22 January, 2016
The Court of Appeal in Singapore in AKN v ALC [2015] SGCA 63 has clarified the ambit of Article 34(4) of the Model Law [as in the International Arbitration Act (Cap 143A)] with regard to the court’s power to remit an award to the arbitral tribunal after the court has set aside the arbitral award.
The Honourable Chief Justice Sundaresh Menon in delivering the judgment held at [34] that the court has no power to remit an arbitral award to the arbitral tribunal after it has been set aside and stated at [25] that remission1 is a curative option available in limited circumstances where the court considers it to be appropriate in order to obviate the consequence of setting aside an arbitral award.
In delivering the judgment, the Court of Appeal also considered two previous High Court decisions of Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd [2010] SGHC 80 (“Front Row”) at [35] and Kempinski Hotels SA v PT Prima International Development [2011] 4 SLR 633 (“Kempinski Hotels”) at [36] – [38] which had previously addressed the point, albeit in a different context.
The Court of Appeal observed that in Front Row the issue was not of remitting the arbitral award to the same tribunal; whilst in Kempinski Hotels, it was said that the issue of remission could have been missed on the grounds that the parties had agreed the arbitral tribunal was not functus officio.
The Court of Appeal’s decision above clarifies that the only recourse available after an arbitral award has been set aside is to commence fresh arbitration proceedings.
The Singapore High Court Reaffirms The Arbitral Tribunal's Latitude in Rendering an Arbitral Award
The Singapore High Court in AUF v AUG [2015] SGHC 305 reaffirmed the findings of the arbitral tribunal, which had found the contractor to be liable for damages in the sum of S$ 3,401,459.62 in an arbitration involving the design, supply and installation of an external wall system for a 13-storey commercial building in Singapore.
Briefly, the High Court was asked to, amongst other things, determine the contractor's application to set aside the arbitral award on the
grounds that:
- the arbitrator had acted beyond his jurisdiction;
- there had been a breach of natural justice in that the contractor had been deprived an opportunity to present its case; and
- there was no evidence to support the arbitral tribunal's findings.
- (Collectively referred to as the "Challenges")
The Honourable Justice Belinda Ang, describing the applicable legal principles vis-à-vis the Challenges, noted:
- at [80] that in order for an act to amount to a breach of natural justice, the applicant would have to show a nexus between the complained act and the exact rule of natural justice that had been breached and would also be required to set out the prejudice that had been caused by the complained act; and
- at [76] that there was no compelling need to decide if the no evidence rule2 should be considered a freestanding rule of natural justice in the context of an application made pursuant to section 17(2) of the Arbitration Act (Cap 10) which deals with the requirement of due process being accorded to litigants.
On the facts, Justice Ang held at [97] that the arbitral tribunal's decision to adopt a method of assessment, i.e., diminution in value cf. cost of cure, was appropriate given that the owner had not unequivocally abandoned diminution in value as an alternative basis of claim.
In regards to the complaint of breach of natural justice, Justice Ang reiterated at [111] that the focus of the inquiry would be on due process cf. the correctness of the arbitral tribunal's decision and therefore held at [131] that no prejudice had been occasioned by the arbitral tribunal's refusal to allow the contractor to reply to the owner's final submissions or for that matter in allowing the arbitral tribunal at [134] and [139] to decide on the issues of interest and costs, respectively.
Notes
1 The Court of Appeal at [17] described "remission" to be the act of referring certain matters arising out of an arbitral award back to the very same arbitral tribunal that made the award.
2 The court at [74] observed the no evidence rule encompasses the "the requirement that a person exercising quasi-judicial functions [to] base his decision on evidence … material which tends to logically … show the existence or non-existence of facts relevant to the issue to the determined, or to show the likelihood or unlikelihood of the occurrence of some future event … ."
For further information, please contact:
Sarbjit Singh, Director, Duane Morris & Selvam
ssingh@duanemorrisselvam.com
