration proceedings and violation of rules of natural justice,Arbitration

1 This was an application by Yee Hong Pte Ltd (“Yee Hong”) to remove Lim Kheng Chye (“Lim”) as arbitrator in respect of arbitration proceedings commenced on or about 24 June 2003 by the respondent, Powen Electrical Engineering Pte Ltd (“Powen”), against Yee Hong. Yee Hong was the main contractor of a condominium at Upper Bukit Timah Road known as Southaven II and Powen was the electrical installation nominated sub-contractor. The application, which was made under s 16(1)(b) of the Arbitration Act (Cap 10, 2002 Rev Ed) (“the Act”), was based upon the alleged failure of the arbitrator to properly conduct the arbitration proceedings and that such failure had caused or would cause substantial injustice to Yee Hong.

2 The allegations in relation to the arbitrator’s failure to properly conduct arbitration proceedings related to Lim’s decision to proceed with the hearing of the substantive claim in the arbitration fixed for hearing on 19 to 21 January 2005. In the result, Yee Hong was ordered to exchange its affidavits of evidence-in-chief on or before 14 January 2005 failing which the arbitrator would proceed ahead to hear the substantive issues on the dates fixed for hearing without regard to the affidavits of evidence-in-chief from Yee Hong. Yee Hong contended that the order was peremptory in nature and it was made without affording the parties the opportunity to be heard. The other complaint was that Lim had acted in excess of his powers in making a peremptory order against Yee Hong on 11 January 2005. On Yee Hong’s application for further discovery of documents and consequential application for extension of time to exchange affidavits of evidence-in-chief, Lim had failed to hold hearings when requested to do so. Mr Edwin Lee for Yee Hong submitted that Lim had violated the rules of natural justice and the most basic duty as an arbitrator. He referred me to s 22 of the Act, which provides that

The arbitral tribunal shall act fairly and impartially and shall give each party a reasonable opportunity of presenting his case.

3 Powen was represented by Mr Jeya Putra of AsiaLegal LLC (“AsiaLegal”) who argued that Yee Hong’s allegations were unfounded as the applicant’s account of the events was inaccurate. The application also failed to meet the requirements of s 16(1)(b) of the Act. He pointed out that Yee Hong’s formal application for further discovery, request for a suitable date to hear that application and application for time extensions were all made on 11 January 2005 after the Peremptory Order (at [21] below) and the tribunal’s Directions No 2 (at [22] below). Mr Jeya Putra further submitted that at the hearing on 10 January 2005, the arbitrator heard arguments for and against an order of a peremptory nature. Moreover, submissions in letters from both parties were forwarded and duly considered by the tribunal before the Peremptory Order and Directions No 2 were issued. Mr Jeya Putra submitted that, in any event, Lim Huay Ee (“LHE”), the applicant’s planning manager, had not in his affidavit of 13 January 2005 demonstrated that substantial injustice resulted or was likely to be caused.

4 The Arbitration Act of 2001 which came into force on 1 March 2002 provides for a set of new domestic arbitration laws which are in line with the UNCITRAL Model Law and at the same time it adopted some features of the UK Arbitration Act 1996 (c 23). Previously, under the former legislation, an arbitrator may be removed for misconduct either of himself or of the proceedings or for delay in proceeding with the reference and making the award. The new Act avoids the label “misconduct” and s 16(1) of the Act reads as follows:

A party may request the Court to remove an arbitrator —

(a) who is physically or mentally incapable of conducting the proceedings or where there are justifiable doubts as to his capacity to do so; or

(b) who has refused or failed —

(i) to properly conduct the proceedings; or

(ii) to use all reasonable despatch in conducting the proceedings or making an award,

and where substantial injustice has been or will be caused to that party.

5 The expression “failure to conduct the proceedings properly” covers a multitude of manifestations and situations. Mustill & Boyd in Commercial Arbitration – 2001 Companion Volume to the Second Edition (Butterworths, 2001) at 291 commented that the expression could cover failure to comply with the general duty of the tribunal under s 33 of the UK Arbitration Act 1996 (which is similar in part to our s 22), the tribunal exceeding its powers, and failure of the tribunal to conduct the proceedings in accordance with the procedure agreed to by the parties. The refusal or failure to conduct the proceedings must be established by evidence: see Russell on Arbitration (Sweet & Maxwell, 22^nd Ed, 2003) at para 7-081.

6 The power to remove an arbitrator is not exercised unless the failure to conduct the proceedings properly has caused or will cause substantial injustice to the applicant. Whilst a failure to comply with s 22 of the Act may manifest improper conduct of the proceedings, that in itself is not enough to warrant the removal of the arbitrator under s 16(1)(b). There is a second stage of the investigation which is required by s 16(1)(b) and that is as to whether the failure has caused or will cause substantial injustice. Actual or cogent evidence of injustice of a substantive nature as the case may be has to be shown before the court will intervene. The test of “substantial injustice” is a high one for any applicant to surmount.

7 Reference is made to “substantial” injustice which indicates that the use of s 16(1)(b), like its equivalent provision, namely s 24(1)(d) of the UK Arbitration Act 1996, should be confined to exceptional circumstances only: see Robert Merkin, Arbitration Law (LLP, 12 May 2003 release) at para 8.73. Each case would depend, inter alia, on the surrounding circumstances, the conduct of the arbitrator and terms of reference. My further observations on this point, on the facts of this case, are at [48] below.

8 I turn to the facts of the present case. It is convenient to set out the chronology of events. They are not seriously in dispute. According to the tribunal’s directions of 4 November 2004, affidavits of evidence-in-chief were to be exchanged on 17 December 2004. The arbitration was fixed for hearing from 19 to 21 January 2005. On 10 December 2004, Yee Hong requested Powen to agree to exchange affidavits of evidence-in-chief on 7 January 2005. Powen agreed on condition that the hearing dates remained. The arbitrator was informed of the situation on 15 December 2004. The tribunal was agreeable to the extension.

9 On 7 January 2005, Yee Hong informed Powen that it was not ready to exchange affidavits of evidence-in-chief. No alternative date for the exchange was mentioned. On the same day, Mr Edwin Lee’s firm, M/s Rajah & Tann, on behalf of Yee Hong sent a letter by fax requesting further discovery as well as further and better particulars of the Statement of Claim dated 16 February 2004. The tribunal convened an urgent meeting on 10 January 2005 after being informed of the recent developments by Mr Jeya Putra who in his letter dated 7 January 2005 to the arbitrator asked that the hearing of the arbitration proceed as previously directed. His clients were ready to exchange affidavits of evidence-in-chief but not Yee Hong. In his view, Yee Hong’s last-minute demands for further documents and further and better particulars were plainly excuses to delay proceedings.

10 I should mention that Powen’s general manager, Wong Chiu Yin (“Wong”), in his affidavit of 18 January 2005 stated that the reason earlier given to Powen for the first extension of time to exchange affidavits (ie, from 17 December 2004 to 7 January 2005) was that the applicant’s representatives were travelling during that period and more time was needed to finalise the affidavits. This was not disputed by Yee Hong.

11 Wong further deposed that further discovery of four categories of documents (see [13]) were not pursued by Yee Hong after AsiaLegal’s fax of 24 November 2004 objecting to discovery on the ground of relevancy. Earlier on 19 November 2004, Rajah & Tann said that they would go ahead to apply for further discovery if they did not hear positively from AsiaLegal by the close of business on 24 November 2004. No application for further discovery was taken out despite Powen’s position on the matter. It was brought up again on 7 January 2005 in Rajah & Tann’s fax, the very day the parties were expected to exchange affidavits of evidence-in-chief. As for the request for further and better particulars of the Statement of Claim, the request was made for the first time on the day fixed for exchange of affidavits and that was close to a year after the Statement of Claim was submitted way back in February 2004.

12 Rajah & Tann said that they tried to call Ms Wendy Leong of AsiaLegal about further discovery of the four categories of documents on 30 December 2004 but they were told that she was on leave until 7 January 2005. Wong in his affidavit deposed that Ms Wendy Leong was away from 22 December 2004 to 5 January 2005 but counsel, Mr Jeya Putra, was in the office between those dates and, in particular, on 30 December 2004 when Rajah &Tann telephoned AsiaLegal. Mr Jeya Putra received no call from Rajah & Tann on 30 December 2004 and the latter left no message with AsiaLegal.

13 LHE deposed that at the hearing on 10 January 2005, the arbitrator was informed of three outstanding issues. First, copies of some documents previously disclosed had not been made available to Yee Hong. They were identified as documents that Yee Hong was entitled to before the exchange of affidavits of evidence-in-chief. Second, Yee Hong had earlier on 29 October 2004 requested six categories of documents but Powen had only provided on 19 November 2004 two categories, leaving four categories of documents...