Singapore Court Clarifies Art.34(3) ML Time Limits & Rejects Natural Justice Objections

In BRQ v BRS [2019] SGHC 260, the Singapore High Court dealt with applications to set aside parts of an arbitration award arising out of a dispute concerning the construction of a hydroelectric power plant.

In the arbitration, the claimants sought to recover from the respondent cost overruns of S$70m+ and various transmission charges amounting to almost S$14m; the Respondents counterclaimed for various amounts. The tribunal found the respondent liable to the claimants for both the cost overrun and the transmission charges (albeit the tribunal did not award the claimants the full sums claimed because the tribunal also found that the respondent’s liability on both claims terminated on an earlier date than claimed), and dismissed the counterclaim. Both parties were dissatisfied with the award and both applied to set aside various parts of the award.

Time Limits

The claimants argued that the respondent’s application should be dismissed because the respondent filed it more than three months after receiving the award, contrary to the strict three-month time limit stipulated in Art 34(3) of the Model Law.

The Court noted that the weight of authority was that the time limit could not be extended, stating [@35]:

“The weight of authority in Singapore is that this three-month time limit is strict and cannot be extended: ABC Co v XYZ Co Ltd [2003] SLR 546 at [9]; PT Pukafu Indah and others v Newmont Indonesia Ltd and another [2012] 4 SLR 1157 at [30]. Most recently, it has been held that Art 34(3) is “written law relating to limitation” within the meaning of s 18(2) read with paragraph 7 of the First Schedule to the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed). Therefore the three-month time limit cannot be extended under the court’s general power to extend time: BXS v BXT [2019] SGHC(I) 10 at [39]. Whether a particular case comes within the first limb or the second limb of Art 34(3) is therefore of critical importance.”

The Court noted the chronology of events:

  • The award was dated 24 January 2018;
  • The parties received the award on 31 January 2018;
  • The respondent applied to the tribunal under Art 33 of the Model Law to correct
    the award on 1 March 2018;
  • The tribunal dismissed that application on 23 March 2018;
  • The respondent filed its application to set aside the award on 22 June 2018.

And set out the relevant provisions:

  • Article 33 of the Model Law allows a party, after receiving an award, to make a request to the tribunal within 30 days of receipt: (a) to correct computational, clerical, typographical or similar errors in the award; (b) to interpret a specified point or part of the award; or (c) to make an additional award on claims submitted to the tribunal but omitted in the award.
  • Art 34(3) of the Model Law requires an aggrieved party to apply to set aside an award within a three-month period. That three-month period commences either on: (i) the date on which the parties receive the award; or (ii) the date on which the tribunal disposes of a request for correction under Art 33.

The arguments of the parties:

  • The respondent argued that it was the second limb of Art 34(3) of the Model Law which applied to its application and that the three-month time limit under Art 34(3) of the Model Law therefore commenced on 23 March 2018 (ie. the date on which the tribunal dismissed the respondents application to correct the award).
  • The claimants argued that it was the first limb of Art 34(3) of the Model Law which applied to the respondent’s application and that the three-month time limit under Art 34(3) therefore commenced on 31 January 2018 (ie. the date of receipt of the award). The claimants further argued that the respondent’s request under Art 33 did not come within the second limb of Art 34(3) since a request under Art 33 postpones the three-month time limit under the second limb of Art 34(3) only if: (a) the request under Art 33 is genuinely made for one of the purposes set out in Art 33 or (b) the request under Art 33 is material to the setting aside application which the aggrieved party ultimately brings.

The Court rejected the claimants’ argument, stating that the commencement of the three-month time limit under Art 34(3) is postponed whenever a party makes a request to the tribunal under Art 33, and further that a request made under Art 33 is purely a matter of form and does not depend on evaluating the substance of the request by applying any qualitative test. The Court stated [@54-55]:

“Accordingly, I reject the claimants’ second proposition … above …. The commencement of the three-month time limit under Art 34(3) is postponed whenever a party makes a request to the tribunal under Art 33. Whether the request is material to the intended setting aside application is immaterial to the postponement of the time limit… I therefore accept the respondent’s submission that the three-month time limit to bring its application commenced only on 23 March 2018, under the second limb of Art 34(3) of the Model Law, when the tribunal disposed of the respondent’s request for correction. The respondent’s setting-aside application has therefore been brought within time.”

Natural Justice

The application was brought on the basis that the tribunal acted in breach of natural justice (a basis also relied upon the the respondent) and that the tribunal exceeded its jurisdiction.

The Court set out the relevant law on breach of natural justice [@58]:

“It is common ground that to challenge an arbitral award for breach of natural justice, the four requirements in Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 (“Soh Beng Tee”) must be established, namely: (a) the natural justice which was breached; (b) how it was breached; (c) in what way the breach was connected to the making of the award; and (d) how the breach prejudiced the party’s rights.”

Noting the following:

  • The fundamental duty of an adjudicator is to apply his mind to the arguments put before him (AKN and anor v ALC and anor and other appeals [2015] 3 SLR 488 at [46]);
  • Establishing that a tribunal wholly failed to consider an issue is a difficult endeavour;
  • An aspect of the right to a fair hearing is that a party must be given a reasonable opportunity to present its case, meaning not only giving that party the opportunity to present the evidence and to advance propositions of law on which it positively relies to establish its case (“the positive aspect”), but also giving the party a reasonable opportunity to present the evidence and to advance propositions of law necessary to respond to the case made against it (“the responsive aspect”);
  • In line with the policy of minimal curial intervention, a tribunal’s failure to solicit submissions from the parties on each and every point for decision is not a ground for setting aside the award;
  • Even if a breach of natural justice is proven, it must be further demonstrated that the breach actually caused prejudice to the aggrieved party, in other words, the breach must have deprived the tribunal of arguments or evidence that had “a real as opposed to a fanciful chance of making a difference to the final outcome of the arbitral proceedings in some meaningful way” (ADG at [148], citing L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2013] 1 SLR 125).

In relation to an application to set aside an award for lack of jurisdiction, the Court noted that it must undertake a two-step inquiry and determine, first, what matters were within the scope of submission to the arbitral tribunal and, second, whether the arbitral award involved such matters, or whether it involved “a new difference … outside the scope of the submission to arbitration and accordingly … irrelevant to the issues requiring determination” (from PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597 at [40]).

The Court noted [@86] that a tribunal can legitimately take the view that an evidential issue which a party raises within the context of the many substantive issues before the tribunal and which the party does not develop with any real seriousness of intent, even if it raises the issue in this way repeatedly, is not essential for it to decide and therefore does not require separate or explicit analysis; taking that view certainly does not amount to a failure to consider the issue entirely or to a deliberate avoidance of the issue, both of which would be grounds for a successful challenge to the award (see ASG v ASH [2016] 5 SLR 54 at [90]).

Ultimately, the Court held that there were reasonable grounds on which the tribunal may have arrived at the view that the objection to the admissibility of the correspondence was not an issue which was essential for it to decide, and therefore rejected the respondent’s submission that the tribunal, by reason only of its silence on the point in the award, must have failed entirely to apply its mind to the issue of admissibility. The court further found that, in any event, even if the tribunal did fail to consider its objections to the admissibility of the correspondence, no prejudice was caused to the respondent.

Role of the Supervisory Court

The Court emphasised the role of a supervisory court in a setting aside application (citing, @194, the following statement in AKN:

“In the light of their limited role in arbitral proceedings, the courts must resist the temptation to engage with what is substantially an appeal on the legal merits of an arbitral award, but which, through the ingenuity of counsel, may be disguised and presented as a challenge to process failures during the arbitration”

Concluding [@195]:

“In my view, there were several arguments raised in the present applications that amounted in essence to a disguised appeal on the merits of the tribunal’s decision. I reiterate, however, that in commercial arbitration, parties exercise their autonomy to choose their dispute-resolution method and to choose their dispute-resolvers. They must accept the consequences of that choice. There is no right of appeal from an arbitral award covered by the IAA. There is only a right to apply to set aside an award on limited grounds. In this case, neither party’s right to a fair arbitral process carried out within the tribunal’s jurisdiction was breached. Neither party’s complaints come within any of the limited grounds for setting aside an award.”

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 Hong Kong Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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