Singapore CA Sets Aside Award After Challenge By Non-Participating Party To Arbitration

CMS Holborn Asia review the Singapore Court of Appeal’s decision in Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd [2019] SGCA 33, where the CA overturned the High Court and confirmed that a respondent that declines to participate in arbitration proceedings on jurisdictional grounds does not lose its right to raise jurisdictional challenges in setting aside proceedings before the supervisory court.

In this case, while both the High Court and CA acknowledged the existing exception established in the Astro Nusantara case – namely, that a respondent who failed to make use of the active remedy in Article 16(3) was not precluded from raising jurisdictional objections in the course of exercising its passive remedy of resisting enforcement – the CA was willing to recognise a second exception; specifically, the CA considered that a respondent who failed to actively challenge a tribunal’s preliminary ruling on jurisdiction under Article 16(3) should not be precluded from raising jurisdictional objections in (active) setting-aside proceedings in circumstances where that respondent did not participate in the arbitral proceedings.

The Court reasoned that while an arbitration agreement obliges a claimant to resolve a legal dispute through arbitral proceedings, it does not impose any duty on a respondent to take any part in those proceedings, particularly if it believes the tribunal has no jurisdiction.  In the absence of such a duty, the CA was unable to conclude that a non-participating respondent with valid objections to the tribunal’s jurisdiction should be prevented by Article 16(3) from raising that objection in later setting-aside proceedings.

The case has generated considerable interest. See the following reviews:

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.

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