30-Day Time Limit Under Article 16(3) Of Model Law Cannot Be Extended

In the 20 June 2019 decision in BXS v BXT [2019] SGHC(I) 10, the SICC held that the court lacked the power to extend the 30-day time limit to apply to set aside an award under Article 34(3) of the Model Law. (see earlier Post here).

In BXY v BXX [2019] SGHC(I) 11, delivered one month after BXS, the court held that the 30-day time limit in Article 16(3) of the Model Law – which provides that a party may, within 30 days after having received notice of a tribunal’s ruling on its jurisdiction, apply to the Singapore High Court to appeal against the ruling – could not be extended.

Facts

The plaintiffs owned through a company and/or managed a business in Cambodia. They agreed that the business would be acquired by the first defendant, an Australian company. The transaction was structured as a transfer of the business to a new company incorporated by the second and third plaintiffs; and then a transfer of the shares in the new company to the second defendant, a wholly owned subsidiary of the first defendant, as the first defendant’s nominee. The parties to the share sale agreement were the second and third plaintiffs as vendors and the first defendant as purchaser. The second defendant was not a party. The SSA was governed by Singapore law and contained a SIAC arbitration clause. Prior to completion the first defendant provided a letter of designation addressed to the second and third plaintiffs containing a declaration that the first defendant nominated the second defendant to be the registered owner of the sale shares, and vested to the second defendant all of the first defendant’s rights, title and interest in, under and/or pursuant to the SSA.

In 2018, the first and second defendants commenced arbitration proceedings against the second and third plaintiffs, alleging breaches of the non-compete and non-solicitation provisions in the SSA as well as other associated wrongs. The plaintiffs asserted that the first defendant was not a proper party to the arbitration because it had vested its rights, title and interest under the SSA in the second defendant, and was therefore no longer a party to the arbitration agreement. They applied to the Tribunal for an order that the first defendant be struck out as a party on the ground that it had assigned all its rights and obligations to the second defendant. The Tribunal dismissed the application. Thereafter, the plaintiffs brought an application in the Singapore High Court to “reverse” the decision of the arbitral tribunal on the question of jurisdiction; the proceedings were subsequently transferred to the SICC.

Issues

Whether the Tribunal had jurisdiction to hear and determine the first defendant’s claims

The Court decided that the words of vesting did not amount to an assignment. The words of vesting were readily open to be understood as vesting in the second defendant the first defendant’s rights, title and interest in the sale shares under the SSA. The purpose of the letter of designation was to nominate the second defendant as transferee of the shares, and nothing in the SSA required or contemplated the assignment of the first defendant’s rights as purchaser under the SSA to its subsidiary. The first defendant remained subject to its obligations under the SSA, and it would make little sense for the first defendant to purport to assign its rights away while its obligations remained. The first defendant also had rights under the SSA which had to subsist in it until completion.

Whether the application was brought within time

On the facts, the Court found that the application was not brought within time; hence, the question turned on whether there was power to extend time.

Whether there was power to extend time

The court considered two issues: (i) the 30-day time limit in Article 16(3) and (ii) the inherent power of the court to extend time.

Article 16(3)

Under Article 16(3) of the Model Law and s 10(3) of the International Arbitration Act, a party may, within 30 days after having received notice of a tribunal’s ruling on its jurisdiction, apply to the Singapore High Court to appeal against the ruling. This time stipulation of 30 days is repeated at O 69A r 2(3) of the Rules of Court.

The court found that there was no power to extend time under Article 16(3) of the Model Law. The court stated [76-77]:

Article 34(3) states that an application “may not be made” after three months. Article 16(3) is not in similarly prohibitory terms, stating that request may be made within three months. The effect is the same, perhaps more clearly so in Article 16(3) in which the conferral of jurisdiction to hear the application includes that the request is made within the 30 days: that is the source of the jurisdiction. In teleMates Pty Ltd v Standard SoftTel Solutions Pvt Ltd (2011) 257 FLR 75 at [53], to which the defendants referred, it was held in the Supreme Court of New South Wales that the scheme established by the Model Law makes no provision for the period in Article 16(3) to be extended and the Court could not intervene where the request was not made in time.

Having regard to Article 16(3) alone, the time cannot be extended. I do not think the plaintiffs seriously submitted otherwise.

The court went on to consider whether the power to extend time in cl 7 in Schedule 1 to the SCJA (recently considered by Anselmo Reyes IJ in BXS v BXT [2019] SGHC (I) 10), permitted extension of the 30-day time limit in Article 16(3). The plaintiffs argued that the permissive nature of Article 16(3) (“may request, within thirty days”/“may, within 30 days … apply”) was different to the mandatory nature of the reference to “may not be made” in Article 34(3). The court rejected the argument, stating [83]:

“While Article 16(3) and s 10(3) are in different terms from Article 34(3), that does not mean that their substance is different. As was said in ABC Co v XYZ Co at [9], … the Court derives its jurisdiction to hear an application to set aside an award from Article 34(3); similarly, it derives its jurisdiction to hear an application to decide a jurisdictional matter from Article 16(3) or s 10(3). Article 34(3) conditions the right to apply upon timely application by the prohibitory “may not be made”, hence the reference to the time limit as mandatory, and the equation with “the bringing of a cause of action”. But Article 16(3) and s 10(3) are even more definite in conditioning the right to apply upon timely application. The statements that the party “may request, within 30 days after having received notice of that ruling”, or “may, within 30 days after having received notice of that ruling, apply”, tie the right to request or apply to the time within which it can be made. When the Court derives its jurisdiction from timely application and the time has passed, application cannot be made: the right is lost.”

And [84]:

“It is not to the point, then, that Article 16(3) and s 10(3) use the permissive “may” rather than the prohibitory “may not”. These are different ways of conditioning the right to apply upon timely application, and there is no warrant for reading into the provisions “or within such other time as the Court may direct”. A right so conditioned is extinguished or lost once the 30 days has passed.”

The court held that Article 16(3) and s 10(3) are “relating to limitation” within the proviso in clause 7 and Clause 7 did not permit extension of the 30 days, stating [88]:

“But a power to extend time under a Rule cannot overcome a time limitation in primary legislation; and in any event, the 30 days in Article 16(3) and s 10(3) is not a period within which an applicant is required to do an act in proceedings, but a time limit for commencing the proceedings.”

Accordingly:

  • Neither the Model Law nor the IAA permitted an extension of the 30 days in Article 16(3) or in s 10(3);
  • Clause 7 in Schedule 1 to the Supreme Court of Judicature Act also could not be used to grant an extension of time, as the 30 day time stipulation was “relating to limitation” within the proviso in the clause; and
  • As the court derived its jurisdiction to hear a jurisdictional matter from Article 16(3) or s 10(3), once the time had passed, the application could no longer be made.

Inherent Power

The Plaintiff’s referred to O.92 r.4 of the ROC, which provide that “…nothing in these Rules shall be deemed to limit or affect the inherent powers of the Court to make any order as may be necessary to prevent injustice or to prevent an abuse of the process of the Court”. Further, the plaintiff referred to Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others [2013] 1 SLR 636, and Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd [2019] SGCA 33, cases which the plaintiff argued supported a less stringent approach to expedition and finality through the 30-day time limit.

The court considered that the plaintiffs could not rely on this power to seek an extension as the court could not exercise any power in respect of a matter over which it did not have jurisdiction [89]–[90].

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

View

Leave a Reply

Your email address will not be published. Required fields are marked *