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ICA COMPILED NOTES (FINAL VERSION) Seminar 1: An Overview on International Arbitration

A. Introduction to Arbitration 1.1 Meaning of Arbitration Arbitration refers to a method of dispute resolution involving one or more neutral third parties who are usually agreed to by the disputing parties and whose decision is binding. The core elements of arbitration are: o [1] A private method of dispute resolution A procedure or method for resolving disputes alternative to the national courts o [2] Involving one or more neutral third parties The notion that all of the arbitrators are neutral, independent and impartial o [3] Who are selected and agreed to by the disputing parties Appointment of the arbitrator or tribunal by agreement of the parties. Party autonomy is essential to all aspects of arbitration, affecting the form, structure and system of arbitration National arbitration laws seek only to give effect to, supplement, and support the agreement of the parties o [4] Whose decision is binding The binding nature of arbitral awards has been facilitated by the law, which is comprised of domestic law and international treaties to ensure that both agreements and awards are legally enforceable 1.2 History of Arbitration Historically, arbitration arose out of arrangements between tradesmen and guilds as a private dispute resolution technique primarily in Continental European countries. In Continental Europe, courts have been historically positive towards such private dispute resolution systems to co-exist as alternatives because tradesmen dont want to go to national courts due to perceived national bias; they would rather go to a neutral ground or party. o Furthermore, as trade grew, the need for arbitration grew this was not seen as a problem because national courts are financed by taxation and have their own backlog o Arbitration flourished in Continental Europe and is thus popular in civil law jurisdictions o Arbitration also is generally institutional and is developed by jurists rather than courts In England, courts have historically been against arbitration because they challenged the authority of the Kings jurisdiction. o Furthermore, English judges were paid by the cases they handled and not via taxation. o Hence, judges petitioned the King to create laws to control and restrict arbitration (laws to remove arbitrators). First court cases involve English courts assuming a supervisory jurisdiction over arbitration. o The attitude towards arbitration has swung back and form, hence historically common law jurisdictions have been anti-arbitration and interventionist o As arbitration did not flourish, institutions were less developed and most are ad-hoc. 1.3 Doctrinal Basis of Arbitration: Consensual Yet Adjudicatory Arbitration is a consensual procedure in that, although the parties will be bound by the arbitral award, the parties must first agree to resolve their dispute by arbitration . Historically there was no necessity for an element of intervention and adjudication by courts o Within a local community, the authority of the community chief and also arbitrator, wouldve been sufficient to ensure that the parties accepted and carried out decisions o This same effect is replicated in merchant guilds, as parties are concerned about their reputations and potential trade sanctions by his trade association. Hence they are likely to have carried out the orders made in arbitral decisions .

Roman law adopted an attitude of indifference towards private arbitration. As arbitration did not have a legal effect, parties would make a double promise (a promise to arbitrate and a promise to pay a penalty if a party reneges on the first promise). Courts will not enforce the arbitration agreement or award, but would enforce the promise to pay the penalty. Hence parties would likely carry out the arbitration award However, no modern state could afford to allow a system of private justice that depended essentially on the integrity of the arbitrators and the goodwill of the participants to be the only method of regulating commercial activities. Hence there was an increase in state intervention. o National regulation of arbitration through legislature o International treaties and conventions to link together national laws and provide a system of worldwide enforcement of both arbitration agreements and awards.

1.4 Relationship Between Arbitration and the Courts The relationship between arbitration and the courts is defined by whether the jurisdiction operates under a civil or a common law system o Civil Law: Tends to be more pro-arbitration and conducted by institutions o Common Law: Tends to be more anti-arbitration and interventionist, conducted ad-hoc As arbitration is pro-business and attractive to investors, most states in the modern era have taken to become pro-arbitration. This is facilitated by the fusion and sharing of ideas through the Model Law and the advent of globalisation Regardless, the tension between arbitration and the courts has always been an issue, and views between controlling arbitration or supportive arbitration can be seen in most interactions at all stages of the arbitral process. 1.5 Arbitration v The Courts Arbitration is an alternative to national courts and there are many reasons why people would prefer one to the other. These reasons generally are: o [1] Inherent national prejudice National courts are perceived to have an inherent national prejudice towards parties of that share a nationality, whereas arbitration tends to be conducted by a seemingly more neutral third party o [2] Knowledge and expertise National courts do not necessarily have the knowledge or expertise to handle disputes arising from international business transactions or even disputes between parties from different countries, whereas arbitration could be conducted by people who are experts in the industry o [3] Choice of procedural law National courts follow the procedure set out by the national law, whereas procedure is flexible in arbitration as parties can determine their own procedures (party autonomy) o [4] Private and confidentiality National courts are generally open to the public where anyone can enter to watch and listen to proceedings, whereas arbitration is private and confidential only to the parties to the arbitration. o [5] Finality of decision National courts tend to have one or more levels of appeal from the initial judgment, whereas arbitral awards, with a few exceptions, are final and binding 1.1 Arbitration v ADR Arbitration refers to a method of dispute resolution involving one or more neutral third parties who are usually agreed to by the disputing parties and whose decision is binding. Adjudication and Expert Determination: Expert appraisers and auditors are distinguished from arbitrators on the manner in which they conduct the dispute resolution and come to conclusion . Singapore Courts consider the paramount distinction between the two is that an expert did not act solely on the evidence before him and had the discretion to adopt an inquisitorial process and

use his personal knowledge and experience to determine the matter without obligation to seek the parties views or to consult them. o Evergreat Construction Co Pte Ltd v Presscrete Engineering Pte Ltd [2006] 1 SLR(R) 634 o An expert was freed from procedural and evidential intricacies or niceties that might attach to an arbitral process, with no obligation to make a decision on the basis of the evidence presented to him, but could act on his subjective opinion. o Whereas an arbitration requires the arbitrator to make a decision based on what was presented before him by the parties o Metalform Asia v Holland Leedon [2007] 2 SLR 268 o The single most significant distinction between the two is that while an arbitrator was required to hear the parties on all issues to be determined, an expert did not need to. o Geowin Construction v MCST Plan No 1256 [2007] 1 SLR(R) 1004 o Where an adjudicator was asked to make a decision which is final and binding on all parties and cannot be appealed from the Courts or submitted to arbitration Held that this is not arbitration but an expert determination. o The Oriental Insurance v Reliance National Asia [2008] S GHC 236; [2009] 2 SLR 385 Mediation and Conciliation: ADR procedures are friendlier means to resolve disputes. Parties work together with an experienced third person with the aim of reaching an amicable settlement which is enforceable as a matter of contract law but not enforceable under the NY Convention The consensual nature of ADR is distinguished from the binding procedures in arbitration; and the key difference is that in arbitration the outcome is decided by the arbitrator rather than an agreement by the parties. o An arbitrators award is final and biding and parties may be forced into arbitral proceedings because of an earlier arbitration agreement. o In contrast, ADR is consensual and parties cannot be forced to accept a settled outcome no decision can be imposed in ADR, it is rather proposed.

B. International Instruments 2.1 International Conventions th th Modern international commercial arbitration arose around the late 19 and early 20 centuries as a response to growing international trade and the desire for an internationally enforceable, commercially sensible mechanism to resolve disputes. These mechanisms were brought about by pressure by the International Chamber of Commerce (ICC), a group of international businessmen o [1] 1923 Geneva Protocol on Arbitration Clauses: The first genuine international treaty specifically concerned with commercial arbitration. Provided for the recognition of arbitration agreement and award that parties can pre-agree to go to arbitration should disputes arise Eurocentric in nature as it was a League of Nations construct (not many Asians) o [2] 1927 Geneva Convention on the Execution of Foreign Awards: Sought to improve on the 1923 Geneva Protocol Extending the scope of the recognition and enforcement of awards to all contracting states and was not limited to enforcement of awards made in the enforcing courts own state (as was the case in the 1923 Protocol) Significant weakness was that the US and USSR were not parties. While the outbreak of WWII halted international business, its immediate aftermath saw huge economic growth and trade, and hence a need for an international mechanism to facilitate dispute resolutions and enforcement of awards o [3] 1958 Convention of the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention): Fusing of the 1923 and 1927 conventions, simplified it and offered it to the new UN Nations. Facilitates the recognition and enforcement of foreign arbitral awards and agreements. It has a pro-enforcement bias for two reasons: Firstly, a major object and purpose of it is to encourage and liberalise the process of recognition and enforcement of awards by decreasing the scope for obstruction by national courts and laws Secondly, due to the principle of comity of nations which requires that the awards of foreign arbitration tribunals be given due deference and be enforced

unless exceptional circumstances exist. This is especially if a nation expects its own awards to be recognized abroad. Boasts a following of 147 signatory states and enacted in Singapore as Schedule 2 in the International Arbitration Act (IAA) o [4] 1965 Convention on the Settlement of Investment Disputes between States and Nationals of States (ICSID Convention/Washington Convention): Formulated under the auspices of the World Bank to facilitate a specialised method of international dispute settlement: investment treaty arbitration. The claimant in this form of arbitration is a private party that is a national of one state and has the respondent is a foreign state in which the private party has invested. The treatment of the investor or its investment by the host state is typically the subject matter of the dispute Purpose of convention is to encourage more bilateral treaties by protecting investors who invest in a state other then theirs and are engaged in disputes involving the nationalisation of investments they dont want to go to national courts because they will likely lose there. These private investors can go to ICSID to resolve the investment disputes. It is persuasive because if the nation is not a signatory, private investors are unlikely to be interested to conduct a bilateral investment treaty with them. Boasts a following of 160 signatories and enacted in Singapore as Cap 11. International Conventions are binding on signatory states and consequently parties who wish to conduct arbitrations or enforce awards under that states laws. It is unlike the instruments below which are rules that can be adopted by parties or by incorporation by the state into their national arbitration law.

2.2 1966 United National Commission on International Trade Law (UNCITRAL) UNCITRAL was established by the UN amid a climate of expanding world trade, with a mandate to advance the harmonization and unification of international trade law . UNCITRAL has developed a wide range of conventions, model laws and other instruments relevant to procedural and substantive aspects of international trade law and hence the development of international arbitration. UNCITRAL Arbitration Rules: Parties can adopt these rules in place of institutional rules to govern the procedures of the arbitration. Parties may choose to elect certain parts of the rules only. These rules may replace the rules provided in the domestic national arbitration legislation, except those that are mandatory and non-derogable. o [1] 1976 UNCITRAL Arbitration Rules: Flexible rules that may apply as though they are incorporate into the parties contract when parties to an arbitration agreement expressly select them (party autonomy) Some of the rules have gained substantial international acceptance and also a source of considerable inspiration for the rules of arbitral institutions. Source of institutional rules governing the arbitral procedures, but it cannot derogate from mandatory laws of the seat of arbitration (IAA, Model Law etc.) Note the new 2010 UNCITRAL Arbitration Rules (below) o [2] 2010 UNCITRAL Arbitration Rules: Effective from 15 August 2010 for arbitration agreements made after that date. The 1976 Rules will however remain relevant for arbitration agreements concluded before that date, and in particular for bilateral investment treaties concluded before that date UNCITRAL Model Law: A recommendation for countries to adopt or supplement their national arbitration laws. The purpose of this is to ensure that there is a homogenization of national laws to facilitate greater international commercial arbitration and the enforcement of awards, and hence the promotion of international trade As the Model Law overlaps with the New York Convention, countries can adopt it in parts. o [1] 1985 Model Law on International Commercial Arbitration: An international instrument that is a suggested text for domestic jurisdictions to adopt as their own arbitration law. Any jurisdiction is free to use it as the basis for its national legislations, with or without any modifications it may desire

No independent force of law unlike a convention. It is adopted by a state and only applies as law in that state because the state has enacted it as part of its own national arbitration law Compilation of the most important principles that are necessary in arbitration law, including those reflected in arbitration laws worldwide, the New York Convention, and the UNCITRAL Arbitration Rules Two overarching principles behind the Model Law are: (1) That it allows for a very significant degree of procedural flexibility parties can agree on virtually any procedure (2) It greatly restricts the role of domestic courts in the arbitral process While many states have adopted the Model Law given the benefits for international accompanies and their legal advisors (Singapore, Australia, Hong Kong, Canada, Malaysia), many states have not chosen to use the Model Law. France, Switzerland, UK (except Scotland), US (at the Federal level and all but a few states) [2] 2006 Model Law on International Commercial Arbitration: The Model Law was revised in 2006. However as it is a model law that has to be adopted, it cannot affect the law applicable in those states that have already used the previous unrevised version as a basis for their national laws. Similarly, the new amendments only apply to the extent that an individual state specifically chooses to adopt them. Within the region, only New Zealand, Singapore and Australia have adopted it The Model Law is to be interpreted from an international standpoint, taking into account the principles behind it, rather than from a domestic standpoint. This is to encourage a consistent interpretation among different states. The fact that harmonization of arbitration laws is one of the major goals of the Model Law is reflected in Article 2A of the 2006 version which provides: (1) In the interpretation of this Law, regard is to be had to its international origin and to the need to promote uniformity in its application and the observance of good faith (2) Questions concerning matters governed by this Law which are not expressly settled in it are to be settled in conformity with the general principles on which this Law is based

C.

International Commercial Arbitration

3.1 Distinction Between International and Domestic Arbitration Many jurisdictions have a dual regime for international and domestic arbitration. This means that they have different laws that apply to domestic as opposed to international arbitrations, or at least different provisions of the same law that apply to each. o Singapore (AA and IAA), Hong Kong, Switzerland, Brazil, France, Belgium, and Colombia There is a necessity and impetus to distinguish between an international and domestic arbitration because domestic arbitrations tend to: o Leave less room for the parties to determine the arbitral procedure and applicable laws; o Provide more possibilities for recourse, such as appeal from the resulting award; and o Permit a greater degree of domestic court involvement However, in jurisdictions with a single regime, the extent of court intervention depends on the jurisdictions attitude towards arbitration. o India: positive steps taken but inconsistent holdings o UK: both domestic and international arbitration have right of appeals to the courts. Whether an arbitration is domestic or international depends on the definition provided in the law applicable to that question (typically the law of the seat of arbitration) o Article 1(3) of the Model Law An arbitration is international if: o (a) The parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different states; or

(b) One of the following places is situated outside the state in which the parties have their places of their business: (i) the place of arbitration if determined in, or pursuant to, the arbitration agreement; (ii) any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subjectmatter of the dispute is most closely connected; or (c) The parties have expressly agreed that the subject-matter of the arbitration agreement related to more than one country

3.2 What is International under Article 1(3) Model Law Table of Permutations approach under Art 1(3) o By Lawrence Boo in Halsburys Laws of Singapore Vol 1(2) [2011] P 22;
S/N Place of business of the parties Place of business with closest relationship with the arbitration agreement Place of substantial performance or subject matter of dispute Australia Foreign Foreign Australia Foreign Australia Australia Australia Foreign Foreign Australia Australia Foreign Foreign Australia Foreign Australia Foreign Australia Foreign Regime

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11 12. 13. 14. 15. 16. 17. 18. 19. 20.

Australia Australia Foreign Foreign Foreign Foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign

Australia Australia Foreign Foreign Australia Australia Australia Australia Australia Australia Foreign Foreign Foreign Foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign Australia/foreign

Australia Foreign Australia Foreign Australia Foreign Australia Foreign Australia Australia Australia Australia Foreign Foreign

Australia Australia Foreign Foreign Foreign Foreign

Domestic International International International International International Domestic International International International International International International International Domestic International International International International International

In most circumstances, in order to ascertain where a substantial part of the obligations of the commercial relationship is performed under the contract, courts will consider the place of substantial performance and subject matter of the dispute (substantial = dominant) o Vanol Far East Marketing Pte Ltd v Hin Leong Trading (Pte) Ltd [1997] 3 SLR 484 o FACTS: Shipping dispute. Vanol tried to set aside award in Court. Hin Leong argued that the Court had no jurisdiction to review because this was an international arbitration falling under the IAA. Both parties had their place of business in Singapore and Singapore law was the governing law of the contract. They payment and nomination obligations were performed in Singapore. However, the other parts of the contract were all performed in South Korea. Further, the damages claimed were alleged to have been incurred at South Korea. o HELD: Applying Article 5(2) IAA, The Court held that the place of substantial performance of the contract as well as the place with which the subject matter of the dispute was most closely with was in South Korea. Hence arbitration was international. o Fung Sang Trading Ltd v Kai Sun Sea Products & Food Co Ltd [1992] ADRLJ93 o HELD: To apply Article 1(3) of the Model Law one has to take a much wider view and look at the position as at the date the contract is entered into and see what obligations each party has to perform under the contract. In this case the place of delivery is significant in a sale of goods agreement. What Article 1(3) attempts to achieve is certainty as at the date of the agreement as to whether the possible future arbitration is international or not.

However, local courts in Singapore have taken a different view as to the definition of what any place where a substantial part of the obligations of the commercial relationship is performed by construing it as only requiring parties to that a substantial part of the commercial obligations was outside one of the places of business of one of the parties (substantial =/= dominant) o Mitsui Engineering v PSA Corporation Limited and Keppel Engineering [2003] 1 SLR 446 o FACTS: Designing and building of cranes. Issue was where is the place of performance because cranes were designed in Tokyo but built in Singapore. o HELD: Reference to any place where a substantial part of the obligations of the commercial relationship is to be performed under Article 1(3) is not to be construed as the place of substantial performance. All that is required to show is that a substantial part of the obligations of the commercial relationship is outside one of the places of business of one of the parties. Hence, the arbitration was international. While Singapore adopts Article 1(3) of the Model Law, we differ because we have an opt-in scheme, where arbitrations which would have been domestic can become an international arbitration for the purposes of the IAA and Model Law if parties agree in writing. o Section 5(1) International Arbitration Act o This Part and the Model Law shall not apply to an arbitration, which is not an international arbitration unless the parties agree in writing that this Part or the Model Law shall apply to that arbitration.

3.3 Commercial, Trade and Investment Disputes Traditionally the distinction between whether a contract was commercial or not was very important because only commercial contracts could be submitted to arbitration. However, in modern times, the term is construed widely so as to include all aspects of international business. o Footnote to Article 1(1) Model Law o The term commercial should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business co-operation; carriage of goods or passengers by air, sea, rail or road. Investment disputes generally are those between an investor and the host-country arising from a breach of a bilateral treaty. o The term investment means more than just putting in money. It also involves the transfer of capital and expertise for a long term investment (building of infrastructure) Trade disputes are those that involve disputes over polices arising over trade barriers o These include trade policy disputes such as anti-dumping and embargos 3.4 Practice and Conduct of International Commercial Arbitration There are no fixed, detailed rules of procedure governing an international arbitration, but there is a basic underlying structure, which is built upon three essential elements: o [1] Applicable Law of the Arbitration: The law of the seat of arbitration determines the applicable law of the arbitration. They do not prescribe the way in which an international arbitration should be conducted, but instead lay down general principles. New York Convention a convention, hence signatory states are bound to abide the provisions of the convention and likewise parties to arbitrations that are conducted under the laws of that state (E.g. proper notice for the appointment of arbitrator or proceedings. Failure to do so may result in the refusal of recognition and enforcement of arbitral award) Model Law must be adopted by national law. If it is adopted, then parties would be bound to it if arbitrations are conducted under the laws of that state (E.g. provisions for the appointment and challenge or arbitrators, authorization for arbitral tribunal to rule on its jurisdictions, doctrine of Separability etc)

Applicable Legislature selection of the applicable law of the arbitration will also bind parties to the necessary laws laid down in the respective statutes (E.g. ender Singapore Law that would be the International Arbitration Act) [2] Arbitration Rules: these would contain the rules, which will establish the outline of arbitration proceedings. Unlike the applicable law, which is determined by legislation, these rules will need to be adopted by the parties under the contract. If parties do not elect rules, arbitrations will be ad-hoc in nature. They may overlap with provisions set out in the applicable law of the arbitration in [1] and may replace those provisions unless the provisions are mandatory (rules are contractual and still subordinate to the mandatory laws of the land) Established Rules of International Arbitration (UNCITRAL Arbitration Rules, ICC Rules, LCIA Rules) Where arbitration is being conducted under the rules of an arbitration institution or under UNCITRAL Rules, there will be a book of rules to provide guidance. While expressed in broad terms, they usually contain provisions governing the place of arbitration, the appointment of tribunal, challenges to arbitrators or their jurisdictions. Institutional Rules Parties may also elect to adopt the rules from certain arbitration institutions such as CIETAC or SIAC [3] The Practice of Experienced Arbitrators and Counsel: there is a wealth of shared knowledge and experience within the international arbitral community. International Bar Association The International Bar Association has published The IBA Rules on the Taking of Evidence in International Commercial Arbitration.

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Overview of the Arbitral Process Arbitration agreement signed by parties Dispute occurs Dispute is referred to arbitration Arbitral tribunal is constituted Preliminary meeting/settling terms of references (TORs) or Memorandum of Issues (MOIs) Applicable law and procedure set out Settling the schedule of the arbitral process Dealing with documents and hearings conducted Award is issued by tribunal Enforcement and challenges at national court

D. Institutional and Ad-Hoc Arbitrations 4.2 Additional Arbitration Rules In any arbitration, it is subjected first to the mandatory rules of the law of the seat of arbitration These rules are however generally broad and non-specific. They include rules such as all parties must be treated with equality, but do not go into detail as to how this can be achieved. Therefore parties may seek to apply additional specific rules and can choose between: o [1] Ad-Hoc Arbitration: Without the involvement of an arbitral institution o [2] Institutional Arbitration: According to the rules of one of the established institutions 4.3 Ad-Hoc Arbitration An ad-hoc arbitration is one that is conducted pursuant to the specific rules agreed by the parties themselves or laid down by the arbitral tribunal; and not administered by an institution o Parties can either establish their own rules of procedure provided that these rules treat the parties equally and allow each a reasonable opportunity of presenting their case o Alternatively, parties may agree that the arbitration will be conducted according to an established set of rules (e.g. UNCITRAL Rules) Parties may also consider special rules if the case is important, to take into account the status of the parties and circumstances of the particular case o Parties can expressly abandon a right to restitution in favour for an award of damages Advantages of an ad-hoc arbitration include:

Greater flexibility rules may be shaped to meet the wishes of parties and the facts of the particular disputes o Better suited for disputes involving large sums or when state/state entity is involved As issues of public policy and sovereignty are likely to arise, special procedures can be devised that is sensitive to the requirements of the state party whilst still remaining fair Disadvantages of an ad-hoc arbitration include: o Its full effectiveness is dependant on the cooperation between the parties and their lawyers, backed up by an adequate legal system in the place of arbitration it is easy for parties to delay the proceedings by refusing to appoint an arbitrator for example.

4.4 Institutional Arbitration An institutional arbitration is one that is administered by a specialist arbitral institution under its own specific rules of arbitration; and is incorporated into the main contract by express mention under the arbitration clause. The following are examples of well know arbitral institutions: o Singapore International Arbitration Centre (SIAC) o American Arbitration Association (AAA) o International Centre for Dispute Resolution (ICDR) Advantages of an institutional arbitration include: o Automatic incorporation of an established book of rules these rules provide solutions for different situations (e.g. rules that allow parties to bring the claim effectively even though the other party is reluctant to continue with arbitration proceedings) o Rules are established and proven to work well in practice taking into account new developments in the law and are periodically revised o Assistance by institutional resources and staff to administer arbitration ensures tribunal is appointed, payments made and time limits kept to ensure a smooth process o Institutional review of tribunals award serves as an internal quality control. While it does not comment on the merits, it ensures that the tribunal has dealt with all issues Disadvantages of an institutional arbitration include: o Not as flexible as an ad-hoc arbitration are parties need to process certain steps through the machinery of the arbitral institution o Parties need to may a fixed fee in advanced for the costs of arbitration and is assessed on an ad valorem basis depending on the stake in the disputes o Rigidity of time limits would place respondents in an invidious position of having to seek time extensions because claimants may submit cases right at the last minute

Seminar 2: The Arbitration Agreement


A. Entering Into An Arbitration Agreement 1.1 Agreement to Arbitrate The arbitration agreement a binding, contractual arrangement between the parties, that is specifically enforceable; and is the very foundation on which an arbitration can be commenced. The arbitration agreement principally does two things: o [1] Ousting (or at least significantly restrict) the jurisdiction of national courts; and o [2] Confers jurisdiction on an arbitral tribunal to decide dispute instead The extent of these two effects is determined by the language of the arbitration agreement itself because an arbitral tribunals jurisdiction is limited to what the parties have granted to it An arbitration agreement may be entered before or after a dispute has arisen because there is no distinction made between a post-dispute submission and a pre-dispute arbitration clause. o Section 2A(1) International Arbitration Act o In this Act, arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration clause may come in two general ways; either as an arbitration clause in a contract or a separate document specifically dealing with the reference to arbitration. o Section 2A(2) International Arbitration Act o An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. An arbitration agreement must also be in writing, however the application of this requirement will depend on the respect national arbitration law o Section 2A(3) International Arbitration Act o An Arbitration agreement shall be in writing B. The Writing Requirement 2.1 Rationale for the Writing Requirement Although major business decisions can be concluded over an oral transaction, there is still a strict requirement for arbitration agreements to be in writing because of two key reasons: o [1] Best Evidence of Parties Intention: The first rationale is to bring about the best evidence of the parties intention to enter into an arbitration agreement. This takes into account the cultural difference where silence, nonobjections/acquiescence may not always be regarded as a total agreement It captures the genuine consent of the parties and distinguishes the conclusion of the arbitration agreement from the commercial transaction (doctrine of Separability) and also ensures that no agreement is reached unwittingly o [2] Principle of Parties Right of Access to the Courts of Justice: The second rationale is the recognition of the principle that parties have a right of access to the courts of justice for the resolution of disputes. Right of access is a fundamental right that individuals should not be deprived of unless displaced in an express written form. 3.1 Application of the Written Requirement The extent and application of the written requirement differs from jurisdiction to jurisdiction depending on which international convention or Model Law adopted. However one thing to note is that over the decades, the strictness of the requirements has diminished significantly o [1] New York Convention: Under the convention, the written requirement is defined strictly as either a signature by the parties or contained in an exchange of letters or telegrams. This requirement is binding and applicable in all 146-member states. Article II (2) New York Convention:

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The term agreement in writing shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams However, the writing requirements under the New York Convention were found to be too strict and there was interest in ameliorating the harshness of these standards. As UNCITRAL was against the idea of signing a new convention for fear of losing membership, a solution was to expand the writing requirement under the 1985 Model Law recommendations. o [2] 1985 UNICTRAL Model Law: Under the Model Law, the writing requirement was significantly expanded to recognized more modes of communication between parties, exchanges of statements of claim and defence and references to other documents. Article 7 1985 UNCITRAL Model Law: An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide record of the agreement , or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract o Non-Exhaustive Approach to Records of Communication: There is an expansion beyond letters and telegrams to recognize more forms of communications. This is not exhaustive because of the underlying purpose of the Model Law and recognition that methods of communication will change. Ultimately it must still be recorded. Sebor (Sarawak) Marketing & Services v SA Shee (Sarawak) 2000] Minutes recording agreement to arbitration, naming and appointing arbitrator was held to be sufficient writing to satisfy the requirement Proctor v Schellenberg [2003] 2 WWR621 at 628 [18] "What is important is that there be a record to evidence the agreement of the parties to resolve the dispute by an arbitral process. This flexibility is important in this day and age of changing methods of communication. In my view, communication by facsimile falls within the definition. This is in keeping with a functional and pragmatic interpretation of the definition to serve the Legislatures intent to give effect to arbitral awards granted in other jurisdictions in this era of inter-jurisdictional and global business." o Record Must Show Agreement to Arbitrate: The record of the agreement must still show the agreement to arbitrate in order to satisfy the writing requirement. Krauss Maffei v Foro Intaliano Yearbook Com Arb XXVI (2001) A sales confirmation note accepting an offer for the underlying contract but failed to mention acceptance of buyers arbitration clause; was held not to be sufficient to constitute and agreement to arbitrate. o Silence to Subsequent Imposition of Arbitration Clause Insufficient: The purpose is to establish the assent of the parties to arbitrate. The mere receipt of the other parties demand to enter into arbitration is not enough to bind the party. Zambia Steel v Clark & Eaton [1986] 2 LLR 225: Sufficient writing is present if proved that the party is contractually bound by an arbitration agreement in the document (assent) United Engineers Contractors v L & M Concrete Specialists Pte Ltd [2000] 2 SLR Oral agreement reached and parties began performance. Written letter of award sent by Defendant to Plaintiff requiring signature. Letter made reference to Standard Conditions of Sub -contract. There was no such document, but a special contract, which had an arbitration clause. Held that there was no written agreement to arbitrate because the terms of the so-called letter of award were not accepted by the plaintiffs and in any event there no standard conditions that the plaintiffs could agree to accept. H Smal Ltd v Goldroyce Garment Ltd [1994] 2 HKC 526: Only the purchasers signed the purchase order, which contained an arbitration clause. When a quality dispute arose, the purchasers sought to appoint an

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arbitrator. In consideration of Art 7, it was held that while it was clear that the parties had a binding contract as evidenced by the purchase order and the physical delivery of the goods by the sellers, there was no document which would provide a record of the agreement by the sellers to arbitrate. Delta Cereales Espano SL v Barredo Hermanos SA (2001) Sales contract entered into through brokers. Sellers subsequently sent contracts containing arbitration clause to buyers. Buyers kept forms but did not reply. Arbitration commenced by sellers and award given was set aside o Supplemental Agreement Making Reference To An Arbitration Clause Sufficient: The writing requirement is satisfied when parties agree to a supplemental agreement, which makes reference to a prior document containing an arbitration clause Consmaremma-Consorzion v Hermanos SA Yearbook Com Arb XXVI (2001): It was held that although a sales confirmation signed by sellers only and sent through brokers referred to arbitration was not of itself a written agreement to arbitrate, a supplemental contract referring to that confirmation made that a sufficient agreement in writing to constitute an arbitration agreement. o Written Requirement Unaffected by Nature of Formation of the Commercial Contract: The commercial contract may be oral in nature or in any other way, however the agreement to arbitrate must still be in writing. Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC The requirement that the arbitral clause in a contract or an arbitration agreement be contained in an exchange of letters or telegrams is not a requirement that the contract be formed by the act of signing or the exchange of letters or telegrams. The clause in a contract or the arbitration agreement can be contained in an exchange of letters and telegrams even if the act of formation was some conduct o Element of Estoppel: The additional portion of reference in a contract to a document containing an arbitration clause introduces an element of estoppel, preventing parties from claiming that their arbitration agreement was in a separate document. The introduction of the 1985 Model Law has led to a sharp increase in litigation with respect to the writing requirement, unlike the unequivocal and strict position in the New York Convention. The writing requirement was further relaxed in 2006 to allow the formal requirements under the article to better reflect the international contract practices and more forms of arbitration. Additionally, they were intended to preserve the enforceability of arbitration agreements under the New York Convention by preventing agreements from being easily challenged on the ground of the writing requirement o [3] 2006 UNCITRAL Model Law Option 1: The revised Model Law now provides two options for Article 7 reflecting different approaches. Option 1 Article 7(3)-(6) 2006 UNCITRAL Model Law: (3) An arbitration agreement is in writing if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means. (4) The requirement that an arbitration agreement be in writing is met by an electronic communication if the information contained therein is accessible so as to be useable for subsequent reference (5) Furthermore, an arbitration agreement is in writing if it is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other (6) The reference in a contract to any document containing an arbitration clause constitutes an arbitration agreement in writing, provided that the reference is such as to make that clause part of the contract o No Requirement for Signature or an Exchange of Communications: The traditional strict requirements have been removed and the focus is now as to whether the agreement to arbitrate it has been recorded in any form. o Consistency with New York Convention Preserved: This was achieved through equating writing under the New York Convention as a record of the contents of the agreement in any form under the new Article 7

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Modernizes Medium of Communication: The new article modernizes the language referring to electronic communication and expressly states that the list is not exhaustive, freeing it to be applicable for future developments in communication The 2006 revision also provided a second option, primarily lobbied by other countries would sought to add further flexibility to the system and to do away with the requirement of formalities o [4] 2006 UNCITRAL Model Law Option 2: This is the second option which is a far simpler definition: an arbitration agreement is an agreement to submit to arbitration, and proof of such an agreement has no strict formal form Option 2 Article 7 2006 UNCITRAL Model Law: Arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

3.2 Writing Requirement in Singapore Singapore has both adopted Option 1 of Article 7 2006 UNCITRAL Model Law and retained operability of the New York Convention. However we have a notable inclusion in both our domestic and international arbitration legislations to references in bills of lading to a charterparty o Section 4(8) Arbitration Act/Section 2A(8) International Arbitration Act o Reference in a bill of lading to a charterparty, or other document containing an arbitration clause shall constitute an arbitration agreement in writing if the reference is such as to make that clause part of the bill of lading. The reason for this exception is primarily historical as bills of ladings are regarded as documents that evidence the loading of cargo into the ship that are issued after the loading. o If the bill of lading contains an arbitration clause, then by sending the goods onto a ship, you are bound to both it and the arbitration clause even though you did not sign it or were aware of the clause before you loaded it up the ship. 3.3 Interaction of the Different Approaches When an award is made in a state recognizing one approach that is not recognized in the enforcement state, the usual approach would be to fall back to the stricter approach in the New York Convention in the enforcing state during enforcement of the award o This is the purpose of retention of the New York Convention requirements in states even after the adoption of the Model Law recommendations. o E.g. New Zealand has only adopted Option 2 of Article 7 2006 UNICTRAL Model Law. If an award made in New Zealand wishes to be enforced in Singapore, it will be subjected to the stricter requirements under the New York Convention because Singapore adopts only Option 1 of Article 7 2006 UNCITRAL Model Law. 3.4 Assessment of the Writing Requirement Given the extensive dilution of the standards for the writing requirement over the past decades, there have been mixed opinions favouring and disproving the current trend Supporters of the trend would claim that the trend reflects modern practices and that a strictly enforced writing requirement is inconsistent with commercial realities. o Travaux Preparatories of the 2006 Model Law o It was pointed out by practitioners that, in a number of situations, the drafting of a written document was impossible or impractical. In such cases, where the willingness of the parties to arbitrate was not in question, the validity of the arbitration agreement should be recognized [and not fail simply because of the lack of formalities] o Article 7(1) New Zealand Arbitration Act 1996 o Even prior to its adoption of the 2006 revision to the Model Law, New Zealand expressly recognised arbitration agreements made orally and similarly any resulting award Given that the role of the writing requirement is to assist in the proving that an arbitration agreement exists and the terms of that arbitration agreement; so long as proof can be established, then there is no reason to place a significantly higher burden on a party trying to establish the existence or content of an arbitration agreement than one trying to establish the existence or content of any other contractual obligation. o Neil Kaplan, Is the Need for Writing Out of Step with Commercial Practice? (1996)

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Commenting on the decision in H Smal v Goldroyce: the decision that the written requirement could not be satisfied because there was no document that would provide a record of the agreement to arbitrate despite the existence of a binding oral contract, produces an absurd result that is inconsistent with commercial reality. o There was no doubt that the parties entered into a contract, which was contained in or evidenced by the written order and Bs conduct. Why on earth should the arbitration clause in the contract require to be established by any higher degree of proof than the basic contractual terms themselves? ...On the facts of the case there are sufficient legal theories available, which could lead to a form of words, which would bring the case not only within the Model law but also the New York Convention. However, it is argued by others that the writing requirement serves another purpose of expressing parties consent to waiving their right of access to the courts. Given that such a right is of a fundamental nature, waiving of it must require a more formalistic and stricter requirement as compared to the finding of normal contractual obligations. o Lawrence Boo The Writing Requirement Is There Really Need for Change? (2008) o The courts jurisdiction over the parties or any subject matter in dispute ought not to be easily displaced by a mere allegation that parties had agreed to arbitration outside the court process, [consequently, a strict requirement is necessary] Furthermore, the doctrine of separability would suggest that the arbitral tribunal when ascertaining the existence of an agreement to arbitrate would be entitled to apply different tests to the formation of the contract and to the arbitration agreement. o Lawrence Boo The Writing Requirement Is There Really Need for Change? (2008) o There can therefore be no complaint that while the underlying contract need not comply with the strict writing requirement and yet remain valid, the arbitration agreement is required to do so If the doctrine of separability is to remain applicable to international arbitrations it should logically apply both ways, viz to treating an arbitration agreement as a separate agreement and to permit the tribunal to apply different tests to the two agreements. To do otherwise may reflect a selective and inconsistent application of the doctrine and betrays a certain element of embedded self-interest in promoters of international arbitration. Ambiguous Clauses

C.

3.1 Ambiguous Intention to Arbitrate While there are generally no specific words or form required to constitute a valid arbitration agreement, the intention to arbitrate must be clear and unequivocal Absence of Arbitrator and Arbitration Not Conclusive of Lack of Intention: While the use of these words or the name of an arbitral institution and the formality of appointing of arbitrators are positive indications of an intention to arbitrate, the lack of them are not conclusive. o David Wilson Homes Ltd v Survey Services Ltd (in liquidation) [2001] EWCA 34 o The court upheld a clause which calls for a reference to Queens Counsel of the English bar to be mutually agreed or in the event of disagreement by the Chairman of the Bar Council as an agreement to arbitrate. May Refer to Arbitration Equated As Shall: The term may refer to arbitration appears prima facie as discretionary and ambiguous. However, most jurisdictions have equated may as shall o Lobb Partnership Ltd v Aintree Racecourse Co Ltd [2000] BLR 65 o The English Courts have consistently taken the view that, provided that the contract gives a reasonably clear indication that arbitration is envisaged by both parties as a means of dispute resolution, they will treat both parties as bound to refer disputes to arbitration even though the clause is not expressed in mandatory terms o WSG Nimbus v Board of Control for Cricket in Sri Lanka [2002] 3 SLR 603 o Affirming Lobb and stating that an agreement in which the parties have the option to elect for arbitration, which if made, binds the other parties to submit to arbitration is an arbitration agreement within the meaning of the IAA Phrases Suggesting Inconsistent Intention Negatives Intention to Arbitrate: Even though a clause may use words such as arbitrator or arbitration, if used alongside phrases suggesting an inconsistent intention, the courts will find that such terms will negative the intention to arbitrate

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Transfield Shipping Inc v Sino-Add (Singapore) Pte Ltd Where the agreement indicates that the arbitrators decision will be persuasive but not binding or that the arbitration process is only a valuation or assessment . The use of such terms in relation to a particular class of dispute may be interpreted to negative the intention to extend arbitration over other types of disputes, which could arise under the agreement. Furthermore, the use of the term general average and arbitration referred only to arbitration of general average disputes only and was not an agreement to refer other disputes to arbitration. Intention to Arbitrate Contingent on Finalization of Other Terms is Insufficient: where the intention to arbitrate or to enter into an arbitration agreement is expressly subject to some other term that have yet to be finalized, then no agreement to arbitrate has been reached. o The Benja Bhum [1994] 1 SLR 88 o In a claim for salvage remuneration, the parties had exchanged correspondence agreeing to arbitration in London but could not agree on the terms of the security to be provided. As the essential words of the letter of undertaking which was to serve as the security could not be agreed, the court said that: Though the parties had agreed in principle to refer the plaintiffs claim to arbitration, the terms of the agreement had yet to be agreed at that time. In effect, there was really no binding agreement . o This decision seems to go against the current international judicial trend to enforce arbitration agreements where the intention to arbitrate was clear and unambiguous. Intention Ascertainable From The Entire Document Even if Clause is Incomplete: Ultimately, the court will ascertain the parties intention through interpretation of the entire document. When a clear intention to arbitrate is found, the court will give effect to it even if the clause is lacking o Lim Su Sang v Teck Guan Construction and Development Co Ltd [1966] 2 MLJ 29 o What is of importance is this. That there must be an agreement to refer disputes to arbitration. That is essential. And the intention to arbitrate must be clear and unequivocal. Thus, when there is a clear intention to arbitrate, effect must be given to it notwithstanding that the arbitration clause is incomplete or it lacks certain particulars o Guangdong Agriculture v Conagra international (Far East) [1993] ADRLJ 100 o Arbitration clause providing that "... In case no settlement can be reached, the case under dispute can then be submitted to the chartered loss adjuster for arbitration ... The arbitration shall take place in Hong Kong and shall take place in accordance with the rules of Hong Kong..." The court found a binding arbitration agreement, since all article 8 MAL required was that the parties plainly agreed to settle any dispute by arbitration .

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3.2 Conflicting Arbitration and Juridical References in Same Contract When parties refer to both processes in the same contract, it conflicts with the intention to arbitrate. These conflicts tend to come in two main ways: o Conflicting Arbitration and Juridical Forum/Exclusive Jurisdiction Clauses: Two clauses in the same contract, each claiming jurisdiction over all disputes Hissan Trading Co v Orkin Shipping (1992, Hong Kong) The claim was made under a bill of lading, which incorporated the arbitration clause of a charter-party. The bill of lading itself also contained an exclusive jurisdiction clause in favour of the Tokyo District Court. The court could not apply the relevant arbitration clause since it was not clear whether the parties had agreed to resolve their disputes through arbitration or through court proceedings before the Tokyo District Court. In order to apply the arbitration clause the court would have to manipulate the language of the agreement of the parties in a substantial and, thus, impermissible way. o The courts have interpreted one as an arbitration clause and the other a lex arbitri clause. While it may conflict with a plain reading of the clauses , this incongruity pales in significance when compared to the unfortunate consequences of treating the arbitration clause in a non-domestic commercial agreement as pro non-scripto (not written) Paul Smith Ltd v H & S International Holding Inc [1991] Clause 13 any dispute or difference shall be adjudicated upon under the Rules of Arbitration of the ICC; Clause 14 the Courts of England shall have exclusive jurisdiction over it to, which jurisdiction the parties hereby submit.

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The Court rejected the notion of striking out both clauses on grounds on inconsistency and held that Cl13 is a self-contained agreement providing for the resolution of disputes by arbitration and Cl14 specifies the lex arbitri the curial law or the law governing the arbitration, which will apply to this particular arbitration. The law governing the arbitration is not to be confused with the proper law of the contract, the proper law of the arbitration agreement, or the procedural rules which will apply in the arbitration. o Arbitration and Litigation as Alternatives: When an agreement permits either litigation or arbitration as the dispute resolution process. However there have been conflicting approaches taken as to whether such clauses are valid. The Dai Yun Shan [1992] 2 SLR 508; Arbitration clause read: All disputes arising under or in connection with this Bill of Lading shall be determined by Chinese law in the courts of, or by arbitration in the Peoples Republic of China. The Singapore Court held that there was no agreement requiring the parties to proceed to arbitration . Hence it did not allow a stay of the court proceedings. [C.F] William Co v Chu Kong Agency Co Ltd [1993] 2 HKC 377 Similar clause as in Dai Yun Shan, however, the HK Court held that the intention to arbitrate was clear and that the clauses operated as an arbitration agreement upon the election by any one party to proceed to arbitration. As one of the parties had in fact elected for arbitration it was not open to the other party to object to it. Regardless, to give effect to the parties intention, the courts are known to find creative ways to save the arbitration clause. However, there is no golden rule as to how this can be achieved. o [1] Construing Juridical Clause as Lex Arbitri Clause: The court may construe a conflicting juridical clause into one that states the seat of arbitration. Paul Smith v H&S International Holding Inc [1991] 2 Lloyd's Law Rep 127 Construed a clause which stated that the English Courts shall have exclusive jurisdiction as one that meant that the laws of England shall apply with r egards to arbitration (lex arbitri) o [2] Main Contracts Clause Will Trump Inconsistent Incorporated Clause: The clause in the main contract will be taken to trump the incorporated clause (UK Courts) Indian Oil Corp v Vanol [1992] 2 LLR 563 Direct conflict between the two choices of law jurisdiction, as one was a main contract term and the other was an incorporated term, it was held that the main contract term prevailed o [3] Construing Clauses as Parallel/Non-Mutually Exclusive: The arbitration clause may be construed as a step taken by parties before any action in court Axa Re v. Ace Global Markets Limited [2006] EWHC 216 (Comm) It is perfectly possible to construe the two clauses in a harmonious manner. In my judgment, they can be read together in such a way as to avoid both conflict and surplusage. The arbitration agreement envisages the possibility that the proceedings will take place in court, though only after arbitration. The contract, when properly construed, demonstrates that the parties do not treat arbitration and court as mutually exclusive, but envisage arbitration as a step which may, or will, take place before any action in court. The reference to English jurisdiction operates in parallel with the arbitration provisions by fixing the supervisory court of the arbitration, that is to say the curial law or the law governing the arbitration in relation to matters arising in the course of the arbitration, and further fixes the appropriate court for proceedings after arbitration.

3.3 Difficult or Impaired Clauses The court will give effect to difficult/impaired clauses if the intention to arbitrate is established Two Sets of Arbitral Rules Not Fatal: In situations where the arbitration agreement involves the mixing of two distinct set of institutional rules, the courts are know the give effect to the intention of the parties regardless of the peculiarities it may present.

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Insigma Technology Co Ltd v Alstom Technology Ltd [2009] SGGA 24 It had a clause that stated that Any and all disputes shall be finally solved by arbitration by the Singapore International Arbitration Centre in accordance with the Rules of Arbitration of the ICC then in effect and the proceedings shall take place in Singapore and the official language shall be English. The problem is that while there is a clear intention to arbitration and the seat of arbitration is clear, it referred to two institutions and hence two different sets of rules. In order to reconcile the rules, the SIAC decided to conduct the arbitration in Singapore while applying ICC rules to give effect to the plain wording of the clause and hence the parties intention. Failure to Reference An Specific Seat of Arbitration Not Fatal: If an arbitration agreement does not expressly state the seat of arbitration, the courts will still find ways to save it. o Who Hup (Pte) Ltd v Property Development Ltd [1991] SLR o As a general rule the arbitration agreement will be governed by the same law [the proper law of the contract], since it is part of the substance of the underlying contract. In the absence of an express choice of the proper law of the individual reference, we submit that the ordinary inference would be that the parties intended individual references to be governed by the same law that governed the agreement to arbitrate under which the reference is to take place. Reference to Non-Existent Body or Rules Not Fatal: When the agreement references a nonexistent arbitral institution or to rules that do not exist, such a problem will not affect the validity of the agreement as long as the intention to arbitrate is established o Partial Award in ICC Case 7920 in 1993 o Clause: In the case of litigation, parties hereby agree to appeal to International Chamber of Commerce of Geneva (Switzerland) according to international rules of arbitration Problem is that there was no International Chamber of Commerce of Geneva. One party maintaining that the clause in the contract referred to arbitration before the Geneva Chamber of Commerce, whereas the other party refused to take part in the proceedings. The arbitrator held that although the arbitral clause was ambiguous, ICC arbitration in Geneva complied with the parties' unambiguous intention to have their disputes settled by international arbitration in Geneva . o Lucky Goldstar v Ng Mook Kee Ltd [1993] 2 HKLR 73 o LG bought escalators from Mook Kee. Clause stated that matters should be referred to a place that does not exist and in a third neutral country (ambiguous seat of arbitration). o It was held that there is an intention to arbitrate; therefore it is an arbitration agreement. It over came the problem with the lack of rules by declaring that it was an ad hoc arbitration, and a third neutral country would simply be any other country other than the parties countries (Korea and Hong Kong); thus the case came to Singapore to be arbitrated. Hence, where the intention to arbitrate is clear, the courts will enforce it. o Case 28 Sch 17/99 (Kammergericht Berlin) o Arbitration clause referred to the German Central Chamber of Commerce. Since no such organisation or rules exist, claimant started arbitration proceedings under the rules of the Deutsches Institut fr Schiedsgerichtsbarkeit; held valid o Circus Productions Inc v Rosgoscirc (S.D.N.Y. 1993) o The United States District Court ordered the parties to arbitration before the American Arbitration Association in New York where they had mistakenly provided for a nonexistent arbitral forum in their contract Referencing Uninterested Existent Body Which Doesnt Provide Dispute Resolution Rules Fatal: Should parties refer to an existent body who is unable or unwilling to take up the dispute, the courts would most likely not find that it is an intention to arbitrate; but an expert determination o Teck Guan Sdn Bhd v Beow Guan Enterprises Pte Ltd [2003] 4 SLR 276 o Clause states, Any quality dispute would be settled [sic] amicably with reference to an independent surveyor. However, any dispute out of this contract to be governed by the rules of the Cocoa Merchants Association of America Inc in force on that date. The association did not provide provisions for dispute resolution between non-members in their rules, nor did they want to deal with the case when the parties wrote to them.

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D. Effect of Arbitration Agreement

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4.1 Effect of Arbitration Agreement The formation of an arbitration agreement will lead to four main effects: o [1] Supersession of the Curial Jurisdiction: The agreement creates a consensual regime that ousts the jurisdiction of the national courts. It is binding and specifically enforceable in court against the defaulting party by referring him to arbitrate, unless the agreement is null and void, inoperative or incapable of performance Article 8(1) 2006 UNCITRAL Model Law A court before which an action is brought in a manner which is the subject of an arbitration agreement shall, if a party so request not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed o Court May Still Assist Arbitration: The court has no statutory power to revoke an arbitration agreement, however they may stay proceedings or issue anti-suit injunctions against proceedings committed elsewhere that breach of the arbitration agreement Article 9 2006 UNCITRAL Model Law It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure o Court May Order Stay of Arbitration Following The Filing Of Bankruptcy Petition: As provided for by statute, a court may order a stay against a person in the special circumstances where a bankruptcy petition was filed against him (not automatic) Section 74(1) Bankruptcy Act Any court may by order, at any time after the making of a bankruptcy application, stay any action, execution or other legal process against the person or property of the debtor. A party with a claim against the bankrupts estate may continue to pursue a claim in arbitration if the official assignee, as trustee in the bankruptcy, adopts the contract and arbitration agreement. In the even that the official assignee does not adopt the contract, the party may apply to court for the matter to be referred to arbitration o [2] Agreement Not Discharged By Death: The Arbitration agreement is not discharged by the death of any of the parties and will still continue to be enforceable Article 5 Arbitration Act An arbitration agreement shall not be discharged by the death of any party to the agreement but shall continue to be enforceable by or against the personal representative of the deceased party. The authority of an arbitrator shall not be revoked by the death of any party by whom he was appointed. o [3] Private and Confidential: No other parties can hear the case and rulings do not need to be disclosed to the public to set precedence . Not setting precedents for future suits is attractive for large companies with multiple clients Esso Australia Resources Ltd v Plowman and Ors [1994-95] 183 CLR 10 Arbitration has always historically been considered private and confidential. However it was held in this case that it was private but not confidential. Esso had to disclose their documents from an earlier arbitration for use in this suit. In response, in 2011, Australia amended its law (AUS IAA S 22(3), S 23C-G and S15) to include new provisions that recognize that arbitrations are both private AND confidential. France has now made it no longer prima facie confidential. Parties need to select the rules that provide for confidentiality o Trend Towards Transparency: Internationally it is not a unanimous trend as there have been movements in UNCITRAL from public litigation lawyers wanting to r emove the veil of confidentiality because they want to know how big companies resolve their disputes. In reality, confidentiality is also hard to achieve seeing that arbitration decisions can be found easily online (www.americanlayer.com)

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E.

Separability

5.1 Doctrine of Separability The doctrine of separability treats an arbitration agreement contained in a contract as a separate agreement from the commercial contract itself. The doctrine differs from severability which involves the cutting away of inoperable parts of the contract o Jorge Gonzales v Climax Mining (2007) Supreme Court of The Philippines o The doctrine of separability enunciates that an arbitration agreement is independent of the main contract. The arbitration agreement is to be treated as a separate agreement and the arbitration agreement does not automatically terminate when the contract of which it is part of comes to an end Giving Effect to Competence-Competence: The doctrine of competence-competence allows an arbitral tribunal to determine its own jurisdiction without referring to the courts. Separability gives effect to this doctrine in the event that the tribunal declares the main contract void, its jurisdiction under the arbitration agreement is not frustrated because it is a separate agreement o Article 16(1) 2006 UNCITRAL Model Law o The arbitral tribunal may rule on its own jurisdiction, including any objects with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause, which forms part of a contract, shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. Doctrine Borne out of Logical Necessity: Separability is necessary because: if the arbitration clause were part of the main, contract, the arbitration clause would not come into existence unless the main contract did, and would be terminated when the main contract terminates o Avoids a paradox that if the arbitration clause were part of the main contract, and one party contended that the main contract was void, an arbitral tribunal may not be able to decide that allegation because if it finds that the contract was void, the basis of its power to make that decision would have never existed Legal Principle Rather Than Legal Fiction: The doctrine of separability has been described as a legal fiction, which favours commercial pragmatism over logic, essentially a rule of convenience. However, there is argument that it is a legal principle which recognizes modern forms of contracting such as point by point negotiation, which may give rise to an implied presumptive intention to treat the arbitration agreement as separate from the main contract o Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192 o But the doctrine of separability is not so much a fiction as an approach by the law to accommodating commercial practicality and commonsense to the operation of legal rules. Commercial law and honest, practical common sense should never be far apart. The approach to construing and dealing with commercial contracts in this way, subject always of course to the particular contract at hand, is not to introduce a fiction, but to apply a legal rule or perspective borne of precedent and common sense better to facilitate the intentions (express and inferred) of the commercial parties involved o Ferris v Plaister 34 (1994) NSWLR 474 o Referring to the decision in Harbour Assurance v Kansa General Insurance by Ralph Gibson LJ, the argument that parties could not have intended to commit to the arbitrator the issue whether the contract was void ab initio because, if it was, then the arbitration clause was also void, has been met by the device of treating the arbitration clause as being, for this purpose, severable from the rest of the contract. o QH Tours v Ship Design & Management (Aust) Pty Ltd (1991) 10 ALR 371 o Justice Foster affirmed Lord Wrights view in the UKHL case of Heyman v Darwins that the existence of an arbitrators jurisdiction is to be determined by the words of the submission under the arbitration agreement. Parties may submit to arbitration any or almost any question including whether there was a contract at all, or whether if there was, it had been avoided or ended. Hence, due to the specific nature of an arbitration clause, it can be regarded as [separate] from the main contract with the result that logically, an arbitrator, if otherwise empowered to do so, can declare the main contract void ab initio without at the same time destroying the basis of his power to do so

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5.2 Validity of Main Contract and Arbitration Agreement The validity of an arbitration clause must be considered as a separate question from the validity of the contract containing that clause because an arbitration agreement is a separate agreement. o Ferris v Plaister 34 (1994) NSWLR 474 o Validity of the arbitration clause does not depend upon the validity of the remaining parts of the contract in which it is contained. This allows the tribunal to declare a contract invalid and yet retain its jurisdiction to decide a dispute as to the consequences of such invalidity provided hat the arbitration clause is valid as a separate entity and is sufficiently broad in its wording and scope so as to cover non-contractual disputes Ground of Challenge to Validity of Main Contract and Arbitration Clause May be Identical: There may be cases where certain challenges would affect both agreements, however the Courts have to still deal with them as distinct challenges o Premium Nafta Products v Fiji Shipping Company [2007] 2 All ER at [17]-[18] o The arbitration agreement must be treated as a distinct agreement and can be void or voidable only on grounds, which relate directly to the arbitration agreement. o There may be cases where the ground upon which the main agreement is invalid is identical with the ground upon which the arbitration agreement is invalid: [1] Main contract and arbitration agreement contained in one forged document [2] Party alleges that someone who purported to sign as agent on his behalf had no authority whatsoever to conclude any agreement on his behalf 5.3 Law Governing Main Contract and Arbitration Agreement Parties may choose different laws to govern the arbitration clause and the main contract because an arbitration agreement is a separate agreement and the two serve different purposes. This freedom of choice is implicitly recognized in the Model Law o Article 34(2)(a) 2006 UNCITRAL Model Law o The determination of the validity of an arbitration agreement under the law which the parties have subjected it, is a recognition that parties are free to choose the law that governs their arbitration agreement, even if it is a different law from that governing the substantive main contract Where parties have failed to expressly state the law governing the arbitration agreement but state the law governing the contract, common law courts have held a rebuttable presumption that the law governing the main contract will also govern the arbitration agreement o Sonatrach Petroleum v Ferrell International (2001) Commercial Court o The proper law of the arbitration agreement is to be determined according to the general principles for ascertaining the proper law of a contract: there can be an express choice of law or the choice can be implied by reference to that body of law with which the arbitration agreement has its closest and most real connection. Where the substantive contract contains an express choice of law, but the agreement to arbitrate contains no separate express choice of law, the latter agreement will normally be governed by the body of law expressly chosen to govern the substantive contract. Where the parties have failed to state both the law governing the contract and the arbitration agreement, another presumption arises favouring the law of the seat of arbitration o Sonatrach Petroleum v Ferrell International (2001) Commercial Court o Where, however, there is no such express choice of law in either the substantive agreement or the arbitration agreement, but the venue of the arbitration is identified, it will normally, but not invariably, be concluded that the arbitration agreement and the substantive contract are both governed by the law of that place. o Shin-Etsu Chemical v Aksh Optifibre (2005) Supreme Court of India o Where there is no express choice of the law governing the contract as a whole, of the arbitration agreement as such, a presumption may arise that the law of the country where the arbitration is agreed to be held is the proper law of the arbitration agreement F. Arbitrability

6.1 Doctrine of Arbitrability

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Arbitrability is concerned with whether a dispute is capable of determination by arbitration and it arises in two main forms: o Subjective Arbitrability: refers to competence/capacity of the parties that enter into the agreement to arbitrate and scope of the agreement o Objective Arbitrability: refers to whether certain subject matters or types of dispute may be resolved by arbitration

1.1 When Does Arbitrability Arise Arbitrability of a dispute may come into question at two different stages of the dispute resolution process and may fall for determination in accordance with two or more systems: o [A] Commencement of Process A national court may be asked to stay curial proceedings, instituted in apparent contravention of an arbitration agreement. A stay may be refused on the ground that, according to the relevant national legal system, the dispute is not susceptible to determination by arbitration. Petropod v Larsen Oil and Gas [2010] SGHC 186 The concept of arbitrability ought to be taken into account when a court is asked to exercise its discretion to grant a stay under s 6(2) Arbitration Act. o [B] Enforcement Stage An award may be refused enforcement on the ground that the subject matter of the dispute was not capable of settlement by arbitration under the law of that country. 6.2 Subjective Arbitrability Subjective arbitrability deals with the subjective act of the parties agreeing to arbitrate disputes It is primarily concerned with the competence of parties in entering the arbitration agreement o Individuals: Under certain national laws, the laws restricting competency of individuals to enter into an arbitration agreement is the same governing capacity to contract Parties are of legal age, no mental infirmities etc. o State/State Entities: Similarly, states and state entities may be restricted from entering into an arbitration agreement or may require special authorization to do so The capacity of parties can also be relevant at the time of enforcement of an award o Article V1(a) New York Convention o Enforcement may be refused if one of the parties was under some incapacity 6.3 Objective Arbitrability (Subject Matter Arbitrability) Objective arbitrability is concerned with what disputes are not permitted under the law to be resolved by arbitration, even if parties have otherwise validly agreed to arbitrate such matters The New York Convention recognizes and permits Contracting States application of inarbitrability o Article II (1) New York Convention o Each contracting state shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration o Article V (2)(a) New York Convention o Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: The subject matter of the difference is not capable of settlement by arbitration under the law of that country National Legislation As The Starting Point: Nations are allowed to develop their own legislation declaring, which types of disputes are arbitrable and which are not. o Development by Judiciary: While certain statutes may explicitly disallow arbitration, most of them are silent, as such may categories of disputes which are not arbitrable are as a direct result of judicial interpretation of statutes and its underlying policy interests Classic Categories: Examples of non-arbitrable disputes that have been excluded include: o [1] Matters of Status: Generally, matters of status are not arbitrable E.g. validity of citizenship, legitimacy of marriage etc. o [2] Domestic Relations: Family law related issues are not arbitrable E.g. divorce proceedings, marriage, custody rights etc.

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[3] Criminal Offences: Criminal proceedings are not arbitrable Criminal proceedings are vested in the authority of the Courts, furthermore there are public interest in ensuring that it is dealt with in a public forum [4] Insolvency: The issue of arbitrability arises in respect of insolvency law due to the conflict between the private nature of arbitration and the public policy driven collective procedures provided for under national insolvency laws. Core v Non-Core Issues: In order to identify which insolvency issues are arbitrable; distinction is made between core and non-core issues. However this dividing line varies between countries and their national insolvency laws Petropod v Larsen Oil and Gas [2010] SGHC Core insolvency issues include matters relating to the adjudication of the insolvency itself or the verification of creditors claims are considered to be not arbitrable. Non-Core issues involve the remaining circumstances involving the insolvency of one of the parties to a commercial arbitration and are generally arbitrable Disputes Arising Only Upon the Onset of Insolvency Due to Operation of the Insolvency Regime: These disputes are generally inarbitrable because it would nullify the statutory remedies made available to creditors Petropod v Larsen Oil and Gas [2011] SGCA Many statutory provisions in the insolvency regime were in place to recoup for the benefit of the companys creditors losses caused by the misfeasance and/or malfeasance of its former management. This objective could be compromised if a companys pre -insolvency management had the ability to restrict the avenues by which the companys creditors could enforce the very statutory remedies, which were meant to protect them against the companys management. Disputes involving an insolvent company that stemmed from its preinsolvency rights and obligations: These disputes do not always involve public policy considerations such as the protection of creditors Petropod v Larsen Oil and Gas [2011] SGCA In instances where the agreement was only to resolve the prior private inter se disputes between the company and another party, there would usually be no good reason not to observe the terms of the arbitration agreement. The proof of debt process was merely a substituted means of enforcing debts against the company, and did not create new rights in the creditors or destroy old ones. Therefore, allowing a creditor to arbitrate his claim against an insolvent company in such circumstances did not undermine the insolvency regimes underlying policy aims [5] Illegal Contracts: In certain cases where the contracts are tainted with illegality and involve elements of fraud, bribery, money laundering and corruption; they are considered as contrary to public policy and hence not arbitrable ICC Case No. 1110 (1963) Judge Lagergren Parties who ally themselves in an enterprise of the present nature must realize that they have forfeited any right to ask for assistance of the machinery of justice (national courts or arbitral tribunals) in settling their disputes [6] Intellectual Property Rights: IP rights are generally regarded as not arbitrable because they required registration and decisions on them impact third party rights. Impact on Third Party Rights: Existence of IP rights often require registration, which can grant, amend or revoke these rights and determine their scope. Hence not arbitrable because affecting the registries affect third parties However, in Switzerland, the Swiss Patent and TM Office recognizes arbitration awards as a basis for revoking the registration of a patent Commercial Contracts Still Arbitrable: Disputes not about the validity of IP rights but as to the contract concluded in the exercise of the right are arbitrable because they do not have a direct impact on third parties

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E.g. Disputes as to validity, effect and royalties under licensing agreement, contracts for the transfer of property rights Registered v Non-Registered IP Rights: Most countries distinguish between rights that have to be registered (patents and trademarks) and those which exist independently of any such formality (copyrights) [1] Registered Rights: generally not arbitrable, and if so, will only permit an award which takes effect between the disputing parties [2] Non-Registered Rights: internationally accepted to be arbitrable o [7] Anti-Trust and Competition Disputes: Antitrust and competition legislation involve important issues of national economic policy and third party interests However, some jurisdictions have a more expansive view that antitrust between two companies may be arbitrable in a situation where they are the only two players in the market o [8] Securities Transactions: Securities transactions were found to be inarbitrable to allow the protection to customers granted under the relevant statutory remedies E.g. US Securities Act 1933 and the Securities Exchange Act 1934 Rodriquez de Quijas v Shearson/American Express (1989) US S.Crt. After years of judicial tussling, courts now hold that arbitration agreements should not be prohibited under the Securities Act since they seek to advance the objective of allowing buyers of securities a broader right to select the forum for resolving disputes o [9] Investments in Natural Resources: These investments have been considered inarbitrable because they have a direct impact on the public, and there is interest in environmental protection and planning of a states resources o [10] Employment Disputes: Employment disputes have also found to be inarbitrable because of the various statutory protections provided for in employment legislature o [11] Consumer Disputes: Have been found to be inarbitrable because of public policy interests, especially in states with a strong consumer protection regime Unconscionability Arising From Disparity of Bargaining Power: One of the major concerns is that a private consumer will be at an unconscionable disadvantage against a powerful economic entity While the types of disputes, which are non-arbitrable, may differ from nation to nation, they almost always arise from a common set of considerations. o Gary Born, International Commercial Arbitration (2009) o The non-arbitrability doctrine rests on the notion that some matters so pervasively involve public rights, or interests of third parties, which are the subjects of uniquely governmental authority, that agreements to resolve such disputes by private arbitration should not be given effect.

6.4 Objective Arbitrability and Public Policy Objective arbitrability is closely related to but distinguishable from the principles of public policy o Common Character: Both are premised on the existence of unacceptable conflicts between the arbitral agreement and award with basic legal norms and public policies of a particular state, which the state is permitted, exceptionally, to invoke to justify nonrecognition of an otherwise valid award or agreement o Distinguishable: However they are distinguishable, as merely because a dispute invokes matters of public policy it does not necessarily mean that it is non-arbitrable This the common and exceptional character of public policy and objective arbitrability as two distinct grounds is recognized in the provisions of the New York Convention o Article V (2) New York Convention o Sets forth two exceptional bases for non-recognition; public policy of the enforcement forum under V (2)(b), and the non-arbitrable subject matter under V (2)(a) o Gary Born, International Commercial Arbitration (2009) o The public policy doctrine provides that certain results reached by arbitral awards contradict public policy and cannot be recognized, while objective arbitrability provides

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that the arbitral process itself cannot be used to produce a binding decision in particular cases (regardless what its results are) 6.5 Objective Arbitrability in International and Domestic Arbitrations In many jurisdictions, the objective arbitrability in certain disputes are more prevalent in domestic rather than in international matters o Petropod v Larsen Oil and Gas [2011] SGCA o Courts are expected to take a more interventionist approach in domestic arbitrations under the AA than international arbitrations under the IAA In international cases, national conceptions of public policy should be moderated, in light of the existence of competing public policies of other states and the shared international policy of encouraging the resolution of international commercial disputes through arbitration. o Mitsubishi Motors v Soler Chrysler-Plymouth (1985) US Supreme Court o It is necessary for national courts to subordinate domestic notions of arbitrability to the international policy favouring commercial arbitration 6.6 Modern Developments in Objective Arbitrability Prior to the 1980s the doctrine of objective arbitrability flourished and many categories of disputes were interpreted as non-arbitrable by the Courts. This was motivated by the following: o [1] Claims that embody public values and interests should not be referred to arbitration o [2] Perceived limitations in arbitral procedures in comparison to court proceedings o *3+ Implied legislative intention derived from Courts interpretation o [4] Unprecedented effect of arbitral decisions on third party rights o [5] Inability of the arbitral tribunal to grant legislatively mandated reliefs o [6] Unconscionability brought about by unequal bargaining power between parties Progressive Judicial and Legislative Trends Favouring Arbitration: However, in recent decades, the number of issues that have been regarded as non-arbitrable has been in decline. o [1] Increasing Confidence in the Arbitral Process: The first motivator is that Courts have increasingly developed confidence in the arbitral process Mitsubishi Motors v Soler Chrysler-Plymouth (1985) US Supreme Court The adaptability and access to expertise are hallmarks of arbitration, and there is no reason to assume at the outset of the dispute that international arbitration will not provide an adequate mechanism. The New York Convention was reinterpreted as limiting the applicability of objective arbitrability rather than to recognize and permit it. Particular care must be taken to prevent local parochialism from undermining the Conventions purpose of promoting arbitration. Desputeaux v Editions Chouette Inc [2004] Supreme Court of Canada Interpretive presumption in favour of arbitration that a matter is arbitrable unless a statute expressly provides otherwise 2006 UNCITRAL Model Law Does not contain any provision prescribing any particular categories of disputes to be non-arbitrable. Reflecting that, as a matter of principle, almost any dispute is capable of resolution by arbitration. o [2] National Legislation Encouraging Arbitration: secondly national legislatures have been prompted to enact arbitration statues to facilitate and encourage arbitration E.g. Federal Arbitration Act in the US, IAA in Singapore Petropod v Larsen Oil and Gas [2011] SGCA Furthermore, courts have adopted the philosophy of facilitating arbitration

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Seminar 3: Court Proceedings and the Arbitration Agreement


A. Identifying Parties To the Arbitration 1.1 Parties To the Arbitration The Parties to the arbitration agreement would normally be the signatories to those agreements. In multi-party agreements, when two signatories have already commence arbitration proceedings; a third signatory may refer his claims to the current arbitration through obtaining consent of the existing claimants arbitrator to act in respect of his claims as well. o Charles M Willie & Co (Shipping) v Ocean Laser Shipping (The Smaro) [1998] EWHC 1206 o The court held that a third signatory could join his claims to an existing arbitration and would not need to have them referred under an entirely new arbitral submission. Forcing the third signatory into a separate arbitration might weaken the claimants claim in the existing arbitration or lead to inconsistent decisions over the same facts Non-signatories may be considered a party to an arbitration agreement in certain exceptions: nd o Thomson-CSF v American Arbitration Association (USCA 2 Cir, 1995) o The court recognized five theories whereby a non-signatory could be bound by an arbitration agreement: [1] incorporation by reference; [2] assumption; [3] agency; [4] veil-piercing/alter-ego; and [5] estoppel 1.2 Incorporation By Reference Incorporation by reference usually arises where parties have not included an arbitration agreement in their own contract, but merely included a reference to another document that contains an arbitration agreement There are three divergent views as to how incorporation by reference can be carried out: o [1] Specific Reference: An arbitration agreement can only be incorporated if it has been specifically referenced and drawn to the attention of the parties Aughton Ltd v MFKent Services Ltd (1991) 57 Build. L.R. 1 A sub-contractors order provided for a sub-sub-contract to be on a standard form contract used by the British government in public contracts. The CA held that the reference to the standard form contract did not include a reference to the arbitration clause contained in such contract. Megaw J held that for a valid incorporation there must be distinct and specific reference expressing the parties intention to make the incorporation Ousting Jurisdiction of the Courts: An arbitration agreement can preclude a party from bringing a claim before the courts and therefore very clear language should be introduced into any contract, which is to have that effect Writing Requirement: The statutory requirement that an arbitration clause be in writing is designed to ensure that a party is not been deprived of his right to litigate unless he has consciously and deliberately agreed that it should be so Separability: An arbitration clause included in a contract constitutes a selfcontained contract collateral or ancillary to the substantive contract. To be incorporated this self-contained contract must be expressly referred to, and it is not incorporated by a mere reference to the terms and conditions of the contract to which the arbitration clause forms a collateral contract o This approach has gained favour and appears to be the dominant view in common law Giffen (Electrical Contractors) v Drake & Skull Engineering (1993) Arbitration clause is not incorporated by a mere reference to the terms and conditions of contract to which contains the arbitration clause Ferris & Anor v Plaister & Anor (1994) 34 NSWLR 474 Kirby J agreed with Megaws reasoning that an arbitration clause is to be treated as separate and distinct as the main agreement Carob Industries v Simto Pty Limited (1996) Supreme Court of Western Australia Scott J agreed with Megaws conclusion in Aughton however arrived to the same conclusion via a construction of the clause and parties intentions. That

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specific reference was necessary to evince intention in construction. This case has since been overruled on appeal (new position refer to Conagra below) [2] General Reference: The second view is that general reference to another document containing an arbitration clause may be sufficient to effect incorporation Aughton Ltd v MFKent Services Ltd (1991) 57 Build. L.R. 1 Ralph Gibson LJ found that general words may sufficiently incorporate an arbitration clause, depending on the terms of the general clause with due respect to the construction of the contract, the nature and the circumstances in which it was made. However he did not find it sufficient in this case because the arbitration agreements are statutorily required to be in writing Prior Contractual Relationship: General Incorporation might be sufficient when there has been a prior contractual relationship between parties to suggest the incorporation Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL [2010] EWHC 29 Parties had contracted 14 times over the past 2 years with a similar contract, th which contained an arbitration clause. In the 6 year a new contract was adopted which lacked the arbitration clause but had a clause, which states that it includes the other terms from the other years. Held that the general words of incorporation in the contract between the parties all the rest will be same as our previous contract incorporated the arbitration clause from the contracts previously made between those parties without the need for specific words of reference within the incorporating contract to the arbitration clause Bomar Oil NV v ETAP (France) (1990) Specific reference is not required if previous business relationship as well as prior industry experience evidence sufficient awareness of incorporation [3] Matter of Construction to Ascertain Intention to Incorporate: The third approach, that is dominant in the Asia-Pacific region, is simply whether, as a matter of construction, the parties intended to incorporate the arbitration agreement Congara International Fertiliser v Lief Investments [1997] NSWSC Although Rolfe J found that on weight of authority, specific reference is required, his honours preferred position would have been to determine simply on a case-by-case basis, on a matter of construction, whether the parties hand intended to incorporate the term absent a specific reference . Notwithstanding the potential consequences of an arbitration clause, he did not see why, as a mater of principle, that it should be treated differently in construction. Congara International Fertiliser v Lief Investments [1998] NSWSC-CA While finding that n terms have been incorporated, it observed that if the parties had agreed to the incorporation of the terms and conditions of the standard contract and these could have been identified with certainty, then there was no textual or policy consideration which would prevent the incorporation of the arbitration clause into the contract of sale Hence, the position in Australia (at least for NSW) is simply a question of intent without the need for any particular wording Bina Puri Sdn Bhd v EP Engineering (2008) 3 MLJ 564 Endorses the view that the test is one of intent, with or without express wording. Whether a term in one contract has been incorporated in another depends on the facts and circumstances of each case. Special Treatment Due to Unique Nature of Arbitration Clause Unfounded: There is no reason to treat the incorporation of an arbitration clause differently because it is unique Gary Born, International Commercial Arbitration The question of incorporation by reference should not in any way be confused with or influenced by the doctrine of separability, which purpose is for ensuring the jurisdiction of the tribunal. Furthermore, arguments requiring a specific written reference because an arbitration agreement precluded avenues of state judicial recourse has been discredited in the context of international arbitration, which was developed to avoid the heightened and confusing standards of domestic law

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Specific Reference Not Necessary By Strong Proof: While specific reference to the arbitration agreement is not necessary for its incorporation, it is nevertheless strong proof of parties intention to incorporate Concordia Agritrading v Cornelder Hoogewerff [2001] 1 SLR 222 I think it is a question of construction in each case. There must be a clear intention to incorporate an arbitration clause. If the words of incorporation are specific that intention may well have been clearly expressed.

1.3 Assumption A non-signatory may be bound under the theory of assumption if he manifested intent to arbitrate through his conduct or behaviour and the other party relied on that conduct o Bauer v Daewoo Corp [1999] 4 MLJ 545 o The Malaysia Court of Appeal held that subsequently conduct may assume the obligation to arbitrate; and may be determined not only by words but also by conduct The premise of this theory is that the non-signatory should not be allowed to express intent to arbitrate and then later assert that an arbitral award is invalid. The non-signatory will be considered to have impliedly agreed to arbitrate o If the non-signatorys conduct indicated that he waived any objection to being bound by the arbitration agreement then he would also be bound under this theory 1.4 Agency Relationships A principle may be bound to an arbitration agreement signed by his agent. However, there must have been an agency relationship and when the contract was signed the agent must have been acting within the scope of his authority o Overseas Union Insurance v Turegum Insurance [2001] 3 SLR 330 o Held that an L/U clause stating that wording in arbitration clause is to be agreed by underwriter, granted the underwriter sufficient authority to agree to an arbitration clause that bound his principle. Also, it is also recognized that an underwriter also had the authority to agree to an arbitration clause since such a clause was quite usual in a reinsurance contract. 1.5 Veil-Piercing/Alter Ego Generally, it is common for parties to use companies to enter into transactions to take advantage of the companys separate legal personality to shield them from the full brunt of liability o Alter-Ego Theory: It arises when one party so dominates the affairs of another party (company), and has sufficiently misused such control, that it is appropriate to disregard the two companies separate legal personalities and to treat them as a single entity. Referring the Non-Signatory to Arbitration: The courts may chose to lift the corporate veil so that parties that have contracted in an arbitration agreement with the company, may refer the other non-signatory company to arbitration. o [1] Fraud and Abuse of the Corporate Structure: Courts have recognized that the corporate veil may be lifted where there has been fraud or a deliberate attempt to abuse the corporate system for an illegal purpose such as evading liabilities. nd Carte Blanche (Singapore) v Diners Club (1993) USCA 2 Cir Court held that non-signatory Diners Club could be brought to arbitration because there was no question that they controlled and dominated the actions of the signatory CBI. CBI was a corporate shell, as it had no bank accounts, officers, stationery, transactions, or carried out any other activities. Furthermore, when the arbitration was conducted, the attorneys who appeared for CBI addressed and sent their bills directly to Diners Club and were paid by Diners Club over a million dollars in fees for their services o [2] Group of Companies: The group of companies doctrine is another means by which the courts have recognize implied consent to bind non-signatories to arbitration clauses The doctrine applies in cases where a party to an international transaction is a member of a group of companies. Consent of a non-signatory member of the group may be implied if another member of the group signed the agreement

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and the conduct of the group of companies implied consent to the contractual obligations including the arbitration agreement. Dow Chemical v Isover Saint Gobain (1982) The non-signatory company had absolute control over its subsidiaries and was involved in the performance of the contract at issue; therefore it was found that it was bound to the arbitration clause. Reverse Lifting To Prevent Signatories From Avoiding Arbitration: Courts have also recognized the unique scenario where non-signatories would lift their signatory companys corporate veil to ensure the other signatory party enters into arbitration o Smith/Enron Co-Generation v Smith Co-Generation International (1999) o Determinations of veil-piercing are often fact specific and differ with the circumstances of each case. Normally the court is asked to impose an obligation to arbitrate on a non-contracting party. But in this case, it is a signatory trying to escape its obligation to arbitrate and a non-signatory that is requesting the court to pierce its own corporate veil because of special circumstances. o Court lifted the veil because the non-signatories have reflected themselves and received correspondence as the signatories. Furthermore the signatory trying to escape the obligation has treated both the non-signatories and signatory company as those they were interchangeable.

1.6 The Doctrine of Estoppel The estoppel exception binds non-signatories who take advantage of benefits in a contract but claim to be exempt from the obligation of arbitration. o Doctrine of Estoppel: Estoppel is the legal principle by which a party is prevented from denying representations arising out of words or deeds on which another party has relied on to its detriment Parties may be estopped from avoiding an arbitration agreement in the following ways: o [1] Conduct: Parties may be estopped upon the basis of a common understanding derived from the conduct between the parties Bauer v Daewoo Corp [1994] 4 MLJ 545 They are bound by the 'conventional basis' on which they conducted their affairs. The reason is because it would be altogether unjust to allow either party to insist on the strict interpretation of the original terms of the contract when it would be inequitable to do so, having regard to dealings which have taken place between the parties. o [2] Participation In Arbitration Without Protest: A non-signatory would also be estopped when he has participated in arbitration proceedings without protest Slaney v IAAF (2001) USCA Our judicial system is not meant to provide a second bite at the apple for those who have sought adjudication of their disputes in other forums and are not content with the resolution they have received . If a party willingly and without reservation allows an issue to be submitted to arbitration, he cannot await the outcome and then later argue that the arbitrator lacked authority to decide o [3] Treatment of Non-Signatories As Group Entity In Contract With Arbitration Clause: Similarly, when a signatory has treated various non-signatories as a single party in the contract with an arbitration clause, it is estopped from avoiding arbitration with them Smith/Enron Co-Generation v Smith Co-Generation International (1999) A signatory to an arbitration agreement may be estopped "from avoiding arbitration with a non-signatory when the issues the non-signatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed. Affirmed in HG Estate LLC v Corporation Durango (2003) MS Dealer Service Corp v Sharon D. Franklin (1999) USCA A signatory is compelled to arbitrate against a non-signatory when the close relationship between the entities involved, as well as the relationship of the alleged wrongs to the non-signatorys obligations and duties in the contract and [the fact that+ the claims were intimately founded in and intertwined with the underlying contractual obligations.

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[4] Leading the Other Party That The Arbitration Existed: In cases where one party had represented and led the other party to believe that the arbitration existed under certain circumstances, he is estopped from declaring that it should have been another clause Yokogawa Engineering Asia v Transtel Engineering [2009] SGHC 1 Plaintiffs were estopped from asserting that the proper dispute resolution should be commenced under another clause 20 when they have represented to the respondents that it was under clause 19. Furthermore, not only has the plaintiff failed to inform the respondent that it was under clause 20, it had provided them with a document containing clause 19, and have not corrected the mistake for over four 4 years, resulting in large payments made by the respondent in pursuance to the procedures under clause 19.

1.7 Third Party Beneficiaries Another avenue through which non-signatories may take advantage of an arbitration agreement is via the exceptions to the principle of privity of contract for third party beneficiaries o [1] Successors-in-Interest/Assignees: Assignment refers to the transfer of property or rights (such as contractual benefits and obligations) to another party (E.g. A and B enters into a contract and B assigns his rights to C who inherits it as successor-in-title). Ibar v American Bureau of Shipping (1998) USDC Non-signatories to an agreement have standing to enforce the agreements arbitration clause as successors-in-interest to a signatory party The Smaro [1998] EWHC 1206 An assignee may join the arbitral proceedings provided that he gives notification to the other party and submits to the jurisdiction of the tribunal o [2] Statutory Provisions: Similarly, statutory provisions may assist third parties who derive a benefit under the contract to rely on the arbitration clause. However, this is limited to the requirements under the statutory provisions rd Section 9 Contract (Rights of 3 Parties) Act 2001 Where (a) a right under section 2 to enforce a term (referred to in this section as the substantive term) is subject to a term providing for the submission of disputes to arbitration (referred to in this section as the arbitration agreement); and (b) the arbitration agreement is an agreement in writing for the purposes of the AA or Part II of the IAA, The third party shall be treated for the purposes of the AA or the IAA, as the case may be, as a party to the arbitration agreement as regards disputes between himself and the promisor relating to the enforcement of the substantive term by the third party. Jiang Haiyang v Tan Lim Hui and another suit [2009] SGHC Andrew Ang J doubted if apart from the CRPTA, whether there is a concept of a third party beneficiary in Singapore Black v Veatch International v Wartsila NSD North America (1998) The efficacy of an arbitration clause upon third parties is not contingent upon a showing by the parties to the contract containing the arbitration clause that they intend to enforce the arbitration clause against each other B. Conditions Precedent to Arbitration 2.1 Condition Precedent A condition precedent is a legally binding and enforceable requirement to be observed before either party can ask for the dispute to be arbitrated o E.g. Time periods for friendly negotiation or mediation before referring to arbitration Condition Precedent Not Satisfied Voids Arbitration: If the condition precedent is enforceable, arbitration proceedings that have begun in breach of the condition precedent are void. o Private Co Triple V Inc v Star (Universal) [1996] ADRLJ 196 o Clause required parties to settle disputes via agreement first and in the event it cant then refer the matter to arbitration. Issue was whether application for arbitration was premature as attempts to negotiate settlement not exhausted under the arbitration clause. The court held that the dispute cannot be settled by agreement because plaintiff

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did not believe that defendant was acting in good faith nor were they interested in being involved in the defendants negotiations with their supplier. Hence arbitration proceeds Condition Precedent Must Be Clear And Unequivocal: The condition precedents must be clear in setting down the procedure for parties to follow, if not it will be considered unenforceable o Insigma Technology Co Ltd v Alstom Technology Ltd [2008] SGHC; [2009] SGCA 24 o On balance the provisions are unenforceable because they are vague and subjective especially in relation to the meaning of the words friendly and consultations. There is no particular procedure set down for the parties to follow o Interpreting a direction to hold friendly consultations as a mandatory injunction to have recourse to a form of alternative dispute resolution would be a strained and unnatural construction of the term. A direction to hold friendly consultations is more equivalent to a direction to attempt in good faith to resolve the dispute than to a mandatory mediation order Scope of the Arbitration Agreement

C.

3.1 Scope of the Arbitration Agreement A prevailing concern is whether parties have agreed to arbitrate certain claims or issues. This would involve an ascertainment of the scope of the arbitration agreement through contractual interpretation/construction (certain clauses might limit it to disputes of quantum etc) o Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192 o Its meaning is to be determined by what a reasonable person in the position of the parties would have understood it to mean, having regard to the text, surrounding circumstances, purpose and object of the transaction Arising Out of This Contract Can Cover Pre-Contractual Claims: The phrase has generally been accepted to cover pre-contractual claims. Where commercial parties agree to arbitrate, their presumed desire is for all of their claims pre-contractual or post-contractual arising in any way from that relationship to be decided by arbitration. What is left is for the Court to establish a connection between the dispute and contract o Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192 o Allsop J: The words "arise out of the contract" are sufficiently flexible, to encompass a sufficiently close connection with the making, the terms, and the performance of the contract as permit the words "arise out of" aptly or appropriately to describe the connection with the contract. o In my view, there is no bright line to be drawn at the point of contract formation with all causes of action reliant on events prior to that point not being disputes arising out of the contract. It will be necessary in each case to assess the connection of the dispute with the contract its formation, terms or performance to see whether disputes fall within the clause, as well, of course, as the terms of the arbitration clause in the context in which they appear. Subsequent Conduct To Initial Contract Will Be Covered By Arbitration Agreement: Similarly, if the courts consider the actions of the party amounted to an extension of the first contract, the arbitration agreement will also apply to disputes arising from these actions o Ahmad Al-Naimi v Islamic Press Agency [2000] 1 LLR Eng CA o True nature of the arrangement was that there was a single contract on the terms (including an arbitration agreement), initially for fixed price works, which was subsequently extended, as the appellant had always hoped and intended that it would be, to cover a second phase of works to be done on an at cost basis. Hence the arbitration agreement extends to the matters claimed in that second phase. Generous Construction that Arbitration Agreement Covers Any Dispute: The English and Singapore Courts have adopted a generous approach in constructing the arbitration agreement that all disputes (including torts of conspiracy, breach of fiduciary duty and fraud) are to be referred to arbitration unless found to be excluded o Premium Nafta Products v Fili Shipping Company [2007] All ER UKHL o Lord Hoffman: In my opinion the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any

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o o

dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrators jurisdiction Larsen Oil and Gas v Petropod [2011] SGCA 21 Arbitration clauses should be generously construed such that all manner of claims, whether common law or statutory, should be regarded as falling within their scope unless there is good reason to conclude otherwise. The underlying basis for a generous approach towards construing the scope of an arbitration clause is the assumption that commercial parties, as rational business entities, are likely to prefer a dispute resolution system that can deal with all types of claims in a single forum.

D. Enforcement of the Arbitration Agreement 4.1 Enforcement of the Arbitration Agreement Enforcement of arbitration agreements concerns the extent to which a domestic court will respect the parties exclusive arbitration agreement by staying its own proceedings when a party alleges that there is an arbitration agreement covering the dispute in question o E.g. Where despite an arbitration agreement, one of the parties seeks an advantage or wishes to delay the matter, by commencing court proceedings rather than arbitration o Article II (1) New York Convention o Each contracting state shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration International instruments have provided that in such circumstances, the courts will recognize and enforce and arbitration agreement, as well as stay its proceedings in favour of arbitration o Article II (3) New York Convention; Article 8 (1) 2006 UNCITRAL Model Law o A court of a contracting state, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall at the request of one of the parties, refer the parties to arbitration, unless it funds that the said agreement is null and void, inoperative or incapable of being performed Generally it is recognized that the national courts will do the following: o [1] Decline Jurisdiction: That the arbitration agreement ousts the courts jurisdiction o [2] Dismiss Court Action: That the court is to refer parties back to arbitration o [3] Stay proceedings: Primarily used in common law jurisdictions Shipowners Mutual Protection and Indemnity Association v Hodgetts [2000] rd If granted, stay applies to principle proceedings as well as 3 party proceedings 4.2 Staying Proceedings In Domestic Singapore Arbitration Courts have a discretion to order the stay of proceedings with regards to domestic arbitrations. o Article 6(2) AA: The court may stay the proceedings However, this is subject to several conditions as provided for in the statute o [1] Timing of the Application: Article 6(1) of the AA provides that applications for a stay of proceedings must come within a set period of time Article 6(1) Arbitration Act At any time after appearance and before delivering any pleadings or taking any other step in the proceedings o [2] Existence of a Dispute: One of the ingredients for the granting of a stay is the existence of a dispute under the relevant arbitration agreement Dalian Hualiang Enterprise Group v Louis Dreyfus Asia [2005] 4 SLR 646 The existence or non-existence of a dispute as envisaged under the relevant arbitration agreement between the parties is crucial to the granting of a stay. For this purpose, a dispute will exist unless there has been a clear and unequivocal admission not only of liability but also of quantum . In absence of

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admissions as to both these aspects, a mere denial of liability or of the quantum claimed, even in circumstances where no defence exists, will be sufficient to found a dispute under Article 8 of the Model Law. Thus finding out whether a dispute exists, is the only exercise that the court carries out in a stay application (apart from constructing the arbitration agreement to discover its full ambit); it does not involve itself in evaluating the merits of the claims [3] Sufficient Reason To Go to Arbitration: The test as to whether a stay will be granted is whether there is sufficient reason for the dispute to go the arbitration as agreed Article 6(2) Arbitration Act Court may grant a stay if it is satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement *4+ Applicant is Ready and Willing: Furthermore, the statue requires the applicant to be ready and willing to do all things necessary to the proper conduct of the arbitration Article 6(2) Arbitration Act The applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration

4.3 Staying Proceedings In International Arbitration In contrast, for arbitrations that full under the international regime, upon application by a party, the court has to stay proceedings (mandatory) and can only refused to do so on certain grounds. o Article 6(2) International Arbitration Act o The court to which an application has been made in accordance with subsection (1) shall make an order, upon such terms or conditions as it may think fit, staying the proceedings so far as the proceedings relate to the matter, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed. The grounds for refusing to enforce an arbitration agreement and the object of the courts substantive inquiry as described by the MAL Digest to Article 8 come in two forms: o [1] Arbitration Agreement is Non-Existent, Null and Void, Inoperative, Incapable of Performance: As the width of these terms is large, there are a variety of circumstances under which the arbitration agreement may be found to be of the following: Kaverit Steel & Crane Ltd v Kone Corporation [1993] ADRLJ 108 The Alberta Court of Appeal took the view that the phrase is an echo of the law about void contracts (null and void), unenforceable contracts (inoperative) and frustrated contracts (incapable of being performed) o Not Parties to the Alleged Arbitration Agreement: Referral to arbitration might be denied on the ground that the respondent to the referral application was not a party to the alleged arbitration agreement Lack of consent or no valid consent to alleged arbitration agreement Arbitration agreement not validly transferred (assignment/successor) to the party making the referral application or to the party responding Validity of incorporation by reference of an external arbitration clause CF.Oil Transport Group v West of England Ship Owners Mutual Insurance (1992) Order to order stay even if one of the parties to the action is not a party to the arbitration agreement o Formal requirements not met: Referral to arbitration might be denied on the grounds that requirements for constituting a valid agreement was not met Question as to whether parties had indeed intended arbitration Whether the writing requirement was satisfied BWV Investments Ltd v Saskferco Products Inc & Ors. [1995] The Saskatchewan Court of Appeal held that an arbitration clause (coming within the definition of Model Law) in a contract, which also falls within the ambit of the Builders Lien Act, (which requires a form of statutory arbitration and which declares that any agreement which provides otherwise to be void) is not null and void and a stay is mandatory HH Casualty and General Insurance v Wallace [2006] NSWSC 1150

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Court held that an arbitration clause in a reinsurance treaty as inoperative because it infringes a local insurance law that decreed that any submission in insurance contracts to arbitration would not be binding unless it was contained in an agreement entered into after the dispute had arisen Condition precedent to the arbitration agreement taking effect not fulfilled: Referral to arbitration might be denied if the arbitration clause contained valid condition precedents that were not met before commencement of arbitration Failure to meet contractually stipulated requirements such as the formation of the tribunal by a certain pre-determined body Failure to meet contractually stipulated time requirements Arbitration agreement no longer in effect: Referral can be dined on the ground that a once-existing arbitration agreement has ceased to be binding on the grounds of termination, rescission, abandonment, repudiation, waiver and the like An arbitration clause inserted in an employment contract had been superseded by a subsequently concluded employment contract containing no arbitration cl. Arbitration agreement invalid because dispute is not arbitrable: Courts will refuse to refer a dispute to arbitration when the dispute is inarbitrable pursuant to mandatory, public policy based rules which prohibit the enforcement of arbitration agreements As discussed above in the section on arbitrability ABN Amro Bank Canada v Krupp Mak Maschinenbau GmbH [1997] ADRLJ 37 Court held that mere allegation of fraud would not preclude arbitration Prince George (City) v McElhanney Engineering Services Ltd [1997] ADRLJ 315 nd Parrett J refused stay where only the 2 defendant and the plaintiffs were parties to the arbitration agreement. He held the arbitration agreement to be inoperative on the ground that the broader issues between the plaintiff and st the 1 defendant could not be resolved in arbitration Arbitration agreement invalid because it is abusive or unconscionable: Courts may also refuse referral where it is shown to be so unfair or one-sided as to be non-binding under the rules of contract applicable to the case Examples would be in consumer contracts: courts seized of applications have considered challenges to the arbitration clause relying on contract law based defences to enforceability of clauses that are unconscionable, abusive or unfair Arbitration agreement invalid because of the invalidity of non-severable provisions: Courts may also refuse referral where an arbitration agreement is incapable of being performed if non-several provisions thereof are found to be invalid Provisions of the arbitration agreement relating to the constitution of the arbitral tribunal were contrary to public policy and therefore null Desbois c. AC Davie Industries (1990) Court consider an agreement as contrary to public policy where the arbitration to be appointed is a party to the contact. Hence it was considered as null and void even though it was not illegal Provisions designating the applicable arbitration rules did not comply with mandatory provisions relating to the validity of external clauses contained in standard form contracts (adhesion contracts) Arbitration agreement designating an arbitral institution or appointing authority that is either non-existent or uncooperative: Courts have also refused referral where the arbitration agreement is invalid by virtue of its ambiguity and failure of operation Provisions designating an institution or appointing authority are unclear Provisions that designate a non-existing institution or appointing authority Provisions that designate an institution or appointing authority that refused to cooperate as expected by the parties Note that the courts are know to be generous in their interpretation of these clauses and will give effect to them despite their ambiguity Failure to commence arbitration within deadline provided for in arbitration agreement Agreements sometimes provide that arbitration must be commenced within a given period following certain predetermined occurrences

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However, several cases stand for the proposition that the fact that the right to commence arbitration is contractually time-barred does not justify the dismissal of a referral application Prohibitive Costs of Arbitration On Parties: Referral might be refused on the ground that it as incapable of being performed where the party against whom it was invoked did not have the financial resources needed to proceed to arbitration. This is particularly attractive in cases of individual consumers against a power economic entity Case III ZR 33/00 (Germany: Federal Supreme Court, 2000) A bona fide inability to fund arbitration renders arbitration clause inoperable Green Tree Financial Corp-Alabama v Randolph (2000) US Supreme Court Held that a party seeking to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive bears the burden of showing the likelihood of incurring such costs [2] Agreement Does Not Cover The Subject Matter in the Court Proceedings: If the arbitration agreement provided for arbitration of disputes, then the subject matter of the proceedings would fall outside the terms of the agreement if: No Dispute: Refer to the discussion in Hualiang above in domestic, A dispute is read broadly and is usually found unless in exceptional situations: Tjong Very Sumito v Antig Investments [2009] SGCA 41 The refusal to grant stay on the ground that there was no dispute is highly exceptional and will only be made where there has been a clear and unequivocal admission to both liability and quantum. A defendants silence, without more, is insufficient to constitute the clear and unequivocal admission necessary Dispute Falls Outside Scope of the Arbitration Agreement: This has to deal with whether the alleged dispute is unrelated to the contract Tjong Very Sumito v Antig Investments [2009] SGCA 41 As a matter of principle, general words providing for arbitration of all disputes should be generously interpreted to encompass any sort of disagreement, dispute, differences, or claim that may be asserted din arbitral proceedings Ahmad Al-Naimi v Islamic Press Agency [2000] 1 LLR Eng CA Court to order stay if court was not certain whether arbitration clause covers subject matter in dispute if good sense and litigation management made it desirable for the arbitrator to consider the whole matter

4.4 Judicial Approach When Considering Stay As discussed above there are two situations in which the court can consider the refusal of referral to arbitration, as these matters would conflict with the principle of competence-competence and there has been debate as to the extent of judicial consideration in them: o [1] Consideration the Existence of Arbitration Agreement (Null/Void/Inoperable): Whether courts seized of referral applications should review the validity, operativeness, performability and applicability of the arbitration agreement fully or merely on a prima facie standard is a question that has not been answered in a consistent manner: Full Review: In several jurisdictions, courts have adopted the view that a full review would be required. Issues of validity, operativeness, performability and applicability would thus be analysed fully, and decisions relating should be final E.g. Croatia, Mexico, Australia, Uganda, Ireland Barnmore Demolition & Civil Engineering v Alandale Logistics (2010) In Ireland, the High Court analysed the issue in detail and said to be inclined to favour the full review standard Prima Facie Review: Courts in other jurisdictions have preferred to apply a prima facie standard on the ground that, as arbitrators are empowered to rule on their own jurisdiction (competence-competence), they normally ought to

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rule first on issues of validity, operativeness, performability and applicability, subject to subsequent review by the courts Not a full trial, all is needed is to show on the face of it that there is an agreement to arbitration (E.g. Hong Kong, Canada, India, Singapore) Dell Computer Corp v Union des Consummators (2007) SCC Adopted the prima facie approach, although with several caveats. The court held that where the objection to the referral of the case to arbitration only raises questions of law, those questions ought to be resolved immediately, and in a final manner, by the court. Where the objection raises disputed questions of fact, the court should normally refer the case to arbitration and let the arbitral tribunal make the first ruling on that objection. Where the objection raises mixed questions of fact and law, the case should normally be referred to arbitration unless the questions of fact require only superficial consideration of the documents submitted by the parties [2] Considering Whether Arbitration Agreement Covers Subject Matter in Proceedings: This is not a judicial review as the courts are not going into the merits of the agreement, rather whether procedurally, the agreement deals with the issue before the courts

4.5 Imposition of Additional Conditions (outside Convention) Although Article 8 is silent about the possibility of imposing conditions on referrals ordered under that provision, courts have done so in several cases though their arbitration legislature o Section 6(2) International Arbitration Act o The court to which an application has been made in accordance with subsection (1) shall make an order, upon such terms and conditions as it may think fit, staying the proceedings so far as the proceedings relate to the matter, unless it is satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed Reasonable or Required by the Ties of Justice: These terms and conditions have come in multiple forms and is exercised by the courts in light of the different facts and circumstances of the case o The Xanadu [1997] 3 SLR(R) 360 o Action stayed on the condition that the defendants waive their time bar defence, security and costs borne by the plaintiffs. Although registrar had to order a stay, she was entitled to impose terms and conditions as appear reasonable or required by the ties of justice. The circumstances of the case called for the condition in question. First, there was sufficient ambiguity whether the relevant bill of lading had identified the arbitration clause invoked. Second, the defendants waited until after the expiry of the time-bar before they filed their application to stay the proceedings. Third, if the condition was not imposed, and in the light of the amount of their claim, the plaintiffs would suffer undue and disproportionate hardship: o Ansett Australia Limited v Malaysian Airline System Berhad [2008] VSC 109 o FACTS: Following the dispute, Ansett commenced court proceedings in Australia. Malaysian Air asked for a stay since there was an existing arbitration agreement between the parties. When the matter went to the court, the time bar seemed to have been in favour of MAS. The court held that while the New York Convention directs Ansett to arbitration, it imposed conditions requiring MAS to proceed expeditiously and also preventing MAS from relying on certain limitation arguments. It is arguable whether such conditions were properly imposed. Slow To Exercise Discretion: While the courts have discretion to impose conditions upon a stay of court proceedings in favour of arbitration it must be exercised judiciously and slow to interfere with the arbitration process o The Duden [2008] 4 SLR 984 o The courts discretion is an unfettered one. However it must be exercised judiciously. The corollary to a wide discretionary power is the great caution with which it should be exercised. The main guiding principle is that courts generally should be slow to interfere in the arbitration process.

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o o

o o

OBrien v Tanning Research Laboratories (1988) 14 NSWLR 601 The conditions contemplated under the Model law are machinery conditions. They relate to hearing and the like procedures and not to conditions which determine, in effect, the substantive rights of the parties Drydocks World-Singapore Pte Ltd v Jurong Port Pte Ltd [2010] SGHC 185 Should not interfere with the substantive rights of the parties. Since the New York Convention has been extended by legislation (IAA), if the court extends it even more, it is not aligned to the nations treaty obligations.

4.6 Inherent Power To Order Stay Even when the requirements under the mandatory provision of Article 8 are not met, the courts may nevertheless stay an action on the basis of local procedural rules o Channel Tunnel Group v Balfour Beatty Construction (1993) AC 334 o Court held that even if there is no agreement to arbitrate, the court still has its inherent powers. It can stay its own proceedings for other reasons and is not bound strictly on the conditions in the New York Convention and Model law Courts have also recognized the possibility of relying on local rules to stay part of an action not falling within the arbitration agreement while the rest of the claim was being arbitrated. E. Anti-Suit Injunctions

5.1 Anti-Suit Injunctions An anti-suit injunction is an order by a court or arbitral tribunal to restrain a party from initiating or continuing proceedings in another jurisdiction or forum o Discretionary: It discretionary and is exercisable when the ends of justice requires it. o Sought In Lex Arbitri To Stop Foreign Courts: It is relevant in the scenario where one party wants to commence court proceedings in their own country instead of arbitration at the seat of arbitration. Differs from a stay of proceedings which is sought at the same court which the other party has attempted court proceedings o Sought Concurrently With Commencement of Arbitration: Sought concurrently with the commencement of arbitral proceedings by protecting yourself through preventing the other party from commencing his own court proceedings in his own country Note that anti-suit injunctions interfere with the jurisdiction of the courts in other states. Hence it is not popular amongst many countries and thus why it was not included in the New York Con. Anti-suit Injunctions Useful To Court Exercising Supervisory Jurisdiction Over Arbitration (Lex): One factor that has motivated the use of anti-suit injunctions is that it is an invaluable tool for the supervisory courts to ensure that there is no multiplicity in proceedings and potential conflict o Aggeliki Charis Compania Maritima SA v Pagnan (The Angelic Grace) *1995+ 1 LLR 87 o In my judgement, the time has come to lay aside the ritual incantation that this is a jurisdiction, which should only be exercised sparingly and with great caution. There have been many statements of great authority warning of the danger of giving an appearance of undue interference with the proceedings of a foreign Court. Such sensitivity to the feelings of a foreign Court has much to commend it where the injunction is sought on the ground of forum non conveniens or on the general ground that the foreign proceedings are vexatious or oppressive but where no breach of contract is involved. In the former case, great care may be needed to avoid casting doubt on the fairness or adequacy of the procedures of the foreign Court. In the latter case, the question whether proceedings are vexatious or oppressive is primarily a matter for the Court before which they are pending. But in my judgement there is no good reason for diffidence in granting an injunction to restrain foreign proceedings on the clear and simple ground that the defendant has promised not to bring them o West Tankers v Ras Riunione Adriatica di Sircurta SpA (The Front Comor) *2007+ UKHL o The most important consideration was the practical reality of arbitration as a method of resolving commercial disputes. People engaged in commerce chose arbitration in order to be outside the procedures of any national court. They frequently preferred the privacy, informality and absence of any prolongation of the dispute by appeal which arbitration offered. The jurisdiction to restrain foreign proceedings was generally

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regarded as an important and valuable weapon in the hands of a court exercising supervisory jurisdiction over the arbitration. It promoted legal certainty, reduced the possibility of conflict between the arbitration award and the judgment of a national court and saved a party to an arbitration agreement from having to keep a watchful eye upon parallel court proceedings in another jurisdiction, trying to steer a course between so much involvement as would amount to a submission to the jurisdiction and so little as to lead to a default judgment Anti-Suit Must Be Sought Promptly and Before Foreign Proceedings Advanced Too Far: The courts have had to deal with the tension of respecting the jurisdiction of foreign courts, hence a caveat to the issuance of the injunction is that foreign proceedings must not be too advanced. o Bankers Trust v PT Jakarta International Hotels & Developments [1999] o Where an injunction is sought to restrain a party from proceeding in a foreign Court in breach of an arbitration agreement governed by English law, the English Court will where appropriate grant an injunction, provided that it is sought promptly and before the foreign proceedings were too far advanced ; there was no difference in principle between an injunction to restrain proceedings in breach of an arbitration clause and one to restrain proceedings in breach of an exclusive jurisdiction clause; the justification for the grant of the injunction in both cases was that without it the plaintiff would be deprived of its contractual rights in a situation in which damages were manifestly an inadequate remedy Anti-Suit Fallen Out of Favour in Europe: Note that the Grand Chamber of the European Court of Justice has held that the anti-suit is incompatible with the European Council Regulations o Allianz SpA and Generali Assicurazioni Generali SPA v West Tankers (Case C-185/07) EC o It is incompatible with Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings before the courts of another Member State on the ground that such proceedings would be contrary to an arbitration agreement. Issuable in Singapore Under 12(f) As Interim Measure for Arbitrations in Singapore and Not Foreign Arbitrations: An anti-suit injunction has been granted under 12(7) to assist international arbitrations conducted by arbitral tribunals pursuant to IAA o Swift Fortune v Magnifica Marine SA [2006] SGCA o The circumstances that led to the enactment of s 12(7) suggested that the intention was not to give more powers to the court to grant interim orders to assist foreign arbitrations, but to assist international arbitrations conducted by arbitral tribunals pursuant to Pt II of the IAA. Similarly, the placement of s 12(7) as a subsection in a provision that dealt exclusively with the powers of arbitral tribunals conducting international arbitrations in Singapore made it unlikely that Parliament intended, in the absence of clear words, for the courts to assist foreign arbitrations Court Cannot Order Anti-Arbitration Injunction: While the court has a discretion to order an anti-suit injunction, it cannot order an anti-arbitration injunction o Mitsui Engineering and Shipbuilding Co v Easton Graham Rush [2004] 2 SLR o The Court has no power to issue injunction against an arbitrator from proceeding o C.F. Albon v Naza Motor Trading [2008] Eng CA o Arbitration clause stated that arbitration to be held in Malaysia. Other party commenced arbitration in UK. English Court refused stay and granted injunction against Naza from commencing arbitration in Malaysia. Is it the courts roles to examine on a full trial basis the existence of an arbitration, shouldnt this be caught by the competence of the arbitral tribunal Insolvency Laws

F.

6.1 Insolvency Laws and Arbitration Winding-up proceedings are to protect the companies and creditors; hence there must be a fair distribution of assets. To allow a part to proceed to arbitration, a leave of court is needed to inform the other creditors that you are going to arbitration

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The concerns is that if one party attempts to commence winding-up proceedings, can and should the court order a stay of the winding-up proceedings on the grounds that an arbitration agreement exists? o No Because Winding-Up Proceedings Are Not Dispute Resolution Proceedings : The winding-up process is not a dispute resolution process, it is an exercise of a specific statutory duty and is not an adjudicatory process that can be subject to a mandatory order for the other party to proceed to arbitration Four Pillars Enterprises v Beierdorf Aktiengesellschaft [1999] SGCA Winding-up proceedings is an exercise of specific statutory duty and not as its adjudicatory jurisdiction in resolving disputes and not subject to stay under arbitration law S Y Technology v Pacific Recreation [2006] SGCA Arbitration agreement alone cannot thwart the proper exercise of the statutory right to wind-up a company where there is no bona fide dispute on the debt owed (protection of the right) o Hence when faced with an arbitration and if you know the other party has some debt, you should commence winding-up proceedings to freeze his assets. The drawback is that you will have to compete with the other creditors pari pasu o However Courts May Stay If Winding-Up Process is Abused: While courts would generally not stay winding-up proceedings, it may do so when the winding up is not bona fide, and to prevent an arbitration of a substantive dispute from going on. This is premised on the inherent power of the court to prevent abuse of the winding up process Metalform Asia v Holland Leedon [2007] 2 SLR SGCA CA ordered injunction against winding-up process pending arbitration if the is genuine cross-claim based on substantial grounds subject to arbitration.

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Seminar 4: The Arbitral Tribunal


A. Appointment of Arbitrators 1.1 Number of Arbitrators The number of arbitrators is determined by 3 possible factors: o [1] National Arbitration Legislature, [2] Arbitral Rules, [3] Party Autonomy/Choice As the number of arbitrators is not a mandatory rule, parties are allowed to determine the number of arbitrators to constitute the arbitral tribunal o Article 10(1) 2006 UNICTRAL Model Law o Parties are free to determine the number of arbitrators In the event parties do not state their choice, national arbitration legislature would often provide the required number. Generally, legislatures determine 3 arbitrators in the tribunal. However, in the case of Singapore, legislature has determined that a 1 arbitrator tribunal shall suffice o Article 10(2) 2006 UNICTRAL Model Law o Failing such determination by parties, the number of arbitrators shall be 3 o Article 9 Internaitonal Arbitration Act o Not withstanding Article 10(2) of the Model Law, if the number of arbitrators is not determined by the parties, there shall be a single arbitrator Note that the number of arbitrators is also an Arbitral/Institutional rule. In the event that parties wish to conduct the arbitration under these rules, these rules shall take effect over the recommendation under national legislature by virtue of party autonomy o Section 6.1 SIAC Rules o A sole arbitrator shall be appointed unless the parties have agreed otherwise or unless it appears to the Registrar, giving due regard to any proposals by the parties, the complexity, the quantum involved or other relevant circumstances of the dispute, that the dispute warrants the appointment of three arbitrators 1.2 Special Qualifications/Disqualifications The law generally does not stipulate any special restrictions as to who can be arbitrators in respect of party autonomy (it is for the parties to decide who is to settle the dispute) o Although in China and Indonesia there are age stipulations Hence, parties are allowed to come up with a myriad of qualifications for their arbitrators pertaining to their background and what was agreed upon. o [1] Commercial Qualifications: In old agreements it used to be stipulated that only certain qualifications are allowed however these have varied over time Palmco Shipping v Continental Ore Corp, The Captain George K [1970] Commercial men a retired solicitor practicing as a maritime arbitrator was accepted as a commercial man Pando Compania Naviera SA v Filmo SAS [1975] 1 LL LR 560 Commercial men a full time maritime arbitrator was recognized as one Rahcassi Shipping Co. SA v Blue Star Line *1967+ 2 Lloyds Rep 261 Commercial men and not lawyers the umpire that was appointed was a barrister; hence the award was set aside because he could not qualify as an arbitrator (as per party autonomy) Owners of the Myron v Tradax Export SA [1970] 1 QB 527 Shipping man a full time maritime arbitrator was held to be a shipping man o [2] Nationality: normally a natural person is to be appointed as an arbitrator and there are no limitations as to nationality of the arbitrator. Article 11(1) 2006 UNCITRAL Model Law While parties are granted extensive freedom with respect to who may be appointed as an arbitrator, it prohibits discrimination based on nationality o However, caution should be taken to recognize nuances such as parties would usually want a neutral arbitrator of separate nationality from the parties. Regardless, there is nothing stopping them form electing one who is of the same nationality of one of the parties as well due to recognition of party autonomy

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Salutary Avenue v Malaysia Shipyard and Engineering [1999] MLJU 87 A corporate body was recognized as an arbitrator. However Prof Boo severely criticizes this position as the reason for selecting a natural person is that you recognize that he can make his own decisions. A company cannot be said to be equivalent to a person, even though it is recognized to have legal personality in law, that is a legal fiction. [3] General and Sexual Orientation: There are generally no recognized declinations drawn as to either gender or sexual orientation. However this might be possible in light of social developments (perhaps parties would be more comfortable with a female arbitrator etc.) [4] Race and Religion: Similarly, there are no bars to stipulation of race or religion. However, unlike the above categories, selection of arbitrators on such grounds would potentially create trouble for the parties Unlike gender or sexual orientation, racial and religious inclinations are stronger because they permeate the lives of arbitrators and the parties. Even if it does not affect, there is still a possibility that it might be a potential source of dispute should the other party perceive a hint of biasness along those lines However, religious and racial qualifications might be relevant as arbitrators would be sensitive to the concerns of certain parties and appear more credible (for example, a dispute between two Muslim parties or between two churches) Jivraj v Hashwani [2011] UKSC 40 Arbitrators should be respected members of the Ismaili community and holders of high office within the community. UK Supreme Court held that arbitrators are not employees for the purposes of UK antidiscrimination legislation. The arbitrator is in critical respects independent of the parties. His functions and duties require him to rise above the partisan interests of the parties and not to act in, or so as to further, the particular interests of either party. Court observed that such a religious requirement could be relevant to the manner in which disputes are resolved and as such could qualify as a legitimate and justified occupational requirement .

1.3 Appointment By Arbitral Rules In the event that parties have selected certain arbitral rules to govern the arbitration proceedings, and have not designated their choice of arbitrator, the appointment of the arbitrators shall be governed under these rules: o [1] Institutional Rules: The institution would appoint an arbitrator to form the tribunal Section 6.1 SIAC Rules A sole arbitrator shall be appointed unless the parties have agreed otherwise or unless it appears to the Registrar, giving due regard to any proposals by the parties, the complexity, the quantum involved or other relevant circumstances of the dispute, that the dispute warrants the appointment of three arbitrators o [2] UNCITRAL Rules: However, unlike institutional rules, instead of appointing an arbitrator, the Secretary General of the Permanent Court of Arbitration will designate an appointing authority (an arbitral institution who will then appoint the arbitration) The reason why the PCA was only given powers of designation rather than powers of appointment is because of fear that giving a global institution the power of appointment is both too dangerous and impractical Dangerous because it is a League of Nations construct and hence autonomous and not aligned to any international governing body such as the United Nations Impractical because it would be better for local institutions to appoint arbitrators instead as they would know who are the arbitrators in their region and their respect areas of specialization with regards to the dispute at hand

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1.4 Appointment To Be Conducted Fairly Regardless of the appoint authority, the appointment of an arbitrator is to be conduct fairly and to give paramount consideration to the qualifications designated by the parties . o [1] Institutional Appointment: Although institutional authorities have the power to appoint arbitrators, it must still be done so fairly: Taking into account the necessary expertise required by the arbitrators, the subject matter, the nationality of the parties and the parties specific interests. Institution must not fetter its discretion in appointment Article 6(7) 2010 UNCITRAL Rules The appointing authority shall have regard to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and shall take into account the advisability of appointing an arbitrator of a nationality other than the nationalities of the parties. o [1] Ad-Hoc Appointment: In the absence of institutional appointments, parties are free to decide how they would like to appoint an arbitrator. Article 11(5) 2006 UNCITRAL Model Law The court or other authority, in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and, in the case of a sole or third arbitrator, shall take into account as well the advisability of appointing an arbitrator of a nationality other than those of the parties. B. Appointment Procedure 2.1 Appointing Procedure The starting position is that parties are generally free to agree to the appointment procedure o Article 11(2) 2006 UNCITRAL Model Law o The parties are free to agree on a procedure of appointing the arbitrator or arbitrators As such a myriad of procedures have been developed by parties and institutions: o Time limits of 30 days to break locks o List procedure: appointing authority will generate a short list of names of potential arbitrators and ask the parties who would they object to as an arbitrators. From the names not struck off, the appoint authority will make the appointment 2.2 Default Appointment By Statutory Authority In the event that parties fail to agree on the appointment procedure or if the parties fail to perform what is required under such procedure, or if the institution is not able to appoint an arbitrator, then the fall back position would be provided for by the law: o [1] Parties Fail to Agree on Appointing Procedure: However if parties fail to agree on a procedure of appointing the arbitrator, there are usually rules which supplement: Article 11(3) 2006 UNCITRAL Model Law [A] In an arbitration with three arbitrators, each party shall appoint one arbitrator and the two arbitrators thus appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator within thirty days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within third days of their appointment, the appoint shall be made, upon request of a party, by the court or other authority specified [B] In an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he shall be appointed, upon request of a party, by the court or other authority specified o [2] Failure to Perform Agreed Appointing Procedure: Even if parties agree on a procedure for appointing the arbitrators, it may still fail to operate: Article 11(4) 2006 UNCITRAL Model Law Where, under an appointment procedure agreed upon by the parties, [A] a party fails to act as required under such procedure, or [B] the parties, or two arbitrators, are unable to reach an agreement expected of them under such

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procedure, or [C] a third party, including an institution, fails to perform any function entrusted to it under such procedure, any party may request the court or other authority specified to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment. Law of the Situs: The law of the situs designates the default appointing authority o In some countries, municipal courts may be regarded as the default appointing authority o In Singapore, the default statutory appointing authority is the SIAC Section 13(8) Arbitration Act/ Section 8(2) International Arbitration Act For the purposes of this Act, the appointing authority shall be the Chairman of the Singapore International Arbitration Centre Jurisdiction of the Tribunal

C.

3.1 Competence-Competence At it simplest, the competence-competence principle is that an arbitral tribunal is empowered to determine and decide on any and all objections as to its own jurisdiction o It allows arbitrators to determine that an arbitration agreement is invalid and to make and award declaring that they lack jurisdiction without contracting themselves o It ties goes hand in hand with the doctrine of separability which ensures that the tribunals jurisdiction via the arbitration agreement is still valid in the event that they find that the main contract which the arbitration agreement is in, is invalid Competence-Competence Universally Recognized: The competence-competence rule is almost universally recognized in arbitration laws, but in distinctly varying degrees and in different ways o Article 16(1) International Arbitration Act (Following the Model Law) o The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement . For that purpose, an arbitration clause, which forms part of a contract, shall be treated as an agreement independent of the other terms of the contrac t o Section 21(1) Arbitration Act o The arbitral tribunal may rule on its own jurisdiction, including a plea that it has no jurisdiction and any objections to the existence or validity of the arbitration agreement, at any stage of the arbitral proceedings Timeliness Requirement: additionally, the Model Law provides that objections to the arbitral tribunals jurisdiction should be raised promptly before the submission of statements of defence o Article 16(2) International Arbitration Act (Following the Model Law) o A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified Parties Not Precluded From Challenging Even If They Appointed Tribunal Likewise, participation in the constitution of a tribunal does not amount to submission to the jurisdiction of that tribunal o Article 16(2) International Arbitration Act (Following the Model Law) o A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator Tribunals Discretion When to Rule on Jurisdiction: When faced with a question of jurisdiction, the courts may rule on such a plea either at thee possible instances: o [1] Preliminary Question: Generally, the tribunal will consider the challenge of jurisdiction as a preliminary question when it is a discrete challenge, such as whether the tribunal has qualification or whether the writing requirement/consent is satisfied Article 16(3) 2006 UNICTRAL Model Law The tribunal may rule on a plea either as a preliminary question Fung Sang Trading ltd v Kai Sun Sea Products & Food Co Ltd [1992] A ruling on jurisdiction as a preliminary question was desirable where the case on the merits is difficult and is likely to be costly

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[2] Award on the Merits: Generally the tribunal would consider the challenge of jurisdiction at the later award stage when it deals with more substantive issues such as arbitrability and where the jurisdictional issue is intertwined with the substantive issues Reason being is that rulings on jurisdiction may only be made after a full assessment of the dispute when all the evidence is on the table; hence parties cannot deal with it objectively at the preliminary stages like an assessment of the words of the arbitration agreement Article 16(3) 2006 UNICTRAL Model Law The tribunal may rule on a plea in an award on the merits Section 21(8) Arbitration Act An arbitral tribunal may rule on a plea that it has no jurisdiction either as a preliminary question or in an award on the merits o [3] Any Stage of the Arbitral Proceedings: Unlike the Model Law provisions, the Singapore Courts have added an additional provision to allow pleas against the tribunals jurisdiction at any stage of the proceedings for international arbitrations Section 10(2) International Arbitration Act An arbitral tribunal may rule on a plea that it has no jurisdiction at any stage of the arbitral proceedings Reviewability of Jurisdictional Decision Rendered by Tribunal: While the tribunal is allowed to rule on its jurisdiction in the first instance, its decision may be subjected to court review o [1] Ruled as a Preliminary Question: When the tribunal makes a ruling as to its jurisdiction as a preliminary question, there have been different approaches taken: Tribunal Assumes Jurisdiction: When the tribunal assumes jurisdiction, a challenge against that decision can be made in the courts in order to protect the rights of parties. This position is uncontroversial Article 16(3) 2006 UNCITRAL Model Law If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified to decide the matter Section 10(3)(a) International Arbitration Act If the tribunal rules on a plea as a preliminary question that it has jurisdiction, any party may, within 30 days after having received notice of that ruling, apply to the High Court to decide the matter Tribunal Refused Jurisdiction: However, what is controversial is in the situation where the tribunal refuses jurisdiction, whether a challenge can be made in court to request the tribunal to take jurisdiction. This appears in Singapore only Article 16(3) 2006 UNCITRAL Model Law No provision, once a tribunal says it does not have jurisdiction it is the end of the matter. You cannot force jurisdiction when the tribunal has refused it, neither is there the protection of any rights of the parties like there may be when a tribunal assumes jurisdiction wrongly Section 10(3)(b) International Arbitration Act If the tribunal rules on a plea at any stage of the arbitral proceedings (including as a preliminary question) that it has no jurisdiction, any party may, within 30 days after having received notice of that ruling, apply to the High Court to decide the matter Section 21(9)(b) Arbitration Act Replicates the above provision from the International Arbitration Act o [2] Ruled as an Award on the Merits: Similarly, challenges to the ruling of the tribunal as to its jurisdiction may also be made at the courts however via a different mechanism Appeal on Issues Regarding Award and Enforcement of Award: In these circumstances, challenges to the tribunal will not come in the form of that which is provided for under Article 16(3). If the tribunal decides to pronounce on its jurisdiction after a full hearing as part of its final decision, then it is appealable to the courts as a matter of the parties right

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[3] Rule at Any Stage of the Arbitral Proceedings: Note that in the unique case of the tribunal may rule on its jurisdiction at any stage of the proceedings, Tribunal Refuses Jurisdiction (Non-Preliminary Question): Challenges to its decision in any stage other than the preliminary stage can only be done when the tribunal refuses jurisdiction Section 10(3)(b) International Arbitration Act If the tribunal rules on a plea at any stage of the arbitral proceedings (including as a preliminary question) that it has no jurisdiction, any party may, within 30 days after having received notice of that ruling, apply to the High Court to decide the matter Effects of Order Declining Jurisdiction: Other than in the rare case of appeal being allowed under Singapore Law, parties are generally free to pursue other options o Montague v Commonwealth Dev Corp (1999) o Cost award was enforced even though the Court recognized the tribunals refusal of jurisdiction

3.2 Challenging Arbitral Jurisdiction in Court The commonly recognized grounds for challenging the jurisdiction of an arbitral tribunal tend to consider the existence, scope and validity of the arbitration agreement. Hence most of the factors determining the courts refusal of stay of court proceedings would be relevant o Arbitration agreement did not exist/ null/ void/ inoperable/ incapable of performance o Arbitration agreement did not cover the subject matter That aside, the following are examples as grounds of challenging the arbitral tribunal in court: o [1] Exercising Jurisdiction Beyond Scope of Reference: The arbitrators jurisdiction depends on the reference by the parties and also the validity of such reference Bocotra Construction v AG [1995] SGCA The arbitrators jurisdiction depended on reference by the parties. If the reference was invalid, or if there had been no reference at all, prima facie he had no jurisdiction. Held that the dispute was not before the arbitrator because the counterclaim was never validly before him in the first place. Hence he had no jurisdiction to grant the order based on that dispute o [2] Claims in Tort: While generally a tortuous claim may not be in jurisdiction of the tribunal, the tribunal may have jurisdiction to decide these claims if there is a sufficiently close connection between the tortuous claims and the claim under the contract The Angelic Grace [1995] Eng Ca A tortious claim does arise out of a contract containing an arbitration clause if there is a sufficiently close connection between the tortious claim and a claim under the contract. In order that there should be a sufficiently close connection, as the Judge said, the claimant must show either that the resolution of the contractual issue is necessary for a decision on the tortious claim, or, that the contractual and tortious disputes are so closely knitted together on the facts that an agreement to arbitrate on one can properly be construed as covering the other." o [3] Scope of Arbitration Agreement: Similarly, questions as to the scope of the arbitration agreement and whether it covers the disputes raised is a common issue Batshita International (Pte) Ltd v Peter Lim Eng Hock [1997] 1 SLR 241 Issue of whether an alleged separate oral agreement made before the agreement was signed held to be connected with the agreement and hence referable to arbitration. Alagappa Chettiar v Palanivelpillai & ors [1967] 1 MLJ 208 Raja Azlan Shah J held that the arbitration clause, which referred matters under or in connection with this lease, did not extend to matters under a subsequent agreement. Coop International Pte Ltd v Ebel S.A. [1998] 3 SLR 670 Court held that a dispute arising out of an agreement, which terminated an earlier distributorship agreement, could not be referred to arbitration under the distributorship agreement.

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Ethiopian Oilseeds & Pulses Export Corporation v Rio del Mar Foods [1990] Hirst J held that a claim for rectification of a contract gave rise to a dispute "arising out of' the relevant agreement. Adopted and affirmed in Francis Travel Marketing Pty v Virgin Atlantic Airways (1996) 39 NSWLR 430 and Walter Rau Neusser Oel Und Fett AG Applicant v Cross Pacific & Ors [2005] FCA 1102 Sabah Shipyard v Government of the Islamic Republic of Pakistan [2004] Costs of arbitration which was earlier terminated held to be a matter arising out of or in connection with this Agreement

3.3 -

Role of Arbitral Institution in Jurisdictional Challenges The arbitral institution is the appointing authority The arbitral institution also has oversight on the arbitration, arbitrators and substantive issues Likewise there are institutional rules that govern challenge procedures o Rule 25 SIAC Rules 2010

D. Duties and Obligations of the Tribunal 4.1 General Duties and Obligations In accepting an appointment, arbitrators agree to the inherent duties of care and diligence attached to their role. While not spelt out in the arbitration rules, they are nonetheless implied Gary Born suggests that that the obligations of an arbitrator can be summarised as follows: o *1+ Duty to resolve the parties dispute in an adjudicatory manner: It encompasses a number of more discrete obligations and significantly overlaps with the other duties. It is also described as the duty to act judicially. Duty to act fairly, impartially and independently: The tribunal while appointed by the parties, does not act for the parties and must at the end of the day appear fair when discharging their duties Duty to make disclosure: The tribunal has the duty to make disclosure of anything that may impact his impartiality or independence. Duty to consider all evidence: The tribunal is also expect to consider all evidence placed before it by the parties in order to treat all parties equally Article 18 2006 UNCITRAL Model Law The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case o [2] Duty to conduct the arbitration in accordance with the arbitration agreement: This duty considers the specific interests of the parties and obliges the arbitrator to give effect to these specific considerations under the arbitration agreement E.g. Place of hearing, to apply the correct governing law and proceeding rules Duty to maintain financial arrangements: While it is clear under institutional financial arrangements, in ad-hoc arbitrations, arrangements may be problematic because there are no procedures as to how and when arbitrators can receive their pay. Hence, parties would like to agree with the tribunal early with regards to their terms of engagement and renewals so as to prevent confusion and misunderstanding subsequently ICT Pty Ltd: Sea Containers Ltd v ICT Pty Ltd [2002] NSWCA 84 Unless an arbitrator expressly stipulates for a cancellation fee when he accepts his appointment, he is forever disentitled from seeking one. In this case, the arbitrators insistence on a cancellation free was considered to amount to misconduct K/S Norjarl A/S v Hyundai Heavy Industries Limited [1992] 1 QB 863 Any fee upon which the arbitrators wish to insist should be made known at the outset before acceptance of appointment o [3] Duty to maintain the confidentiality of the arbitration: Arbitrators are expected not to announce details of the arbitration unless it is available in the public domain already Duty to report criminal activity: While there is a general duty of confidentiality, arbitrators have a duty to report criminal activities

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AAY v AAZ [2011] 1 SLR 1093 Arbitrator has a duty to report serious crimes under S 39 of the Corruption, Drug Trafficking and Other Serious Crimes Act o [4] Duty to propose a settlement to the parties: this only applies in certain contexts, where arbitrators may propose a settlement in appropriate cases E.g. Provided for in national legislature in the Netherlands, Germany and Japan o [5] Duty to complete the arbitrators mandate and make award: An arbitrator is always expected to come to a decision on all issues, make the award and give his reasons for it Shanghai Tunnel Engineering v Econ-NCC Joint Venture [2010] SGHC An award must be final in the sense that, in relation to the issues or claims with, which it deals, it is a complete decision on the matters requiring determination. A tribunal cannot reserve to itself, or delegate to another, the power of performing in the future any act of a judicial nature in relation to matters dealt with in the award. The tribunals duty is to make a complete and final de cision by its award, and it is a breach of that duty to leave any part of the decision to be determined subsequently or by another. General Duties Are Not Delegable: The three primary duties of the arbitral tribunal are not delegable. Doing so would may result in the arbitrator being challenged and removed o Arbitrators are not allowed to consult anyone to decide the dispute on their behalf o Neale v Richardson [1938] 1 AER 753 o Court held that arbitrator couldnt name another person to hear the evidence as by doing so would essentially be letting them influence the final decision Breach of General Duties As Grounds for Removal of Arbitrator: If an arbitrator breaches a general duty during the course of an arbitration, the breach might provide grounds for an application to remove the arbitrator.

4.2 Delegable Functions However, certain functions of the arbitrator are delegable. These functions are clerical in nature and require no exercise of judgment on the part of the tribunal: o Analysis of Samples: Generally the tribunal would be able to delegate the duties of analyzing samples because these do not require an exercise of their judgment o Stock-taking/inventory: Clerical task that does not require exercise of judgment However, certain forms of functions may be delegated that would involve the asking of advice from professionals and experts in certain fields. Caution must be made so that the arbitrator must still exercise his own judgment in accepting or rejecting advice or opinion o Measuring or valuating land: In certain cases, the arbitrator may request the assistance of a land valuer on the value of the land Anderson v Wallace (1835) Arbitrator consulted valuers on land value. Once of the arbitrators subsequently said that he did not query the valuation as he did not think it worthwhile differing. It was held that he must still exercise his own judgment when coming to his award and should not have differed o Taking Accounts: Particularly in the case for the taking of accounts the court has recognized various degrees of delegation that would be allowable The Eastern Counties Railway Co v Eastern Union Railway Co (1863) Where an arbitrator gave claims on accounts to a firm of accountants who gave the report. And when the award made adopted the report of the accountants, it was held to be excessive delegation. o Legal Advice: Similarly in the case for obtaining legal advice, the arbitrator must not fully adopt what the professional said without applying his mind Giacomo Costa Fu Andrea v British Italian Trading [1961] 2 LLR 394 The arbitrator must make his own decision and not that of the lawyer. Arbitrator should seek advice on general principles and not on the actual question of law in dispute o Technical Advice/Expert Opinion: Likewise, the reason and basis for accepting an experts opinion must not be because of the qualifications of the experts as that would

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be a delegation and not applying his mind. He must assess the opinion and question the validity of the opinion, whether it is supported, the cogency of the arguments presented Luzon Hydro Corp v Transfield Philippines Inc [2004] SGHC 204 Award was challenged in Singapore courts on the ground that the tribunal had delegated its functions to he experts; courts held that the tribunal has set out the terms of reference of the experts, followed the terms of reference as agreed to by the parties hence it was not too much of a delegation. Shanghai Tunnel Engineering v Econ-NCC Joint Venture [2010] SGHC An award must be final in the sense that, in relation to the issues or claims with, which it deals, it is a complete decision on the matters requiring determination. A tribunal cannot reserve to itself, or delegate to another, the power of performing in the future any act of a judicial nature in relation to matters dealt with in the award. The tribunals duty is to make a complete and final decision by its award, and it is a breach of that duty to leave any part of the decision to be determined subsequently or by another. 4.3 Disclosure Obligations Impartiality and independence represent the core obligations of an arbitrator and are so widely recognized that they amount to general international principles. While they have been often used synonymously to indicate absence of bias, they are conceptually different o [1] Impartiality: Impartiality is a subjective concept and is concerned with the tendency of an arbitrator to favour one of the parties position Does not necessarily require a tangible relationship that could be the cause of an arbitrator acting unfairly It is the examination of the likelihood of an arbitrator actually having a state of mind or prejudgment that favours one side of the dispute (real & apparent bias) A lack of impartiality could be caused by totally immeasurable, psychological motives or prejudices, so it foreseeable that an arbitrator could act partially without any objectively explainable or provable reason for doing so o [2] Independence: Refers to the absence of actual, identifiable relationships with a part to proceedings or someone closely connected to the party The test for independence examines the appearance of bias and not actual bias and it is thus entirely objective. It looks at facts that can be show or proved The existence of an offending relationship is sufficient and there is no need to show the effect of such relationships on the mind of the arbitrator Business, Social, Family or Financial etc The relationships must be examined on their strength, whether there was an element of dependence for business, or a significant social relationship that goes beyond ordinary business encounters Veritas Shipping Corp v Anglo-Canadian Cement [1966] 1 LLR 76 Present employment has been held as bias, where arbitrator was a managing director of a party who appoint him and it was presumed in the case that the managing director is not independent and that he was likely to act partial o Requirement for Independence Dropped in English Law: Note that the requirement for independence has been dropped in English law Section 24 (1)(a) Arbitration Act 1996 (England) Court may remove an arbitrator on the grounds that circumstances exist that give rise to justifiable doubts as to his impartiality Laker Airways v FLS Aerospace [1999] 2 LLR The test is an objective one The court must find that circumstances exist, and are not merely believed to exist; and that those circumstances must justify doubts as to impartiality. An unjustifiable or unreasonable doubt is insufficient: it is not enough to say that one has lost confidence in the arbitrators impartiality. Justifiable doubts are sufficient: not necessary to prove actual bias Arbitration laws and rules impose a duty of disclosure of all facts or circumstances that may give rise to justifiable doubts as to the arbitrators impartiality or independence

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Article 12(1) 2006 UNCITRAL Model Law When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties unless they have already been informed of them by him IBA Guidelines on Conflicts of Interest in International Arbitration: To assist its members and the profession generally, the IBA has provided guidelines, setting out principles and examples of circumstances arbitrators should disclose in connection with impartiality and independence o The IBA guidelines do not have the force of law, but are now widely referred to o [1] Red List: Situations that will create a conflict of interest. However these are further divided into the non-waivable red list and the waivable red list Situations in the non-waivable red list give rise to a conflict of interest that automatically disqualified arbitrators from accepting or continuing their mandate, regardless of whether a party has challenged the arbitrator or not Situations in the waivable red list gives rise to a conflict of interest that must be disclosed. Arbitrators cannot continue to act unless parties agree otherwise o [2] Orange List: A non-exhaustive enumeration of situations which (depending on the facts of a given case) in the eyes of the parties may give rise to justifiable doubts as to the arbitrators impartiality or independence. The arbitrator is under a duty to disclose those situations and if parties fail to object, then they are understood to have accepted the arbitrator o [3] Green List: Covers situations which do not give rise to a conflict of interest and need not be disclose to the parties. No Automatic Disqualification: Being in a circumstance of lack of impartiality or independence does not mean that an arbitrator is automatically disqualified; he has to still make disclosure to the parties and let them decide whether to keep you or not . Arbitrators jurisdiction can be revoked by courts without the parties approval if he has already made his award o Burkett Sharp v Eastcheap Dried Fruit and Perera [1962] 1 LLR 267 o The court has no power to revoke an appointment against the will of the appointing party. It could in a proper case give leave for that party to revoke it. However once the arbitrator has made his award or the parties have settled the dispute or differences, his jurisdiction can be revoked, as he is functus officio. o HSMV Corp v ADI (1999) o Arbitrator named was from firm that represented one of the parties. Arbitrator did not conduct a check nor did he have knowledge that his firm had acted. The court held that there was constructive knowledge and the award was vacated

o o

4.4 Role of Chairman/Umpire Arbitrators may also serve as Chairpersons or Umpires. o [1] Chairman: The chairman is essentially part of the tribunal and may rule on procedural matters. He is usually also the person who is given the presiding vote in the event of a rare deadlock within the tribunal o [2] Umpire: A separate individual who is called upon in the event that the arbitrators are unable to reach a decision (for 2 man arbitral tribunals where deadlocks are common) Jurisdiction Crystallized Upon the Inability of Arbitrators to Reach Decision: The umpires jurisdiction only arises in t hose circumstances, otherwise he has no say in the proceedings until that stage Calling of Umpire Must be Provided For in Arbitration Agreement: There is generally no provision for arbitrators to appoint their own umpire in the event of deadlock. It must be stated that they can do so in the arbitration agreement Note that when parties appoint an arbitrator each, and the arbitration agreement provides that the two arbitrators shall appoint an umpire who will sit in the tribunal. Such an umpire is in substance not an umpire but a chairperson o Fletamentos Maritimos SA v Effjohn International BV [1997] ADRLJ 239 (Eng CA)

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Attempt to remove umpire who was present in meetings of arbitrators; one of the arbitrators gave evidence against counsel in separate proceedings before Commission for Racial Equality.

4.5 Courts Power To Remove An arbitrator may also be removed by the courts in certain grounds: o [1] Breach of a General Obligation o [2] Justifiable doubts to impartiality and independence o [3] Lack of requisite qualification E. Immunity of Arbitrators & Arbitral Institution

5.1 Immunity of Arbitrators Some arbitration laws provide arbitrators and institutions with an exclusion of liability provision to protect arbitrators and arbitral institutions from civil liability o Section 25 International Arbitration Act o An arbitrator shall not be liable for negligence in respect of anything done or omitted to be done in the capacity of arbitrator; and any mistake of law, fact or procedure made in the course of arbitral proceedings or in the making of an arbitral award o Section 25A Internaitonal Arbitration Act o The appointing authority, or an arbitral or other institution or person designated or requested by the parties to appoint or nominate an arbitrator, shall not be liable for anything done or omitted in the discharge or purported discharge of that function unless the act or omission is show to have been in bad faith o The appointing authority, or any arbitral tribunal or other institution or person by whom an arbitrator is appointed or nominated, shall not be liable, by reason only of having appointed or nominated him, for anything done or omitted by the arbitrator, his employee or agents in the discharge or purported discharged of his functions as arbitrator Although the precise wording differs slightly between the various legislation, for obvious reasons immunity is not generally given in situations where there has been fraud or some similar intentional dishonesty on the party of the arbitrator While arbitrators and arbitral tribunals should be accountable for their actions or omissions, it is important they are able to perform their functions without fear of spurious liability claims. o Given the considerable sums of money frequently involved in international commercial arbitrations, potential exposure to civil liability claims could have detrimental consequences on the manner in which arbitrators and institutions conduct arbitrations o Sutcliffe v Thackrah [1974] AC 727 (UKHL) o Prior to the enactment of the 1996 English Arbitration Act, English courts have granted arbitrators broad common law immunity, recognizing only a (possible) exception for fraud. Those employed to perform duties of a judicial character are not liable to their employers for negligence o Arenson v Arenson [1973] 2 All ER 235 o Where national law classes arbitrators as judges, established case law has modified the judges absolute immunity to relative immunity solely applying to judicial acts

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Seminar 5: The Arbitration Proceedings


A. Overview of Arbitral Proceedings 1.1 Typical Procedural Steps The following list sets out in are in sequential order many of the most typical procedural steps from the commencement to the closure of an international arbitration o Commencement via notice of arbitration o Response to notice of arbitration o Appointment of arbitrators o Preliminary meeting between the arbitral tribunal and the parties at which procedural timetables and documents such as terms of reference might be prepared o Exchange of written submissions o Disclosure of documentary evidence o Oral hearings (with witness of fact and expert witnesses) o Post-hearing submissions o Deliberation of the arbitrators o Issuance of award o Setting aside or enforcement of the award in domestic courts However, given the flexible nature of arbitral procedures and party autonomy, not all of these steps will be featured in an arbitration and other steps not mentioned may also be adopted o Note that arbitration procedures may be divided into different phases dealing with jurisdiction, liability and quantum B. Commencement of International Arbitration 2.1 Commencement via Notice of Arbitration A notice is a document which demands that a certain dispute be referred to arbitration and typically includes details of the parties, the arbitration agreement invoked, the nature of the claim and remedy sought, and proposals for the appointment of arbitrators Notice Commences: The notice of arbitration or initiates/commences the arbitration process o Ad-Hoc Arbitration: By request or notice of arbitration to the other party would suffice o Institutional Arbitration: By request or notice of arbitration to both the other party as well as to the institution as well (based on the institutional rules) Date of Commencement: The date of commencement of arbitration varies accordingly o Article 21 2006 UNCITRAL Model Law: o Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commenced on the date on which a request for that dispute is to be referred to arbitration is received by the respondent. o Ad-Hoc Arbitration: when the notice is received by the other party o SIAC, ICC, CIETAC Rules: when the notice is received by the secretariat o American Arbitration Act: when the notice is received by the other party Legal Fiction of Deemed Receipt: Article 3 of the Model Law provides a legal fiction whereby any written communication (including a notice) is deemed to have been received if it is delivered to the addressees place of business, habitual residence or mailing address, or last known. o Article 3(1) 2006 UNCITRAL Model Law o Any written communication is deemed to have been received if it is delivered to the addressee personally or if it is delivered at this place of business, habitual residence or mailing address; if none of these can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is s ent to the addressees last-known place of business, habitual residence or mailing address by registered letter or any other means which provides a record of the attempt to deliver it. o Communication is deemed to have been received on the day it is so delivered Reasonable Steps to Notify: Parties need to take reasonable steps to notify the other party of the commencement of arbitration to so that the other party is heard and is able to answer the case.

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No Judgment in Default for Arbitration: Unlike court proceedings where if parties fail to show up, the court is allowed to give judgment in default, arbitrators are not allowed to do so in the case of arbitration Legal Fiction of Deemed Receipt May Be Insufficient: However, despite this legal fiction, the courts have often found that it may be insufficient Skorimpex Foreign Trade v Lelovic Co (1991) CLOUT Case 384 In a case where the address of the party to be notified could not be found, a court held that all reasonable steps should be made by a party to inquire into the location of the recipient and communications should be addressed to all the recipients known addresses. Such inquiries have been held to include searches in available registers to determine the recipients current address Case 4ZSH/99 (2000) CLOUT Case 402 The existence of local regulations deeming dispatch of documents as sufficient proof of delivery does not necessarily override the requirement set out in Article 3. An award made in Russia against a German corporation was refused enforcement in Germany when it was shown that the claimant had not made inquiries to ascertain the respondents current address CLOUT Case 870 (2005) Germany In a case before a German court, the respondent resisted enforcement of an award, arguing that it had neither received the request for arbitration nor the award, because these communications were sent to the address for service indicated in the agreement, without further checking the actual location of the respondent. The court rejected the challenge, ruling that the arbitral tribunal had no duty to investigate whether the address indicated in the agreement was accurate. Award enforced. Hence what is normally done when there is silence is that they must make a search and serve the notice everywhere (to the directors, the offices, the warehouses etc). Then can be it said that all reasonable steps have been taken to inform the other party of the commencement of arbitration All that is necessary is for the other party to reply: the purpose of these acts is to entice the other party to reply to signify their receipt of notification, regardless of whether it is positive or not or in any form

C.

Statutory Time Bars

3.1 Statutory Limitation Periods A claim may be barred by reason of a statutory limitation period however the scope of the limitation period defers from country to country o E.g. Contractual time bar is 6 years in Singapore, and it is 2 years in China However, the question as to which countries time bar to apply would depend on firstly whether there is a delineation between the substantive law of the contract and the lex arbitri o Substantive Law of Contract = Lex Arbitri: When the substantive law of the contract and the lex arbitri are the same, then the limitation period of that countrys law will apply E.g. meaning that if the substantive law of the contract and the lex arbitri is Singapore, the applicable limitation period for contractual claims is 6 years o Substantive Law of Contract =/= Lex Arbitri: When there is a distinction as to the substantive law of the contract and the Lex Arbitri, the question of which countrys limitation period is to apply would depend on whether ones courts considers if the laws of limitation periods is procedural or a substantive law of the contract Approach Adopted By The Courts: Which limitation period law should apply would depend on the attitude of the courts of the place of arbitration Old Section 8A(1) International Arbitration Act 2001 Tribunal is obliged to apply the same approach that the Singapore Courts would take to the application of the provisions of the Limitation Act at the time of the arbitration proceedings in question [1] Limitation Period Law Is Procedural: The common law courts have historically considered limitation period laws as procedural in nature. Hence

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according to the principle that a forum applies its own procedure, the forum will apply its own limitation period even if the claim is governed by foreign law E.g. A Chinese contract that is arbitrated in Singapore will apply the limitation period of Singapore law instead of that under Chinese law Section 6(1) Limitation Act Limitation period for actions founded on a contract shall be 6 years from the date on which the cause of action accrued [2] Limitation Period Law is Substantive: Civil law courts have generally regarded limitation period laws as substantive in nature; and that the applicable limitation period is that of the substantive law governing the claim . E.g. A Chinese contract that is arbitrated in Singapore will apply the limitation period of the substantive law governing the claim: that being Chinese law, instead of the law of the forum, Singapore law Modern Trend Towards Substantive: The modern approach appears to veer away from the historical common law approach. Hence, major common law jurisdictions have enacted legislatures moving towards treating the limitation period as a substantive law of the contract S 8A(1) International Arbitration Act The Foreign Limitation Periods Act 2012 shall apply to arbitral proceedings as they apply to any Singaporean Court Section 3(1) Foreign Limitation Periods Act 2012 Where a substantive claim is governed by foreign law, the Singapore Courts are obliged to apply the limitation period of that foreign law, and not that of Singapore law as per the Limitation Act No Retrospective Effect For New Amendments in Singapore: Note that the FLPA does not have retrospective effect and cannot affect arbitrations commenced before the commencement of the act Section 9 Foreign Limitation Periods Act 2012 Nothing in this Act shall affect any action, proceedings or arbitration commenced before the commencement of this Act (1 June 2012). Anything before shall be governed under Section 6(1) Limitation Act Lawrence Boo suggests that the safest way to approach such a dilemma is to apply the shortest of the two limitation periods and to commence arbitration within that period so as to avoid potential issues of time bars Limitation Period Functions As Substantive Defence: Hence depending on the limitation period applied, it functions as a substantive defence against the claim. o If proved the claim must be dismissed: If it is shown that the arbitration is commenced out of time, the claim must be dismissed however good the claim on the merits may be o Issue of whether claim is time-barred within the jurisdiction of the tribunal Grimaldi Compagna Di Navigazione SpA v Sekihyo Lines [1999] 1 LLR 708 Held that the applicants and respondents failure to appreciate within the time period that the Hague Rules time bar in Article III rule 6 operate din respect of a time-charterers claim against the ship owners under a time charger was quite insufficient to show that its applicability was a circumstance outside the reasonable contemplation of the parties since the contract was governed by English Law o Jurisdiction of the arbitrator unaffected: Even if the claim is time barred the jurisdiction of the arbitrator to pronounce on it is unaffected The World Era [1992] 1 LLR 45 o Mere submission to arbitration is not waiver of defence of limitation: The limitation period and time prescription is a substantive defence and just because parties have agreed to go to arbitration after the limitation period does not mean that they have waived their right to plead the defence

3.2 Contractual Limitations

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Parties can also contractually agree to other time bars which are usually upheld by the courts as giving effect to the parties interests o [1] Clauses Barring Claim: Parties can draft clauses that bar their claims and is upheld if it is clear and bars the claim within a certain period of time Atlantic Shipping & Trading v Louis Dreyfus & Co [1922] LLR 446 Clause upheld: Any claim must be made in writing and claimants arbitrator appointed within three months of final discharge and where this provision is not complied with the claim shall be deemed waived and absolutely barred o [2] Clauses Barring Right to Go to Arbitration: The courts have also recognized clauses that bar the claim in arbitration but still allows parties access to go to the courts Indian Oil Corp v Vanol [1992] 2 LLR 563 Clause contained time for notice of claim and for commencement of arbitration but contract also had separate Indian law and arbitration clause as well as English law and all disputes jurisdiction clause. English CA held that time bar operates as preliminaries to the arbitration clause and would not affect the action commenced in England. Application To Court To Extend Contractual Time Bar in Domestic Cases: Often domestic law would allow application to extend the contractual time bar in domestic cases when parties miss them. These are findings based on certain vitiating circumstances to alleviate hardships such as when the arbitrator is sick or the contracted time period is too short o Article 10 (1) Arbitration Act o Where the terms of an arbitration agreement to refer future disputes to arbitration provided that a claim to which the arbitration agreement applies shall be barred unless: [A] Some step has been taken to being other dispute resolution procedures which must be exhausted before arbitral proceedings can be begun [B] Notice to appoint an arbitrator is given [C] An arbitrator is appointed; or [D] Some other step is taken to commence arbitral proceedings o Within a time fixed by the agreement and a dispute to which the agreement applies has arisen, the Court may, if it is of the opinion that in the circumstances of the case undue hardship would otherwise be caused, extend the time for such period and on such terms as the Court thinks fit Parties Waive Contractual Time Bar: When both parties agree to waive the contractual time bar, they can still commence their arbitration even though their own stipulated contractual time bar has passed. However parties are still subjected to the ceiling of the statutory time bar

D. Conduct of Proceedings 4.1 Rules Governing Proceedings Parties are free to agree on the procedure to be followed by the tribunal, however in the event that parties do not stipulate, the tribunal is the master of its own procedure (ad-hoc) o Article 19 2006 Model Law o Failing such agreement by parties of the procedure to be followed, the tribunal may, subject to the provisions of this Law, conduct the arbitration in such manner, as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence However, should parties agree on the application of certain institutional rules, the tribunal will have to conduct the proceedings under those rules o Certain institutional rules may allow the arbitrators leeway to decide, or to turn to the parties to ask them how they would like to proceed 4.2 Pleadings and Statements Parties are mandated to provide statements or pleadings setting out their claim and defence and are to be submitted in addition to the commencement of arbitration. Parties are to plead everything; the applicable law for the proceedings, the facts, the relief sought and the evidence o Article 23 2006 UNCITRAL Model Law

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Within the period of time agreed by the parties or determined by the tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of such statements. Parties are Obliged to Furnish Statements: Evidence is important because arbitrators would like to know the case up front so that they can formulate the issues early (facilitates the case) o The arbitral tribunal is allowed to set its own rules, even those with regards to evidence taking and the examination of witnesses Civil Law countries tend not to have examination of witnesses and resembles more of a seminar between the disputing parties However, not there is an increasing fusion between the Civil and Common law where they are both more willing to listen to witnesses and admit their statements/oral testimonies, and also allowing them to be questioned by the other parties

4.3 Oral Hearings v Documents-Only Arbitration The tribunal is given the authority to decide whether there will be oral hearings or whether the decision will be based solely on documents. o Article 24(1) 2006 UNCITRAL Model Law o Subject to any contrary agreement by the parties, the tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials. Party Requested Oral Hearing: If however a party requests an oral hearing, whether for the presentation of evidence or for oral argument, then, in the absence of a prior agreement between the parties to the contrary, the tribunal must comply with the party s request o Article 24(1) 2006 UNCITRAL Model Law o However, unless the parties have agreed that no hearings shall be held, the arbitral tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested by a party o CLOUT Case No. 659 (2002) Germany o A failure by the tribunal to hold a hearing despite a request from a party resulted in the setting aside of the arbitral award on the basis that the refusal to hold hearings constituted a violation of Article 24(1) Tribunal Not Bound To Hold Hearing Unless Request Made: Likewise, an arbitral tribunal is not bound to hold a hearing unless such a request is made o Asuransi Jasa Indonesia v Dexia Bank (2006) SGCA o The tribunals decision based on the parties written submissions was later challenged on the basis that no hearings have been held. The court held that neither party requested an oral hearing and therefore no party would be entitled to thereafter complain for lacking the opportunity to orally address the tribunal However professor suggests that the tribunal should just commence oral hearings anyway to satisfy the provision under Article 18 to give the parties the maximum opportunity to be heard and also the last chance to show up in the event that one party has consistently not appeared o Article 18 2006 UNCITRAL Model Law o The parties shall be treated with equality and each part shall be given a full opportunity of presenting his case Documents-Only Arbitration: In a documents-only arbitration, there is no need for an oral presentation by lawyers or the giving of oral evidence of the parties when the arbitrator can come to a conclusion with documents alone o Not common for International arbitration, but more for shipping cases of small value (charter party disputes, delivery delays and disputes etc.) 4.4 Summary Hearings or Full Hearings The tribunal may also decide between a summary hearing (no oral testimony by the witness), or a full hearing with cross-examination of witnesses by opposing counsel

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4.5 Expedited Proceedings In certain circumstances, parties to arbitration may desire a swift resolution of their dispute. The principle of party autonomy allows them to agree on an expedited procedure o Parties may prefer faster dispute resolution at the possible sacrifice of decisions qu ality o A more cost effective process is an important feature of expedited arbitration, particularly where the amount in dispute is relatively small o The rapid determination of legal rights has also been considered positive in the sense that it reduces prolonged uncertainty Expedited rules may be contained within the standard arbitration rules of an institution and may take the form of a separate body of self-contained rules on expedited procedure, or they might be specifically formulated by the parties themselves. Examples include: o Expedited constitution of the tribunal o Requirement that the proceedings be conducted by a sole arbitrator o Shortened time limits for submission of briefs o Documents-only determinations without oral hearings o Relatively short period within which the award must be issued Certain arbitration rules specifically provide for expedited proceedings in cases involving less than a specific disputed amount o SIAC Rules o Small claims under a certain value may go for an expedited proceeding where the time frame for submission of statements, disclosure, and delivery of award is shorter E. Statutory Powers of Tribunal

5.1 Statutory Powers of Tribunal Under the Model law the statutory powers of the tribunal are very limited to the termination of proceedings if claimants fail to serve claims, or to proceed with arbitration if respondent fails to serve defence or fail to appear at hearings or produce evidence in defence o Article 25 2006 Model Law o Unless otherwise agreed by the parties, if without showing sufficient cause, [A] The claimant fails to communicate his statement of claim in accordance with article 23(1), the arbitral tribunal shall terminate the proceedings [B] The respondent fails to communicate his statement of defence in accordance with Article 23(1), the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimants allegations [C] Any parts fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it F. Place of Arbitration

6.1 Seat of Arbitration The seat (or place) of arbitration is the jurisdiction in which arbitration takes place legally. o Lex Arbitri: An arbitration will be conducted according to the arbitration law of the seat of arbitration, even if hearings or other meetings are held elsewhere. o Nationality of Award: the seat of arbitration will determine the nationality of the award and its enforceability under the New York Convention Seat of Arbitration =/= Seat of Hearing: The legal location (seat of arbitration) of the arbitration must be distinguished from the location of any physical hearings or meetings o Article 20(2) 2006 UNCITRAL Model Law o While Article 20(1) deals with the designation of the seat/place of arbitration, 20(2) makes clear that the seat/place of arbitration is distinct from the place or venues where hearings may be conducted. Courts have accepted that the term place of arbitration is a juridical concept ad should not be confused with the geographical locale where the hearings may be conduct; that the place of hearing is not determinative of their parties expressed contrary intention

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PT Garuda Indonesia v Birgen Air (2002) SGCA Arbitration clause stated that the seat of arbitration is in Indonesia. Arbitration was held in Singapore because Indonesia was in unrest. Award given and the party sought to set aside the award in Singapore Courts. Held that Singapore was not the seat of arbitration; its is merely the place of hearing. The seat of arbitration is declared in the arbitration agreement and will not change o Virgilio De Agostini v Milloil SPA (1999) o Seat as per agreed in the Terms of reference, not place of oral hearing o Case 6 Sch 2/99 (2000) CLOUT Case 408 o Arbitrators auditing and subsequent negotiations with both parties took place in Zurich; the effective place of arbitration was held not to be situated in Germany Provision of Alternative Seats: When the agreement provides for alternative seat as the rewards might be uncertain and fruitless to the parties o Tema-Frugoli SpA v Hubei Space Quarry Industry Co Ltd o Clause held that if claim commenced by Chinese party, and then seat is in China. If claim commenced by Italian part, and then the seat is in Italy. Used commonly in the past because parties dont expect to enter into dispute. o What happens is that both parties commenced in their own state, and did not participate in the others; each also got their own award. The Italians went to the Italian court to enforce the award and it was granted. o The Chinese party got an award and tried to enforce it in Italy as well and faced an argument that the court has already granted an earlier award by the Italian party, how then can the state enforce the Chinese award, it shall not be consistent! However court enforced the award under NYC since Italy and China were parties, and both awards crossed out each other; hence both parties gained nothing. Provision of Conflicting Seats: When the agreement provides for conflict lex arbitri. The courts have tried to save it by interpreted one law as subordinate to the law of another o Union of India v McDonnell Douglas Corp o Agreed to a lex arbitri of India (Indian Arbitration Act), however states that the seat is also in London. However by virtue the seat in London, the lex arbitri is also in London. There is a direct conflict. Court held in the English Courts that English law does allow at least the theoretical possibility that parties are free to chose to hold their arbitration in one country but subject to the procedural laws of another, but against this is the undoubted fact that such an agreement is calculated to give rise to great difficulties and complexities. The jurisdiction of the English court under the AA over the arbitration In England cannot be excluded by an agreement between the parties to apply the laws of another country, or indeed by any other means unless such is sanction by those acts themselves. However, if the court were convinced that the parties had chosen.. FIND o Hence chose to interpret the Indian Arbitration Act rules as subordinate to the English rules. Determine by Tribunal: If the parties did not state the seat of arbitration, Model Law Art 20 allows the tribunal to decide where to fix it. Institutional rules also provide for this. However generally the decisions as to the tribunal tend to be unsatisfactory to the parties and may be challenged. It is better to decide where you want the seat of arbitration to be

o o

G. Evidence in Arbitration 7.1 Evidence in Arbitration Unlike court proceedings, arbitrators are not bound by the laws of evidence, rather the tribunals power of taking evidence it is substituted under the Model Law o Article 19 2006 UNCITRAL Model Law o Failing such agreement by parties of the procedure to be followed, the tribunal may, subject to the provisions of this Law, conduct the arbitration in such manner, as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence The following areas of evidentiary procedures have been determined by arbitrators o [1] Burden of Proof: The burden of proof always lies with the party making the claim

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o o

o o

[2] Investigative Powers: An arbitrator may have investigative and inquisitorial powers as a result of the fusion of civil and common law. This depends on the domestic law or rules adopted (S 12(3) CIETAC Art 37) [3] Affidavit Evidence and Sworn Statements: In practice, most witnesses give evidence by affidavits or sworn statements. [4] Limitation of Number of Witnesses: The tribunal also has the power to limit the number of witnesses, however they usually slow to do so because they want to give the parties maximum opportunity to present their case [5] Discovery of Documents: Tribunal can also order the discovery of documents within the possession or control [6] Subpoena of Witnesses: Witnesses may be subpoenaed by the tribunal and ordered to attend the proceedings. Like you know when a witness doesnt want to come but you need his evidence, you can go to the tribunal and file a subpoena to order him to come. Similar sanctions as in any court proceedings To give oral evidence/ To produce documents: The danger is that do you dont know what he is going to say when he is subpoenaed. *7+ Courts Assistance: Tribunal or party can also apply to the request the courts power to give assistance in the taking of evidence Article 27 2006 UNCITRAL Model law The tribunal or a party with the approval of the tribunal may request from a competent court of this state assistance in taking evidence. The court may execute the request within its competence and according to its rules on taking evidence

H. Joinder of (Third) Parties and Consolidation 8.1 Joinder of Third Parties and Consolidation In arbitration generally you cannot involve third parties because he is a stranger to the arbitration agreement o The reason for doing so its to protect the covenant and confidentiality/privacy, and more importantly it is a breach of Article 5 of the New York Convention, that the arbitral procedure must be in accordance with the agreement Tribunal also has no power to consolidate disputes o ICC 2012, Art 7 on joinder prior to constitution of tribunal; o Art 10 on consolidation where claims under same agreement or between same parties with same legal relationship Hence third party proceedings and consolidator is generally not allowed, unless an exception exists like a third party beneficiary like in CRTPA in Singapore. I. Multi-Party Issues

8.2 Multi-Party Issues Where more than 2 parties are in dispute (e.g. shareholder disputes; consortium arrangements) o Appointment of tribunal needs for equal treatment of all the parties . Strictly speaking everyone is allowed to appoint his or her own arbitrator. But in reality try to allow for a sufficient balance of power is difficult, hence when parties cannot agree, the institution will decide. o Counterclaims: ??? o Cross-claims: counterclaims arent as bad as cross-claims. No real rules have been set out so far. It is a general weakness of the arbitration system J. Interim Measures of Protection/Preservation

8.3 Tribunals Power Very wide powers nowadays; on par with a high court judge in Singapore, but no penal powers; It can issue orders for interim measures (injunctions, anti-suit injunctions etc)

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Emergency Arbitrator: not really an arbitrator (since he cannot make decisions on the merits of the case) but an individual called upon immediately to issue interim measures before the arbitral tribunal is constituted o SIAC r 26.2 Schedule 1 Emergency arbitrator o ICC Art 28 (Conservatory measures) and 29 (emergency arbitrator) o MAL 2006 Revision Chapter 4 Art 17 allows for interim measures and ex parte preliminary orders to preserve statute quo Preliminary order self-destructs after 20 days to maintain status quo and freeze assets before parties can dissipate their assets as the claimant you must bring this to the notice of the other party as quickly as possible then the party can come at any time to set it aside Not applicable in Singapore because we have a wide section 12 powers, so we do not need chapter 4 to tell us when and how to order, there are no rules to control the exercise of powers and we can do anything we want.

8.4 Courts Power 12 A, power to issue interim measures in support of arbitration - we can issue interim measures, irrespective of where the seat of arbitration is. Mareva injunction also allowed to prevent a dissipation of assets

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Seminar 6: The Decision Making Process


A. Order of Priority 1.1 Typical Mode of Assessment Typically when considering the arbitration agreement before the tribunal, the decision making process would involve the following three steps: o [1] Looking At the Contract: What does the contract stay and what do the parties want Are there any conflicting and contradictory reference to general law such as a jurisdiction clause and an arbitration clause in the same contract? Are there any specific request for the arbitration (number of arbitrators etc) Are there any condition precedents to the arbitration (multi-tiered clauses) o [2] Look for Contractually Incorporated Rules: Have parties selected any arbitral rules to assist the arbitration if silent, it is an ad-hoc arbitration under only on the lex arbitri o [3] Lex Arbitri: To ascertain the extent of application of the lex arbitri because parties may chose to apply their own rules and requests under parts [1] and [2] Are there any mandatory provisions that parties cannot derogate from in the lex, regardless of their choices B. Laws Which May Impact Arbitration 2.1 Governing Laws Typically the laws which may impact an arbitration proceeding would centre around these 5 primary areas of law: o [1] Personal Law: The law that governs the capacity of parties to enter into an arbitration agreement Subjective Arbitrability Authorization of companies in the case for commercial contracts o [2] The Arbitration Agreement: Usually the law governing the formation and validity of an arbitration agreement Null and void, invalid and incapable of performance o [3] Procedure of the Arbitration: referred to as the curial law, or the lex arbitri Concerned with what is required or mandated under the lex arbitri o [4] Underlying Commercial Contract: referred to as the proper law, the governing law or the applicable law, or the law that governs the substantive rights of the parties If it is not supplied by parties, conflicts of law principles are applied to resolve which governing law is to be used o [5] Supportive and Enforcement Measures 2.2 Basis of Determination of Issues in Dispute The basis of determination of disputes is the law it must be fixed and recognizable o Orion Compania Espanola de Seguros v Belfort voor Algemene Verzekgringeen [1962] o Arbitrators must in general apply a fixed and recognisable system of law, which primarily and normally would be the law of England they cannot be allowed to apply some different criterion such as the view of the individual arbitrator or umpire on abstract justice or equitable principles The arbitrator is not allowed to deviate from the law. He has to decide according to the legal rights of the parties and not on his own assessment of fairness unless expressly provided to do so o In Faubert & Watts v Temagami Mining Co Ltd (1959) Canada o It is the duty of the arbitrator, in the absence of express provision in the submission to the contrary, to decide the question submitted to him according to the legal rights of the parties, and not according to what he may consider fair and reasonable under the circumstances. Just because the parties do not think its fair, they are not allowed to go behind the original contract itself, which clearly established the applicable law to find their own implied contract. Ultimately the choice of what laws to apply is elected by the parties (party autonomy)

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o o

Art 28(1) MAL Rules Applicable to Substance of Dispute The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute, Any designation of the law or legal system of a given State shall be construed, unless otherwise expressed, as directly referring to the substantive law of that State and not to its conflict of laws rules.

C.

Equity Clauses

3.1 What are Equity Clauses Equity clauses are clauses which state that the arbitrators are to decide based on notions of equity (fairness and reasonable under the circumstances) and not strict rules of law. Such clauses are historically not upheld o Orion Compania Espanola de Seguros v Belfort voor Algemene Verzekgringeen [1962] o Clause The Arbitrators and Umpire are relived from all judicial formalities and may abstain from following the strict rules of law. They shall settle any dispute under this Agreement according to an equitable rather than a strictly legal interpretation of its terms and their decision shall be final and not subject to appeal . o Court held as above, that it is not for the judges to determine on fairness (equitable concepts; it cannot oust the courts jurisdiction), but on fixed and recognizable law The phrase shall not be bound by the strict rules of law may be upheld because they only oust the technicalities and strict construction of the law . The substantive elements of the curial jurisdiction are still present in the agreement. o Eagle Star Insurance Co ltd v Yuval Insurance Co Ltd [1978] ECA o Clause If any question or dispute shall arise the same shall be referred to Arbitration The Arbitrators and Umpire shall not be bound by strict rules of law but shall settle any differences referred to them according to an equitable rather than a strictly legal interpretation of the provisions of this Agreement o Court upheld the clause The arbitration clause seemed to be entirely reasona ble in that it did not oust the jurisdiction of the Courts but only the technicalities and strict construction; and the arbitration clause in all its provisions was valid and of full effect including the requirement that the arbitrators should decide on equitable grounds rather than strict legal interpretation In the UK, phrases which treat the agreement as contract of honour; not a legal obligation are generally not upheld, but may be valid if its interpretation is restricted to granting arbitrators liberty to depart from the strict and literal meaning of the words using in the clause. Courts can strike out the offending bits, give effect to the intentions of the parties o Home Insurance & St Paul fire & Marine Insurance v Administratia Asigurarilor [1983] o Clause Article 14. Arbitration The award of the Arbitrators or the Umpire shall be final and binding upon all parties without appeal. This treaty shall be interpreted as an honourable agreement rather than as a legal obligation and the award shall be made with a view to effecting the general purpose of this treaty rather than in accordance with a literal interpretation of its language o Court refused to uphold the clause it is plain that it was the common intention that there should be an enforceable obligation to arbitrate and to abide by the award. All that was intended was to free the arbitrators to some extent from strict rules and this, on the authority of the Eagle Star case, is permissible *However+Had I reached the conclusion that Art 14 goes further than is permissible, I should also have concluded that the contention failed. The intention that the agreement should be legally binding appears to me so clear that if and insofar as the arbitration clause is to be construed as going further than the law permits in freeing the arbitrators from the strict rules of law I should either have struck it out altogether or excised the offending parts of it o In Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd (in liq) [1989] o Clause The Arbitrators and the Umpire shall interpret this Reinsurance as an honourable engagement and they shall make their award with he view to effecting the

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general purpose of this Reinsurance in a reasonable manner rather than in accordance with a literal interpretation of the language o Clause upheld but qualified An arbitration clause which purported to free the arbitrators to decide without regard to the law and according to, for example, their own notions of what would be fair would not be a valid arbitration clause; the clause did not do any such thing; the clause did no more than give the arbitrators liberty to depart from the ordinary and literal meaning of the words used in the clause In Canada, clauses that purport that the agreement was a honourable agreement are considered equity clauses and hence not upheld. o CLOUT Case No 507 Liberty Reinsurance Canada v QBE Insurance and Reinsurance 2002 o An honourable agreement (i.e. a non-legally binding mutual understanding between the parties) is sufficient to constitute an express authorisation to decide a case ex aequo et bono (from equity or conscience)

1.1 Amiable Compositeur and Awards Made Ex Aequo Et Bono However, now the tribunal may decide ex aequo et bono or as amiable compositeur if the parties agree to do so (reflect the civil law position) o Art 28(3) MAL Rules Applicable to Substance of Dispute o The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so Clauses retained those words in the text because the drafters could not agree to the definition. Hence Lawrence Boo cautions that if the clause says justice and fairness be wary, but if you use ex aequo et bono or as amiable compositeur then its ok D. Application of International Law or Lex Mercatoria 4.1 Applicability of International Law It is recognized that international law, especially those pertaining to lex mercatoria (merchant law a system of custom and best practice for commercial contracts within the common law) may apply in the decision making process of the arbitration o DST v Rakoil [1987] 2 SLLR 246 ECA o Internationally accepted principles of law governing contractual relations was held to have applied. The decision was subsequently reversed on a garnishee issue in favour of Shell as interveners however the principles of jurisdiction were not affected o Art 28(4) MAL Rules Applicable to Substance of Dispute o In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of trade applicable to transaction o X v Z (2009) Supreme Court of Switzerland o Court accepted that a tribunal may draw on the practice prevailing under the 1980 UN Convention on Contracts for the International Sale of Goods and the 2004 International Institute for the UNIDRIOT Principles of International Commercial Contracts E. Substantive Law in Arbitration

5.1 Applicability of Substantive Law The first question that needs to be tackled is which substantive law is to be applied to arbitration. Courts will first considered whether it is expressly contemplated and provided for by the parties in the arbitration agreement or contract Parties agreement is generally decisive such is when the substantive law is agreed to in the contract, or expressly chosen by the parties in the agreement. o Vita Food Products v Unus Shipping Co Ltd [1939] AC 277 o Express choice of law clause in a contract should be honoured as long as the agreement was bona fide and not against public policy o Peh Teck Quee v Bayerische Landesbank (1999) SGCA o SGCA affirmed the Vita Food principle that express choice of law of the parties will be virtually conclusive unless it is not bona fide or legal. The limitations to party autonomy are narrowly circumscribed. It will be very difficult to demonstrate a case of absence of

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bona fides outside the situation where the sole purpose of the contractual choice of law was to avoid the application of the law otherwise applicable to the contract. The application of the foreign law chosen by the parties will also be denied if the application of that law will be contrary to the fundamental public policy of the forum However, if no choice is made by parties, it is then to be determined by the tribunal in accordance with conflict of law principles which is considers applicable o Art 28(2) MAL Rules Applicable to Substance of Dispute o Failing and designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable o DST v Rakoil [1987] 2 SLLR 246 ECA o Pacific Recreation Pte Ltd v SY Technology Inc and Anor [2008] SGCA 1 o There were three stages in determining the governing law of a contract. The first stage was to determine if there was an express choice of governing law. The second stage was whether an intention of the parties to choose a governing law could be inferred. If the court was faced with a multiplicity of factors (parties nationalities, currency of transaction, language of document, place of execution), each pointing to a different governing law, then the proper approach would be to move on to the third stage, which was to determine the law with the closest and most real connection with the contract. The aim of the third stage was not to divine any "intent" of the parties, but to consider, on balance, which law had the most connection with the contract in question and the circumstances surrounding the inception of that contract. Equal weight ought to be placed on all factors, even those that would not, under the second stage, have been strongly inferential of any intention as to the governing law. The "closest and most real connection" test was the same as the objective test of what the reasonable man ought to have intended if he had thought about the matter at the time when he made the contract Determining what system of law has the closest and most real connection: While Singapore will find the system of law which the contract has the closet and most real connection, such is still not an easy task with the multiplicity of facts o [1] Lex arbitri a factor in determining choice of proper law: The choice of place of arbitration is a factor in determining the choice of proper law and not determinative Compagnie dArmement Maritime SA v Compagnie Tunisienne de Navigation SA [1971] AC 572 Shipment of crude oil. Contract says the flag of the vessel carrying the goods shall govern that contract. Contract also says dispute is to be settled by arbitrators in London. Court had to look at all the connecting factors and the arbitration clause was one factor connecting it to English law. The UKHL held it to be French law. The Arbitration clause should be taken into consideration merely as indicating some actual connection with the transaction has with English law, and not as an exercise of a choice of English law as the proper law of the contract; for it to treat it as that would be contrary to the intention of the parties. o [2] Absence

No choice of place? Woh Hup (Pte) Ltd v Property Development Ltd [1991] 3 MLJ 82 Held to be in Singapore because of all three (no choice of seat of arbitration, proper law of contract, proper law of arbitration agreement) based on the residency of the arbitrators

See Peter Chow, Issues In International Arbitration: Application Of "Foreign" Legislation Const. L.J. 2004, 20(5), 262-277 62

Quarella SpA v Scelta Marble Australia Pvt Ltd [2012] SGHC 166
Question does a purportedly wrong interpretation of the choice of law clause (chosen by the parties to govern their distributorship agreement) by a tribunal justify a setting aside of an award under Articles 34(2)(a)(iii) 34(2)(a)(iv) of the Model Law?

Conflict of law rules Dicey and Morris, The Conflict of Laws (14th Ed): Rule 145 The term proper law of a contract means the system of law by which the parties intended the contract to be governed, or, where their intention is neither expressed nor to be inferred from the circumstances, the system of law with which the transaction has its closest and most real connection. Sub-rule 1 When the intention of the parties to a contract, as to the law governing the contract, is expressed in words, this expressed intention, in general, determines the proper law of the contract. Sub-rule 2 When the intention of the parties to a contract with regard to the law governing the contract is not expressed in words, their intention is to be inferred from the terms and nature of the contract, and from the general circumstances of the case, and such inferred intention determines the proper law of the contract. Sub-rule 3 When the intention of the parties to a contract with regard to the law governing it is not expressed and cannot be inferred from the circumstances, the contract is governed by the system of law with which the transaction has its closest and most real connection. Convention On The Law Applicable To Contractual Obligations opened for signature in Rome on 19 June 1980 (80/934/EEC) Article 4 characteristic performance sale of goods delivery of goods employment work done

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See, however, James Miller & Partners Ltd, Appellants v Whitworth Street Estates [1970] 2 WLR 728 [Eng HL) place of performance cannot prevail against chosen form of contract which incorporates governing law E I Sykes & M C Pryles, Australian Private International Law (3rd Ed) 1991, Law Book Co [pp 141-161]

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Seminar 7: The Award


A. The Arbitration Award 1.1 Nationality of the Award An arbitral tribunals core function is to make decisions that resolve the dispute submitted to it. These determinations are expressed in written documents called the award. Nationality: The first consideration that must be made is to establish where the award is made as this would impact its enforceability when we consider it under the New York Convention. There are traditionally two approaches to establishing the nationality of an award: o [1] Place/Seat of Arbitration: It is now commonly accepted that the award is made at the place or the seat of the arbitration Article 31(3) 2006 UNCITRAL Model Law The award shall state its date and the place of arbitration as determined in accordance with Article 20(1) (the place/seat of arbitration). The award shall be deemed to have been made at that place o The place/seat of arbitration is as determined under the Terms of Reference in the contract between the parties and not the place of hearing: Virgilio De Agostini v Milloil SpA (2000) Seat as per agreed in terms of reference and the award, not place of hearing PT Garuda Indonesia v Birgen Air (2002) SGCA Arbitration clause stated that the seat of arbitration is in Indonesia. Arbitration was held in Singapore because Indonesia was in unrest. Award given and the party sought to set aside the award in Singapore Courts. Held that Singapore was not the seat of arbitration; its is merely the place of hearing. The seat of arbitration is declared in the arbitration agreement and will not change o Courts to Determine Effective Place/Seat of Arbitration If Terms Silent: In cases where the terms of reference are silent, the court is to determine the effective place of arbitration from the conduct of the proceedings Case 6 Sch 2/99 (2000) CLOUT Case 408 Arbitrators auditing and subsequent negotiations with parties took place in Zurich; the effective place of arbitration was held not to be in Germany o [2] Place Where Award is Signed: This approach is no longer applicable, however it still functions as the common law position that may be used as a fall-back in non-model law Hiscox v Outhwaite [1992] 1 AC 562 Conducted in England, but finally signed in France when the arbitrator retired. Held, that when one talks about where the award is made; the award is a culmination of a continuing process and the last act to establish where it is made, is where it is signed. An award is only perfected when it is signed. It is thus a French award 1.2 Scope and Nature of An Award While the arbitral tribunal is likely to make multiple decisions and deliberations throughout the proceedings, not all decisions of the tribunal are awards. An award must be one that resolves or impacts a matter of substance on the dispute between the two parties o Section 2 International Arbitration Act o An award is a decision of the arbitral tribunal on the substance of the dispute and includes any interim, interlocutory or partial award (excludes any orders or directions) o E.g. of non-award decisions: decisions on postponement or an order of discovery o Resort Condominiums International v Bowell (Australia) 118 ALR 655 o An award must decide some issues in dispute between the parties o Inforcia v CGI Information Systems & Management Consultants (2009) Canada o Courts have held that the term award connotes the decision of an arbitral tribunal that disposed of part or all of the disputes between the parties

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Ascertaining which decisions are awards and which are not is important as awards can be the subject of setting aside proceedings (under Article 34 of the Model Law) and can be recognized or enforced under the New York Convention. o [1] Decisions On Jurisdiction: Whether a decision on jurisdiction amounts to an award depends on the stage at which the decision was made and under what governing law. National Law Making Jurisdictional Decisions Into Awards: In certain states, decisions as to whether or not the arbitral tribunal has jurisdiction qualifies as an award. These countries tend to have statutes that make such issues an award, and it is not provided for under Article 16 of the Model Law Bursa Byksehir Belediyesi v Gris Insaat VE Mhendislik AS (2008) In the Netherlands Supreme Court, an arbitrators decision declining jurisdiction to rule that the claimants claim be dismissed for want of prosecution was held by a court to be an interim award affecting the substantive rights of the parties even though it may be technically classify as a procedural order Lawrence Boo notes that a decision as to jurisdiction that happens at the award stage should be considered as an award because the arbitrator also resolves all other substantive issues along with the jurisdictional challenge Preliminary Questions of Jurisdiction Under Article 16 Model Law: In comparison, in countries which adopt the Model Law, preliminary questions of jurisdiction are not regarded as awards PT Asuransi Jasa Indonesia v Dexia Bank S A [2006] SGCA The definition of an award under s 2 of the IAA was clear and did not include a negative determination on jurisdiction as It was not a decision on the substance of the dispute. On the contrary, a negative determination on jurisdiction was a decision not to determine the substance of the dispute, and therefore was not an award for the purposes of Article 34 of the Model Law o [2] Interim Measures: Not all interim measures are awards, while it may be good to enforce all interim measures by treating all interim measures as awards, states are not willing to do so Problem is that interim measures by themselves are not enforceable under the Chapter IV of New York Convention because they are treated not as awards. Hence there is a need for a separate enforcement convention under Article 17 of the Model Law to make it an award to allow it to be enforced Article 17(2) 2006 UNCITRAL Model Law (Under Chapter IV) An interim measure is any temporary measure, whether in the form of an award or in another form (could be an award or not), by which, at any time prior to the issuance of the award by which the dispute is finally decided Note that Singapore does not adopt Chapter IV of the Model Law and hence it does not have Article 17(2) under the lex arbitri. Interim measures might not be considered as an award at all in the case of Singapore Titling of the Document Is Not Conclusive: The use or absence of the word award on the document is not conclusive. The substance rather than the form is important as to the determination of whether something is an award or not o PT Asuransi Jasa Indonesia v Dexia Bank S A [2006] SGCA o The mere titling of a document as an award did not make it an award as defined by the Act. In this case, the court had to consider the substance of the Second Award to see whether it was a pure negative ruling on jurisdiction or a decision on the substance of the disputes.

1.3 Types of Awards During the course of arbitration, a number of different awards may be issued. o Section 19A(1) International Arbitration Act

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Unless otherwise agreed by the parties, the arbitral tribunal may make more than one award at different points in time during the arbitration proceedings on different aspect of the matters to be determined The main types of arbitral awards are final awards, partial awards, interim or provisional awards, and consent awards, as described below: o [1] Final Awards: The final award terminates Arbitral proceedings. A final award generally signifies that the arbitral tribunal has determined all issues (or all remaining issues) submitted by the parties and within the jurisdiction of the arbitral tribunal. Nothing more should be left for the arbitral tribunal to decide (not even, e.g. costs) Not to be confused with the finality and binding aspect of awards, as all awards made at different stages of the arbitration are final (dealt with belo w) o [2] Partial Awards: A partial award finally decides some but not every remaining disputed issue in the arbitration. Once it is delivered, other issues in the arbitration still remain to be determined For example, a partial award may state that the claimant is liable for breach of contract but may leave the assessment of the resulting damage and costs to be dealt with at another phase of the proceedings and subsequent awards o [3] Interim or Provision Awards: An interim or provisional award is a designation sometimes incorrectly used interchangeably with the term partial award. Interim or provisional awards more correctly denote a determination by the tribunal that is not final (one that does not settle a matter permanently) For example, an interim award would be one that orders interim measures of protection, such as restraining a party from disposing of property that is subject of the dispute pending the final award However, whether an arbitral tribunals decision ordering interim or provisional measures constitutes an award that may be set aside or enforced, particularly under the New York Convention, is not altogether settled

1.4 Finality of Awards Once an arbitral awards is issued, it is usually said to be final and binding on the parties. The decisions in awards are not mere recommendations to the parties but are decisions that the parties are obliged to follow and usually compel the performance of certain acts, such as paying compensation, performing a contractual obligation or surrendering property. An arbitrator cannot change his mind and parties cannot re-argue their cases o Section 19A International Arbitration Act o [1] An award made by the arbitral tribunal pursuant to an arbitration agreement is final and binding on the parties and on any persons claiming through or under them and may be relied upon by any of the parties by way of defence, set-off or otherwise in any proceedings in any court of competent jurisdiction o [2] Except as otherwise provided in Articles 33 and 34 (4) of the Model law, upon an award being made, including an award made in accordance with Section 19A, t he arbitral tribunal shall not vary, amend, correct, review add to or revoke the award o Lawrence Boo suggests that if the tribunal does not want it to be binding and binding, make an interim measure rather than an award. An interim measure is always to preserve the status quo and is not final. An emergency arbitrators decisions are never final and are always interim measures When An Award Becomes Final and Binding: An award is considered to become final and binding on the date the award is made, subject to differences as to when it is received. Regardless, it does not need a further confirmation before it is binding. The moment it is signed and received by the parties it is binding o Effective: Date of Signature (Award made) o Binding: Date of receipt of award by parties 1.5 Essential Features of An Award While the formal requirements of an award may vary according to the procedural rules adopted or the lex arbitri, most awards possess the following essential features:

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o o

[1] In Writing: The first requirement is that an award has to be in writing. This is the position adopted under the Model Law and is consonant with the written/documentary requirements for enforcement under the New York Convention Article 31(1) 2006 UNCITRAL Model Law The award shall be made in writing Article IV (1)(a) New York Convention To obtain the recognition and enforcement of an award, the party applying for recognition and enforcement shall, at the time of the application, supply: the duly authenticated original award or a duly certified copy thereof [2] Signed: All members of the tribunal or a majority must also sign the award, provided that there are reasons provided for an arbitrators omission. This is to en sure that all arbitrators must discuss and cannot ignore one of them in making the award Article 31(1) 2006 UNCITRAL Model Law The award shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures or the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated [3] Unambiguous and Certain: If an arbitrator is not ready to make an award, then he should refrain from doing so because once it is made it is binding and he cannot do anything about it (functus officio). E.g. Where money is ordered to be paid, the payee is to be identified; or where acts are to be done, the party performing them should be identified Where specific amounts are intended to be awarded it has to be clearly stated Oricon Waren-Handelgesellschaft v Integraan NV [1967] 2 LLR Where specific amount is intended to be awarded, the it is to state clearly that it is awarded, and not just to be invoiced Award should not depend on subsequent findings to be made by a third party Melbourne Harbour Trust Commrs v Hancock [1927] 39 CLR 570 For example: An award which fixes an amount payable but states that if the court finds that the ruling was erroneous, then a larger amount would be payable. In the absence of a finding by the court, the whole award is a nullity Award is uncertain if premised on assumptions held by the tribunal Nickels v Hancock (1855) 44 ER 117 Award stated that if an so far as I had the power and jurisdiction to set aside the deed, I would so order but if not, the rest of the award would stand It was held not to have resolved the dispute Award must not be a mere proposal that only suggests actions by the parties Lock v Vulliamy (1883) 110 ER 912 An arbitrator after expressing the view that one party was not entitled to payment, continued to say that to meet the circumstances in a liberal manner, I propose that X pay Y $10. The judge held that the arbitrator has not come to no decision, but merely makes a proposal that the defendant, to meet the circumstances in a liberal manner, should pay $10. That is a mere suggestion to the defendant to pay the sum, if he is disposed to act liberally [4] Final in Form: An award must be final and not interlocutory in form (awards made by the tribunal at any stage of the proceedings with regards to one aspect of the claims etc) [5] Complete: An award should be complete by deciding on all issues and to make definite findings/ not to leave any issue unanswered Tribunal is not allowed to declare an issue irrelevant and choose not to deal with it as the courts would do in litigation Shanghai Tunnel Engineering Co v Econ-NCC Joint Venture [2011] 1 SLR Tribunal cannot choose to ignore any issue raised even if he feels it may not be relevant to the final outcome. They will still need to show why it is irrelevant and provide reasons and answers to it

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[6] Made Within Allowed Time: While arbitration laws usually do not prescribe time limits for rendering an award, arbitral rules often specify a period of time within which the arbitral award should be issued, usually coupled with means of extending this period E.g. SIAC Rules 45 days; CIETAC Rules (2005) Within 6 months form constitution of tribunal; ICC 6 months from Terms of Reference Reasonable Time if No Limit Set: The arbitrator is to make the award within a reasonable period of time if the parties do not set a time limit Loosing party argues that award took 13 years, and 13 years interest accumulated court threw it out, said that had he appealed a day before the award was given, the court could find a remedy to remove the arbitrator for taking too long. However, once it was made the court cant do anything Court Extension: The court may grant an extension of time for making the award, however subjected to certain limitations under domestic arbitration laws Section 36 Arbitration Act [3] An application under this section shall not be made unless all available tribunal processes for application of extension of time has been exhausted [4] The court shall not make an order under this section unless it is satisfied that substantial injustice would otherwise be done [5] The court may extend the time for such period and on such terms as it thinks fit, and may do so whether or not the time previously fixed by or under the arbitration agreement or by a previous order has expired Ting Kang Chung John v Teo Hee Lai Building Constructions [2010] SGH Should be exercised to prevent a substantial injustice, provided that there was no prejudice to the other party. The court should be slow to exercise its discretion if by doing so it overrode party autonomy, which was paramount. First, if an arbitration clause was clearly worded that the arbitrator had to issue his award within a specific time, a court should not interfere unless there were exceptional circumstances. Secondly, unless there were very good reasons, a court should not entertain any application under the old section 15 if the time limit had expired by a large margin. The longer the delay in making the application the less likely a court would exercise its discretion to extend time. What was a large margin had to necessarily depend on the facts of each case. It would be a prudent and preferable pre-requisite that any application for extension of time should be made before expiry of the time limit agreed to by the parties for rendering the award. Hong Huat Development v Hiap Hong & Company [1999] 3 SLR 682 The grant of an extension of time was discretionary taking into account the factors of [1] the length of the delay; [2] the reasons for the delay; [3] the chances of the appeal succeeding if time for appealing was extended; and [4] the degree of prejudice to the would-be respondent if the application was granted Awards Made After Limit: The tribunal becomes functus after the expiry of the time given and awards it makes outside the time period may be set aside by the courts Ian MacDonald Library Services v PZ Resort Systems [1987] 14 BCLR CA set aside award made a few months after time allowed

B. Content of Awards 2.1 Relief and Remedies The arbitral tribunal is generally allowed to grant any relief and remedy as the law of the seat allows in its arbitral award. In Singapore, the powers of the arbitrator and the judge are nearly the same (however with arbitrators are not able to grant penal sanctions) o Award for payment of money o Specific performance o Declaratory relief Whether a party is entitled to reject goods; meaning of certain clauses in a lease. Must be a final declaration which determines the rights of parties once and for all (Bocotra Construction v AG [1995] 2 SLR 523)

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o Indemnity against liability to third parties which have yet to be established or incurred o Statutory remedies However where one country might have statutory provisions that impose triple damages by virtue of certain legislative interests (protection of the environment etc), can it be enforced elsewhere?

2.2 Award of Interest While there is no provision in the Model Law, arbitral tribunals have the power to make an award of interest on any sum awarded. o Section 20 International Arbitration Act o Power to award interest from such date (any date, not just the date of the award; usually the date the amount is due), at such rate and with such rest as the arbitral tribunal considers appropriate, for any period extending not later than the date of payment (date of award) Post-award interest: If there is a failure to pay an award, what interests should apply? o [1] Place of Enforcement of award vs. [2] Place where the award was made o No longer the business of the tribunal but under the enforcement by the courts o Parties can ask tribunal before the awards stage to make a pronouncement in its award as to what interest rate to apply, or no interest at all to by-pass this problem 2.3 Cost of Award and The Reference Costs are particularly relevant in the resolution of commercial disputes because some degree of proportionality might be expected between the value of the dispute and the cost of resolving it. o [1] Costs of Award/Forum Costs: incurred jointly by the parties (such as fees of the tribunal, or institution, room hiring, transcripts etc) o [2] Costs of Reference/Legal Costs: costs and expenses of a party (other than the costs of the award) in the preparation and conduct of the arbitration (e.g. fees of counsel or representatives, expert witnesses, travelling expenses of witnesses, or advisers) Discretion of the Tribunal: The power to award costs lies with the arbitral tribunal but may be subject to the arbitration clause, the applicable procedural rules or the lex arbitri o The Maria [1993] 2 LLR 168 o Costs are within discretion of tribunal and must be exercised judiciously and with reason o Section 39(2) Arbitration Act o In domestic arbitrations, any pre-dispute arbitration agreement which provides for each party in any event to pay their own costs of reference or award or any part shall be void No similar provision exists for international arbitration o Matter within the Jurisdiction of the Tribunal and Not the Court: There is no interest of the courts to step into the decision of the tribunal with regards to costs VV and another v VW [2008] SGHC 11 The parties to the arbitration had contracted for disputes to be settled in that particular manner. Thus the amount of costs awarded by an arbitrator to a successful party could not ever be considered injurious to the public good or shocking to the conscience no matter how unreasonable such an award might prove to be upon examination. There was no public interest involved in the legal costs of parties to one-off and private litigation Costs Follow the Event: The general rule is that the cost follows the event; the winner takes all. However difficulty arises because it is sometimes difficult to determine who is the winner o If you claim 10 million, but only succeed on a small amount, are you still a winner? o Is winning based on the number of issues won? o Departure From the Rule: Circumstances such as non-compliance with directions or obstructive conduct, excessive evidence over irrelevant or admitted issues may justify departure from this rule L. Figueiredo Navegacas S A v Reederi Richard Schroeder KG [1974] The primary principle guiding courts and arbitral tribunals in the exercise of their discretion in relation to costs is that costs follow the event unless there are special circumstances making it fair to depart from the basic principle

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Taxation of Costs: Costs of the reference may be assessed (taxed) by the tribunal or if not so ordered. It is carried out by the default statutory tax authority o Montague v Commonwealth Dev Corp (1999) Queensland CA o Award dismissing case for want of jurisdiction may also award costs

2.4 Reasons for Award It must also contain reasons supporting the finding unless parties agreed not to o Article 31(2) 2006 UNCITRAL Model Law o The award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under Article 30 (settlement on agreed terms) Unreasoned Award May Not Be Enforceable : An unreasoned award may be incapable of being enforced under the New York Convention as it is not in accordance to the procedures agreed to by the parties or required under the law o Article V (d) New York Convention o An award may be refused recognition and enforcement if there is proof that the arbitral procedure was not in accordance with the agreement of the parties, or failing such agreement, was not in accordance with the law of the country where the arbitration took place Unreasoned Award May Be Set Aside: An award may be set aside if it is given without reasons o CLOUT Case 662 (2002) Germany o A German court has considered that an award should be set aside only if the arbitral tribunal fails to state the reasons on which the award was based, or the reasoning lacks substance, and is evidently paradoxical or conflicts with the decision made Findings of the tribunal are not in its reasons but its conclusions ( Gora Lal v Union of India (2003)) Uncontested Awards: In certain cases there may be collusion between parties o In The Matter of Aquagen International [2003] SGHC o Claimants holding controlling interest in respondents caused respondents not to context in arbitration C. Mistakes and Omissions

3.1 Mistakes and Omissions While the general rule remains that arbitrators cannot amend their awards, clerical or typographical errors can be corrected; they are curable o Article 33 2006 Model Law o Errors in computation, any clerical or typographical errors of a similar nature o Mutual Shipping Corp v Bayshore Shipping [1985] 1 LLR o Tribunals power is similar to Rules of Court Order 20, Rule 11 o Danae Air Transport SA v Air Canada [2000] Eng CA o Mistake need not be directly attributable to the tribunal; error is correctable even if not admitted or not accidental While it is not clear, mistakes that are curable include errors of omission o CLOUT Case No 208 (1998) SIAC Arb o Includes errors omissions Mistakes an errors of judgment are not curable o Pegang Prospecting Co Ltd v Chan Phooi Hoong & Another (1957) CA Malaysia o Arbitrator made an award on costs; issued a second award where costs were apportioned differently than the first award. Second award not allowed D. Interpretation and Additional Awards 4.1 Interpretation In situations where the award is unclear, parties may ask the tribunal: o Issue an interpretation or clarification of the award or part of the award made. Interpretation then becomes part of the original award ( Article 33(2) Model Law) E.g. Who is to be paid, uncertainty as to what is decided

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Make an additional award on claims presented but omitted from the award (Article 33(3) Model Law) Note that this is different from asking for an additional new award or to rewrite an award, which is not allowed

E.

Effect of the Award

5.1 Effects of the Award The primary position is that the award is enforceable against the party whom it is made If the award is the final award, tow primary things occur: o [1] Terminate the Arbitration and Arbitrator Becomes Functus Officio: The arbitrator also becomes functus officio upon making the award but not before. The Arbitrator cannot vary, amend, correct, review, add to or revoke an award except for clerical or calculation related error Hussmann (Europe) v Ahmed Pharaon (2003) Eng CA In the event that the first award having been set aside, tribunal retained jurisdiction to make another award o [2] Extinguishes the Original Cause of Action/ Replaced with a Right to Enforce Award: While the original cause of action extinguishes, there are certain exceptions Excluded Matters: Matters not referred to arbitration Excomm Ltd v Guan Guan Shipping, The Gold Bear [1987] 1 LLR 330 If reference to arbitration does not confer upon the arbitrators jurisdiction to resolve all matters in dispute between the parties, the original cause of action remains in existence as regards those excluded matters Declaratory Award: A declaratory award which confers no right of enforcement but which requires separate judicial proceedings on the original cause of action. The declaratory award serves only as conclusive evidence of the right Rights in Rem: An award will not affect a partys right in rem. The award serves as conclusive evidence of the claimants right in the proceedings in rem o [3] Res Judicata: There is no re-litigation of the same cause of action Siporex Trade SA v Comdel Commodities [1986] 438 Doctrine applies to arbitration as in an action Unsuccessful claimant cannot commence fresh proceedings or arbitration. Award operates as a defence. Award will be recognised in subsequent inconsistent proceedings e.g. if award holds that a mortgage is cancelled, the mortgagee cannot obtain a foreclosure order in judicial proceedings. o [4] Issue Estoppel: There is no re-opening of the state of law or fact which had earlier been established Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 at 643 Issue estoppel applies to arbitration as it does to litigation. The parties having chosen the tribunal to determine the disputes between them as to their legal rights and duties are bound by the determination by that tribunal of any issue which is relevant to the decision of any dispute which is referred to that tribunal. o In proceedings between the parties on other matters, any finding of fact or law in an earlier award which may have a bearing on the issue in the subsequent proceedings would unless a third party is involved, be conclusive. Carl-Zeiss Stiftung v Rayner and Keeler Ltd (No 2) [1967] 1 AC 853 On issues raised as well as over issues, which ought to have been raised. Arnold v National Westminster Bank Plc (No 2) [1991] AC 112 If however the arbitrator makes an award, which is wrong on an issue of law, no issue estoppel will operate in further dispute between the parties but the award remains binding. Associated Electric & Gas Insurance Services v European Reinsurance (2003) Injunction against a party using an earlier related arbitral award in another arbitration was refused by PC, tribunal is entitled to consider issue estoppel

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Seminar 8: Recourse Against the Award


A. Recourse Against the Award 1.1 Post-Dispute Litigation Once an arbitral tribunal has rendered its final award, it does not necessarily end the legal process between the parties in respect of that dispute as post-arbitration litigation may follow o [1] Appeal Against Award: A party may appeal on the question of fact or law if permitted under the law of the seat of arbitration o [2] Setting Aside: A party dissatisfied with the award may challenge it by attempt to set it aside in a domestic court at the seat of arbitration o [3] Enforcement of Award: If the award is not honoured voluntarily, a successful party may require court assistance to enforce the award against an uncooperative losing party B. Appeals Against Awards In Domestic Courts 2.1 Appeals Against Awards In certain jurisdictions, the lex arbitri permits appeals against domestic arbitral awards o Singapore permits appeals on questions of law in domestic but not in international cases Section 49 Arbitration Act A party to arbitral proceedings may (upon notice to the other parties and to the arbitral tribunal) appeal to the Court on a question of law arising out of an award made in the proceedings. However, leave for appeal will only be given if the Court is satisfied under certain limited circumstances (substantially affect the rights of one or more of the parties, decision of tribunal was wrong, public importance etc.) However, it is generally rare to find provisions under the lex arbitri or a set of arbitral rules that permit international arbitral awards to be appealed against o Singapore does not allow appeal in international arbitration cases PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] SGCA Errors of law or fact made in an (international) arbitral decision, per se, are final and binding on the parties and may not be appealed against or set aside by. o England is notable for having domestic laws that permit appeals in international cases Section 69(3) English Arbitration Act 1996 Unless parties otherwise agree, leave to appeal to a court on a question of law will be granted if the court is satisfied under limited circumstances o In contrast, the Model Law permits no appeal on the merits Whatever the tribunal decides on the substantive issues, it is binding and final on the parties. It is the end of the determination of the merits of the case 2.2 Appeals Against Awards in Appellate Tribunals In all cases if it is provided in the arbitral rules, parties may appeal to an appellate tribunal o This is technically possible if built within the institutional structure (ICSID) o However it is very rare and depends on special circumstances 2.3 Appeals Against Awards in Singapore Domestic Arbitration As noted, Singapore permitted appeals on questions of law in domestic cases under the AA on questions of law arising out of an award made in the proceedings o Section 49 Arbitration Act o A party may (upon notice to the other parties and to the arbitral tribunal) appeal to the Court on a question of law arising out of an award made in the proceedings. The first consideration is as to what constitutes a question of law that can be appealed in courts o *1+ Question of Law and Not Mere Error of Law: The first requirement is that the matter presented before the courts is a question of law Northern Elevator Manufacturing v United Engineers (2004) SGCA

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A question of law was a finding of law, which the parties disputed that required guidance of the court to resolve. When an arbitrator incorrectly applied an established principle of law, that was a mere error of law which did not entitle an aggrieved party to appeal Progen Engineering v Chua Aik Kia [2006] SGHC A question of law means a point of law in controversy, which has to be resolved after opposing views and arguments have been considered. It is a matter of substance the determination of which will decide the rights between parties. If the point of law is settled and not something novel and it is contended that the arbitrator made an error in the application of the law there lies no appeal against that error for there is no qn. of law, which calls for the courts opinion. o [2] Premised on Finding of Fact: The question of law must be premised on the finding of facts found by the arbitrator in the proceedings Ng Huat Foundations v Samwoh Resources [2006] SGHC 43 I therefore accept the submission that the question of law posed by NHPL is misconceived because it is premised on facts that were not found by the Arbitrator and ignores the view of the facts that he took and the factual findings that he made. In the circumstances, this appeal fails and must be dismissed with costs o [3] Question on Foreign Law Are Questions of Fact: Not that issues as to the applicability of foreign law are questions of fact and not questions of law A/S Tallina Laevauhisus v Estonian State Steamship Line (1946) 80 Ll L Rep 99 Questions of foreign law are questions of fact and not law Reliance Industries v Enron Oil and Gas [2002] LLR 645 Issues of Indian law tried in England, not a question of law under the English AA However, appeal will only be given if the court is satisfied under certain circumstances: o Section 49(3) Arbitration Act o Appeal may be brought only if o [1] The agreement of all the other parties to the proceedings; Econ Piling Pte Ltd v Shanghai Tunnel Engineering [2011] 1 SLR 246 Both parties were dissatisfied with the tribunals decision o [2] Or with the leave of the court o [3] Within 28 days after the award has been made This is further limited because the court will only grant leave to appeal in limited circumstances: o Section 49(5) Arbitration Act o Leave shall be given only if the Court is satisfied that: o [1] The determination of the question will substantially affect the rights of parties o [2] The question is one which the tribunal was asked to determine o [3] On the basis of the findings of fact in the award The decision of the tribunal on the question is obviously wrong; or Engineering Construction v Sanchoon Builders [2011] 1 SLR The subcontract was a one-off contract, being the plaintiffs own contract form and not a standard form. Both questions of law were decided on its own particular facts. The arbitrator could not be said to have been obviously wrong. His findings were amply supported by the evidence before him and he was justified in coming to the decision that he did (this a high threshold to meet) The question is one of general public importance and the decision of the tribunal is at least open to serious doubt; and Holland Leedon v Metalform [2010] 1 SLR 517 The issue related to a commonly used commercial pricing mechanism and was of general public importance As compared to whether the decision was obviously wrong, the threshold is lower when the question of law sought to be presented on appeal is of general public importance

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[4] Despite the agreement of parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question. Leave to Appeal Against Refusal To Grant Leave: Leave to appeal against refusal to grant leave can only be sought in the high court and not at the Court of Appeal o Ng Chin Siau v How Him Chuan [2007] SGCA o Article 49(11) of the Arbitration Act states that the Court may given leave to appeal against the decision of the Court in subsection (10) only if the question of law before it is one of general importance, or one which for some other special reason should be considered by the Court of Appeal. o An application under 49(11) of the Act for leave to appeal against a decision of the High Court on an appeal against an arbitration award could not be bought before the CA because it was common ground that the word Court in the Act referred only to the H C Parties May Agree to Exclude Appeal: Note that parties may agree to exclude the appeal process and agreements to dispense with reasons shall be treated as an exclusion agreement. Words of exclusion must be specific in nature o Section 49(2) Arbitration Act o Notwithstanding subsection (1), the parties may agree to exclude the jurisdiction of the Court under this section and an agreement to dispense with reasons for the arbitral tribunals award shall be treated as an agreement to exclude the jurisdiction of t he Court under this section o Holland Leedon v Metalform [2010] 1 SLR 517 o Clause agreeing to exclude any right or application to any court or tribunal of competent jurisdiction in connection with questions of law arising in the court of arbitration was considered to be specific enough Setting Aside Domestic Awards (Singapore)

C.

3.1 Setting Aside An Award Setting aside an award is unlike an appeal because it nullifies an award not because of the merits but due to certain procedural inadequacies in the proceedings o Singapores Grounds for Setting Aside Domestic Awards is Similar to its IAA Regime and what is provided for in the Model Law (will be discussed below instead) o Singapore Courts attitude is similar to that of international arbitration Soh Beng Tee v Fairmount Development [2007] SGCA o Setting Aside for Misconduct of Arbitrator no longer available s17 AA 1950 D. Setting Aside International Awards (Model Law) 4.1 Setting Aside Process State courts retain an important supervisory role that is intended to prevent the arbitration from deviating from fundamental principles of justice, such as due process. o Related to this function of judicial supervision is the power of domestic courts to set aside a foreign arbitral award issued by an arbitral tribunal seated within its jurisdiction. o The power of courts to set aside an award on the grounds contained under Article 34 are generally considered of such importance that they cannot be excluded by contract Setting aside only to awards made in the seat of arbitration, at the seat of arbitration o PT Garuda Indonesia v Birgen Air [2002] SGCA: o Award referred to a place of arbitration as Indonesia. Singapore Court declined jurisdiction to set aside even though oral hearings were entirely held in Singapore, it had no jurisdiction to set it aside because it was not the seat of arbitration o CLOUT Case 408 (2000) Germany o Arbitrators auditing and subsequent negotiations with both parties took place in Zurich, however the effective place of arbitration was held not to be situated in Germany. The Court refused to entertain application to challenged the validity of the award o Venture Global Engineering v Satyam Computer Services (2008) Supreme Court of India o Held that if an award made outside India has sufficiently close and intimate nexus to India, Indian courts have jurisdiction to review it.

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However it has since been overruled in the following case but prospectively Bharat Aluminium Co v Kaiser Technical Services (Sep 2012) Overruled Bhatia International v Bulk Trading (2002) which the court in Venture Global relied on Setting aside must be done within 3 months after the receipt of award o Article 34(3) 2006 Model Law o An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal Grounds for Setting Aside: Under the Model Law, there are 6 limited grounds for setting aside o Article 34 2006 Model Law o The Court may set aside when the party making the application furnishes proof that o [1] A party to the arbitration agreement referred to in was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of this State; or [CHALLENGING JURISDICTION]: The fact that a party has no capacity to enter into an arbitration agreement and hence that agreement is invalid goes to the root of the arbitral process. Such a challenge may occur at multiple stages As a preliminary question of jurisdiction At the end of the hearing at 16 As a grounds of setting aside after the award is made at 34 (Anytime during the proceedings due to Singapores amendments) Slaney v IAAF (2001) USCA However if a party participated in an arbitration without reservation, it would be too late for him to raise the non-party ground to set aside o [2] Party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; [PROPER PROCEEDINGS]: Commencement of arbitration and notice must be given carefully at every stage of the proceedings. Ranging from the notice of arbitration and appointment or arbitrator, or even to the notice of every meeting, should be made known STET International (Canada: 1999) CLOUT CASE 391 However, refusal to participate in proceedings was held to be a forfeiture of the right to be heard and awards cannot be set aside o [3] The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or [SCOPE OF AGREMEENT]: Award deals with matter not contemplated by or beyond the scope of submission matters must come within the terms of reference of the arbitration Pacol v Joint Stock Rossakhar [1992] 2 All ER Tribunal asked to determine quantum of damages but dealt with liability and said no damages held to have exceeded reference and award was set aside CRW Joint Operation v PT Perusahaan Gas Negara [2011] SGCA A failure to deal with every issue referred to the arbitral tribunal did not render the arbitral award liable to be set aside unless there had been a real or actual prejudice to either or both the parties o [4] The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law; or

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o o

[DISQUALFYING TRIBUNAL]: Concern with how the arbitration is conduct, whether the arbitrator should be disqualified or not. Depends on what arbitral terms were agreed upon by the parties. Insigma Technology Co Ltd v Alstom Technology Ltd [2009] SGGA 24 Issue was whether tribunal was properly constituted. The court held that Article 8(4) of the ICC rules only required that the arbitrators nominated pursuant to the parties agreement to be confirmed. Here, the tribunal had been properly constituted in accordance with the ICC Rules because the parties had agreed to the appointment of the presiding arbitrator as agreed between each partys nominated arbitrator, and the SIAC confirmed the appointment of all three members of the tribunal. Thus the appointment procedure was simultaneously in accordance with both the ICC Rules and the SIAC Rules, and whether the confirmation of the appointments by the SIAC was made with reference to the SIAC Rules or the ICC Rules would have made no different at all to the outcome. Therefore the tribunal was validly constituted as per the agreement. However minor the transgression it is a ground for setting aside and can trigger from the beginning to the very end of writing of the award It covers a lot of sins and could be entirely within the arbitrators fault and not any of the partys (for example, when the tribunal refused to listen to one of the arbitrators when coming to a decision goes to composition) If there was a waiver of an earlier transgression, the chances of success is low if challenged during setting aside stage Even when not pleaded by the parties the court finds that: [5] The subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or the award is in conflict with the public policy of this State. ARBITRABILITY: The court may in its own capacity find that the subject matter of the dispute is non-arbitrable, even if it is not pleaded by parties Difficulty in defining scope of Public Policy: Multiple states have adopted different approaches in defining public policy o Zimbabwe Electricity Supply v Genius (1999) CLOUT Case 323 o Fundamental error constituting palpable inequity held to be against public policy o Oil & Natural Gas Corporation v SAW Pipes (2003) AIR o An arbitral award that was wrong in law (error of law) was patently illegal and liable to be set aside on the grounds that it was in conflict with the public policy of India as contemplated by the Indian Arbitration & Conciliation Act o McDermott International v Burn Standard (2006) AIR o Such patent illegality however, must go to the root of the matter. The public violation, indisputably, should be so unfair and unreasonable so as to shock the conscience of the court Narrow Scope of Public Policy: Singapore has adopted a narrow scope of application, equating public policy to fundamental notions of morality and basic principles of justice o PT Asuransi Jasa Indonesia v Dexia Bank S A [2006] SGCA o SINGAPORE rejects patent illegality approach in India. Reasoning not applicable because legislative policy of IAA is to minimise curial intervention in international arbitrations. Errors of law or fact made in an arbitral decision, per se, are final and binding on the parties any may not be appealed against or set aside by a court except in the situations prescribed under s 24 IAA and Art 34 MAL. It would be inconsistent to enlarge the scope of curial intervention to set aside errors of law of fact. Errors of law or fact, per se, do not engage the public policy of Singapore under Art 34

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In our view, public policy only operates in instances where the upholding of an arbitral award would shock the conscience, or is clearly injurious to the public good or wholly offensive to the ordinary reasonable and fully informed member of the public, or where it violates the forums most basic notion of morality and justice. This would be consistent with the concept of public policy in the preparatory material MAL: fundamental notions and principles of justice (e.g. Corruption, bribery, fraud etc) o Sui Southern Gas v Habibullah Costal Power [2010] 3 SLR o Mere contending that the award as perverse or irrational could not itself amount to a breach of public policy. To avail of this, there must instead be some demonstrably egregious circumstances such as corruption, bribery or fraud which would violate the most basic notions of morality and justice o AJT v AJU [2011] SGCA o The tribunals findings in the present case as to the intention of the appellant and the respondent when they signed the agreement are findings of fact, which are not correctable as they are final and binding on both parties. Public policy, based on the alleged illegality of the agreement, was not engaged by such findings of fact. Hence the setting aside was overruled o [6] The making of the award was induced or affected by fraud or corruption o [7] A breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party has been prejudiced (S 24 IAA) NATURAL JUSTICE: In certain jurisdictions such as Singapore, Australia, and New Zealand makes special mention of the breach of natural justice Soh Beng Tee & Co v Fairmount Development [2007] SGCA A party challenging an arbitration award as having contravened the rules of natural justice had to establish: [a] which rule of natural justice 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 its rights. The rule of natural justice alleged to have been breached in the present case was the alleged right of Fairmount to be heard on an issued that it maintained was crucial to the outcome of the Arbitrators decision Pacific Recreation v SY Technology Inc [2008] 2 SLR(4) 491 Held that it would be a breach of natural justice if a court or tribunal decided a case on a basis no raised or contemplated by the parties, as an affected party would have been deprived of this opportunity to be heard or to address the issues upon which the case was decided Front Row Investment Holdings v Daimler South East Asia [2010] SGHC The corollary is plainly also true that a court or tribunal will be in breach of natural justice if in the course of reaching its decision, it disregarded the submissions and arguments made by the parties on the issues (without considering the merits thereof). Court directed a new arbitrator be appointed Grounds for Setting Aside Are Exclusive: Meaning that these are the only grounds in which a setting aside application would be allowed/considered. No new grounds for setting aside o Bulgarian Foreign Trade Bank v A I Trade Finance (2000) Swedish Supreme Court o Breach of confidentiality is not a ground for setting aside Burden of Proof Lays on the Party Seeking to Set Aside: The duty to furnish evidence and proof of a ground for setting aside lays on the party seeking to do so o Article 34(2) 2006 Model Law o Only if a party making the application furnishes proof

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Courts Residual Discretion To Decline Setting Aside: These are the only possible grounds for setting aside, but the court retains discretion not to set aside even if a ground was found to exist o CRW Joint Operation v PT Perusahaan Gas Negara [2011] SGCA o The courts residual discretion to decline to set aside an arbitral award even though one of the prescribed grounds for setting aside had been made out should be exercised only if no prejudice had been sustained by the aggrieved party. The party suffered real prejudice as a result of the Majority Members acting in excess of its jurisdiction and also in breach of the rules of natural justice. There was no basis to exercise the courts residual discretion o No Powers of Review: The court hearing an application to set aside an award under the Model Law has not power to investigate the merits of the dispute or to review any decision of law or fact made by the tribunal o No Powers of Remission: The Court also has no power under the Model Law to reconsider the matter on the merits Powers to Suspend Setting Aside Application To Allow Tribunal To Eliminate Grounds: The Court can allow the tribunal to reconvene to hear matters instead of setting aside the award o However, certain grounds cannot be eliminated (for example, an arbitrator cannot go qualify himself as an engineer if he lacked that prerequisite earlier) o Exception to Functus Officio The jurisdiction of the arbitrator is revived for the sole purpose of addressing some of these grounds It is rarely done; especially if an award was changed afterwards it might be fraught with difficulties. However, what is the point for sending it back if the award wont change; why not let the courts do it. Hence it is rare

4.2 After Setting Aside After setting aside an award it is no longer an award Depending on the grounds of setting aside o Wrongly constituted you reconstitute a fresh tribunal o No Agreement/Non-Arbitrability no need to reconvene o Other grounds of setting aside might reconstitute the same tribunal There are exceptions (enforcing an award that has been set aside) E. Appeal Against Tribunals Decision Upholding Jurisdiction

5.1 Appeal Against Tribunals Decision Upholding Jurisdiction In the event a tribunal rules on a plea as to a preliminary question of jurisdiction in the positive, parties may request an appeal to the court with regards to that decision o Article 16(3) 2006 UNICTRAL Model Law o The arbitral tribunal may rule on a plea referred to in paragraph (2) of this Article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in Article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award. Decisions Rejecting Jurisdiction: Decision by the tribunal rejecting jurisdiction under Article 16(3) is not an award against which recourse may be brought o PT Asuransi Jasa Indonesia v Dexia Bank S A [2006] SGCA o The definition of an award under s 2 of the IAA was clear and did not include a negative determination on jurisdiction as It was not a decision on the substance of the dispute. On the contrary, a negative determination on jurisdiction was a decision not to determine the substance of the dispute, and therefore was not an award for the purposes of Article 34 of the Model Law o Singapores Position (w.e.f. June 2012) Under the New S 10 IAA: The new section allows for appeals against a negative decision on jurisdiction under Art 16(3) Section 10 Arbitration Act [a] On a plea as a preliminary question that it has jurisdiction; or

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[b] On a plea at any stage of the arbitral proceedings that it has no jurisdiction, any party may, within 30 days after having received notice of that ruling, apply to the High Court to decide the matter Lawrence Boo is sure that the intention was to be limited to only preliminary questions of jurisdiction, however [b] allows appeals at any time, and the end result is that it will open the door for more intervention and litigation

F.

Contracting-Out of Review

6.1 Contracting-Out of Review The question is whether parties can agree, notwithstanding what is provided for under Article 34, to say that there are no grounds of which an award can be set aside? o Technically it is possible to agree that Article 34 can not apply because parties intention and autonomy is key to the arbitral process Nobel China Inc v Lei (1998) The court took the view that Article 34 of the Model law was not a mandatory provision (may set aside rather than shall set aside), unlike Article 18, which provides for the equal treatment of the parties. Parties were therefore free to derogate from Article 34 by agreement. Accordingly, the application to set aside the award was dismissed o However, a contrary position was adopted in New Zealand Methanex Motunni v Joseph Spellman and Ors [2004] A reading of the Travaux Preparatories associated with the UNCITRAL Model Law suggests that there was no contemplation that parties to arbitral proceedings could seek to limit further the rights of review contemplated by Article 34 o Can parties expand the scope of review instead? Unlikely Hall Street Associates LCC v Mattel (2007) US Supreme Court The parties arbitration agreement stipulated that the District Court could override the arbitrators decision if the arbitrators conclusions of law are erroneous a far broader role in supervising the arbitration than is specifically granted in the Federal Arbitration Act The Supreme Court rejected the argument that parties to a contract could expand the limited scope of judicial review, but even the courts cannot expand it, even for extraordinary circumstances

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Seminar 9: Recognition and Enforcement of Awards


A. Recognition of Awards 1.1 Recognition Although the New York Convention deals with both recognition and enforcement of awards, the former received considerably less attention than the latter. o Article III New York Convention o Each contracting state shall recognize arbitral awards as binding o Section 29(2) Arbitration Act o Any foreign award which is enforceable under subsection (1) shall be recognized as binding for all purposes upon the persons between whom it was made and may accordingly be relied upon by any of those parties by way of defence, set-off or otherwise in any legal proceedings in Singapore No Enforcement Without Recognition: Nevertheless, recognition is important because an award cannot be enforced unless the award has been recognized (implicitly) by the enforcing court o Section 27(2) International Arbitration Act o In this part, where the context so admits, enforcement includes the recognition of the award as binding for any purpose Recognition Without Enforcement: Moreover there are instances calling for the recognition of an award without enforcement with a court action is filed involving the same parties to the arbitration and in respect of the same subject matter or dispute determined by arbitration o The party that succeeded in the arbitration may ask the court for formal recognition that the award binds the parties, or seek to invoke the award as a set-off or a counterclaim o The approach of the court will depend on its applicable domestic law and persuading the court to recognize the facts or points of law as determined by the arbitral tribunal may prove to be difficult B. Enforcement of Awards 2.1 Enforcement of Awards Made in Primary Jurisdiction (Seat of Arbitration) This is concerned with the enforcement of awards made at the seat of arbitration and enforced at the same jurisdiction (i.e. the seat of arbitration = enforcement state) In Model Law countries, the Courts have a mandatory obligation to recognize and enforce awards unless there are grounds for refusing to do so o Article 35(1) 2006 UNCITRAL Model Law o An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced subject to the provisions of this article and of article 36 (grounds for refusal) Parties generally would go to the court at the seat of arbitration, file and authentic copy of the award and enforce it as though it were a judgment of the court: o Section 19 International Arbitration Act o An award on an arbitration agreement may, by leave of the High Court or a Judge thereof, be enforced in the same manner as a judgment or an order to the same effect and, where leave is so granted, judgment may be entered in terms of the award The court may refuse leave to enforce if: o [1] The award exceeded terms of reference, incomplete or ambiguous (seminar 7) o [2] Grounds for setting aside exist 2.2 Recognition and Enforcement of Awards Made Outside Enforcement State (Foreign Awards) The enforcement of awards is one of the main advantages of international commercial arbitration over international litigation. There would be little point in arbitration if the eventual award could not be enforced against the losing party The ways in which enforcement can be sought are as follows:

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[1] Breach of payment of award as an action under common law: Enforcement can be sought through the common law as an action for the breach of payment of the award. The award is used as parties best evidence of such a breach Brali v Hyundai Corporation (1988) 15 NSWLR The NSW Supreme Court held that a foreign award gives rise to a cause of action under State law thereby conferring jurisdiction on the state court to enforce the arbitral award. Further, the prospect of having a number of state and Territory Supreme Courts interpreting the same statute gave rise to concerns about inconsistency in decision-making Alexander G Tsavliris & Sons Maritime v Keppel Corp [1995] SGCA 36 There is an implied promise in every arbitration agreement that the parties will perform the award. If a party to an arbitration agreement acts in breach of this implied promise by failing to comply with the award, the successful party may bring an action to enforce the award in any court of competent jurisdiction. The award of an arbitrator differs materially from a judgment. The plaintiffs right to sue and the courts right to give judgment for him if he proves his case are not derived from the agreement of the parties and the judgment when given is an entirely fresh departure. The award of an arbitrator on the other hand cannot be viewed in isolation from the submission under which it was made. [2] Recognized as binding for all purposes and be relied upon by any of those parties by way of defence, set-off or otherwise in any legal proceedings in Singapore (e.g. proving a debt in insolvency): Foreign awards which are not registered for enforcement or are not registrable for enforcement may however be recognized (as opposed to being enforced by way of execution) as conclusive findings of fact and law in proceedings which may be commenced in the Singapore Courts based on the original cause of action or related proceedings (such as a statutory demand) Pacific King Shipping v Glory Wealth Shipping [2010] SGHC 1734 SLR 413 The defendants did not have to enforce the award under the IAA before it could bring winding-up proceedings against the plaintiffs. No authority is cited for me for the proposition that a successfully party to a foreign arbitration award is obliged and confined to enforce the award only by way for enforcement proceedings under the IAA, and is thereby precluded form issuing a statutory demand based on a foreign arbitration award followed, if unsatisfied, by a winding-up application on the grounds of a presumption of insolvency. The IAA provided a platform through which a party might have an award in its favour recognized and enforced, but it was not the only means by which a party might seek to utilize an award it had obtained [3] Bi-lateral or multi-lateral enforcement treaties: Beyond the New York Convention, there exists a number of bilateral and regional agreements between states that aim to facilitate the enforcement of foreign arbitral awards Reciprocal Enforcement of Commonwealth Judgments 1961 European Convention (limits the grounds for refusal of recognition) 1972 Moscow Convention 1975 Inter-American Convention on International Commercial Arbitration [4] Recognised and enforced under the New York Convention: Provides a unified system, hence there is no need for bilateral and multilateral treaties, or a fresh course of action on the original breach or a breach of payment of award Certain states are not NYC countries, per se, like Taiwan. However it is arguably part of China and it is thus enforceable as an award from China, a NYC country [5] In Singapore, Non-NYC awards may also be enforced under the Arbitration Act: This is so because the act will apply to awards irrespective of where the seat of arbitration is Section 46(3) Arbitration Act Notwithstanding section 3, subsection (1) shall apply to an award irrespective of whether the place of arbitration is Singapore or elsewhere

C.

Enforcement of Awards under the New York Convention

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3.1 Recognition and Enforcement under the New York Convention 1958 The New York Convention facilitates the enforcement of a wide range of awards including those, which assess and order damages, make declaratory statements as to the rights of the parties and require specific performance. The scope of its application in respect of enforcement: o Article I (1) New York Convention o This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a state other than the state where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the state where their recognition and enforcement are sought Procedural Requirements for Enforcement Are Simple: The beauty of the NYC enforcement process lies in its simplicity, where the role of national courts is trimmed back to an almost administrative function of ordering the award to be enforced . Strictly only two items must be furnished by the party seeking enforcement o Article IV (1) New York Convention o [1] The duly authenticated original award or a duly certified copy thereof; A copy of the original filed in the local court/authority/arbitral institution is certified by that authority; A copy certified by notary is an authentic copy of the original award Original is authentic if arbitrator affirms affidavit as to its authenticity (Bergensen v Jospeh Muller Corp (1983)) Copy is certified by solicitor affirming affidavit that it was issued by the arbitral institution (Guangdong New Technology Import & Export v Chiu Shing (1993)) o [2] The original agreement referred to in article II or a duly certified copy thereof A copy of the arbitration agreement o No Strict Formalism in application: courts have generally held that there should not be strict formalism in application, and most awards are easily enforced R SA v A (1999 Geneva CA) Presented CIETAC original award in Chinese with French translation certified on first and last pages only. Objection to enforcement was rejected Investor v Republic of Poland (Germany Supreme Court, 2000) Arbitration clause was in a treaty and no certified clause was produced. Objection to enforcement was rejected Kanto Yakin Kogyo Kabushiki-Kaisha v Can-Eng Manufacturing (1992, Ontario) Japanese award not duly certified but subsequently filed documents did comply with the requirements of Article 35. The award was enforced 3.2 Refusal of Enforcement Once a party applying for enforcement has satisfied the Article IV procedural requirements of the New York Convention, the burden shifts to the other party against whom enforcement is sought if he wants to resist enforcement Grounds for Refusal of Enforcement are Exhaustive: To resist enforcement, he must establish one of the grounds set out in Article V. These grounds are exhaustive and the courts are not allowed to look into the merits of the award o Article V(1) New York Convention o Enforcement may be refused only if o Aloe Vera of America Inc v Asianic Food Pte Ltd [2006] 3 SLR 174 o I can only permit the party to resist enforcement if he is able to established one of the grounds set out in Section 31(2) of the Act [corresponding to the New York Convention Article V(1)]. Except to the extent permitted by those grounds, I cannot look into the merits of the Award and allow him to re-litigate issues that he could have brought up either before the Arbitrator or the supervisory court. o Van den Berg on the New York Convention [1981] o As far as the grounds for refusal of enforcement of the award as enumerated in Article V are concerned, the pro-enforcement bias of the New York Convention means that they have to be construed narrowly o Tema-Frugoli v Hubei Space Quarry Industry (1999)

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o Conflicting awards are not grounds for refusal of enforcement cancel themselves out Court Still Retains Discretion to Refuse Enforcement of Award: However, it is important to note that while courts have no discretion to add new grounds of refusal of enforcement, they still have a discretion as to whether or not to enforce an award o Article V(1) New York Convention o Enforcement may be refused only if Court May Enforce Even If Grounds Were Proven: Due to the discretionary nature of a courts refusal to enforce, even if one of the five refusal grounds are established, the court can still order an enforcement of an award. This comports with the pro-enforcement object and purpose of NYC o China Nanhai Oil Joint Service v Gee Tai Holdings [1995] ADRLJ o Held referring to Article V of the NYC that even if a ground of opposition is proved, there is still a residual discretion left in the enforcing court to enforce nonetheless. This shows that the grounds of opposition are not to be inflexibly applied. The residual discretion enables the enforcing court to achieve a just result in all the circumstances o Hebei Import & Export v Polyteck Engineering [1999] o I agree with his Lordship that the use of the word "may" in s.44 and Article V of the Convention enables the enforcing court to enforce an award, notwithstanding that a s.44 ground might otherwise be established. Whether a court would so act in such a case would depend in very large measure on the particular circumstances. If is difficult to imagine that a court would do so, if enforcement were contrary to public policy, but there is no reason why a court could not do so where, as here, the factual foundation for the public policy ground arises from an alleged non-compliance with the rules governing the arbitration to which the party complaining failed to make a prompt objection, keeping the point up its sleeve, at least when the irregularity might be cured However, English Courts Consider the Discretion to Enforce a Narrow One: The courts have restricted the discretion and consider it unlikely to be exercised in cases of where the award was subject to a fundamental structural defect o Kanoria v Guinness [2006] EWCA 122 o The use of the word 'may' must have been intended to cater for the possibility that, despite the original existence of one or more of the listed circumstances, the right to rely on them had been lost, by for example another agreement or estoppel. Even if there were a wider discretion, I would not exercise it on the facts of this case. This is an extreme case of potential injustice. It hardly lies in the mouths of the appellants to seek the exercise of discretion in circumstances where the facts that could have led to injustice have only come to the attention of the court at the ninth hour. o Dallah Estate v Ministry of Religious Affairs, Pakistan [2009] EWCA o However, in this court, the dicta in Dardanos and in Kanoria suggest that any discretion is narrow and would be unlikely to be exercised where the award in question was subject to a fundamental or structural defect. There can hardly be a more fundamental defect than an award against someone who was never party to the relevant contract or agreement to arbitrate. Courts Cannot Review the Merits of the Award and Cannot Set Aide A Foreign Award: Article V of the New York Convention permits a court only to enforce or to refuse the enforcement of an award, and does not allow a court considering an enforcement application to set aside the award. Note that an unenforced award is still an award, and can be enforced in other countries o Virgilio De Agostini v Milloil SPA (1999) Italy o Court cannot review the merits of the award: misapplication of law not reviewable o Hebei Import & Export v Polyteck Engineering [1999] o Court cannot set aside foreign award

3.3 Interaction with Setting Aside Cumulative v Alternatives: Setting aside and challenging the enforcement of an award are different methods parties may find recourse against awards, the question is whether they are alternative or cumulative grounds o Alternatives: Enforcement and setting aside are mutually exclusive, once parties have chosen to attempt to set aside an award, they have exhausted their rights to challenge Newspeed International v Citus [2003] 3 SLR 1

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CIETAC award rendered in China in favour of Newspeed. Citus unsuccessfully challenged the award in Chinas Intermediate Peoples Court. Subsequently, when Newspeed sought to enforce the award in Singapore, Citus resisted enforcement. The SGHC held that Citus was entitled either to seek to set aside the award before a Chinese court or resist enforcement at the place of enforcement. Because it had exercised the former option, the HC held that it was not permitted to resist enforcement. Aloe Vera American v Asianic Food [2006] 3 SLR(R) 174 A party seeking to challenge an award under the New York Convention had two courses of action open to him: he could apply to the supervising court to set aside the award and he could also apply to the enforcement court to set -aside any leave granted to the opposing party to enforce the award. An application to a supervisory court to set aside an award had to be based on one of the grounds, which the jurisdiction of that court provided for such an order. Similarly, an application to the enforcement court to resist a grant of leave to enforce had to be based on one of the grounds that the jurisdiction of that court provided for such setting aside Thus, the fact that the Award might be final in Arizona did not necessarily mean that the second defendant was excluded from resisting enforcement in Singapore. As an enforcement court, a Singapore court could only permit the second defendant to resist enforcement of the Award if he satisfied one of the Convention grounds under s 31(2) of the Act. Except to the extent permitted by those grounds, a Singapore court could not look into the merits of the Award and allow the second defendant to re-litigate issues that he could have brought up either before the arbitrator or the supervisory court Galsworthy of the Republic of Liberia v Glory Wealth Shipping [2010] SGHC 304 A party seeking to challenge an arbitration award has two courses of action open to him; he can either apply to the supervising court to set aside the award, or, he can apply to the enforcement court to set aside any leave granted to the opposing party to enforce the award. These options were alternatives and not cumulative o Cumulative: Enforcement and setting aside are cumulative in that even failing an attempt to set aside an award; parties can still attempt to stop it from being enforced. This is in recognition that the right to set aside is governed by the supervisory courts domestic jurisdiction whereas the right to enforce is under the enforcement states. o Furthermore, public policy at the seat of arbitration and public policy at the place of enforcement may be different right to refuse enforcement is granted by the Convention and not by the courts of the place of arbitration Hebei Import & Export v Polytek Engineering [1999] 2 HKC 205 Under the Ordinance [the Hong Kong equivalent of the Act] and the Convention, the primary supervisory function in respect of arbitrations rests with the court of supervisory jurisdiction as distinct from the enforcement court But this does not mean that the enforcement court will necessarily defer to the court of supervisory jurisdiction, such a party is not bound to elect between the two remedies The Convention distinguishes between proceedings to set aside an award in the court of supervisory jurisdiction (arts V 1(e) and VI) and proceedings in the court of enforcement (art V(1)). Proceedings to set aside are governed by the law under which the award was made or the law of the place where it was made, while proceedings in the court of enforcement are governed by the law of that forum. The Convention, in providing that enforcement of an award may be resisted on certain specified grounds, recognises that, although any award may be valid by the law of the place where it is made, its making may be attended by such a grave departure from basic concepts of justice as applied by the court of enforcement that the award should not be enforced. Bifurcated Approach In Examining Documents: Whether the courts can go into the merits of an award in the process of enforcement is split into two stages:

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o o

o o o

Dardana Ltd v Yukos Oil *202+ Lloyds Rep I consider that the scheme of the [Arbitration Act 1996 (c 23) (UK)] is reasonably clear. A successful party to a New York Convention award has a prima facie right to recognition and enforcement. At the first stage, a party seeking recognition or enforcement must, under [the English equivalent of O 69A r 6 of the Rules], produce the duly authenticated award or a duly certified copy and the original arbitration agreement or a duly certified copy. Once such documents have been produced, recognition or enforcement may be refused at the second stage only if the other party proves that the situation falls within one of the heads set out in s. 103(2). The issue before us concerns the content of and relationship between the first and second stages. Denmark Skibstekniske Konsulenter v Ultrapolis [2010] SGHC Endorsed the bifurcated approach in Singapore [1] STAGE 1: Production of Formal Requirements: This would refer to the provision of documents under the New York Convention. This process is formalistic and mechanistic and does not involve the courts conducting an investigation into the merits Aloe Vera of America v Asianic Food [2006] The enforcement process is a mechanistic one which did not require judicial investigation by the court of the jurisdiction in which enforcement is sought It is also material that s 30 of the Act, in setting out the evidential requirements that must be complied with to enforce a foreign award, requires the production of, inter alia, the original arbitration agreement under which the award purports to have been made, or a duly certified copy thereof [emphasis added] and by sub-s (2) enjoins the court to receive such document upon mere production, as prima facie evidence of the matters to which it relates. Only then in the second stage it is considered Cf. Altain Khuder LLC v IMC Mining Inc and IMC Mining Solutions [2011] VSCA At all stages of the enforcement process, courts perform a judicial function and, accordingly, must act judicially. To act robotically is not to act judicially. At stage one, the court must carefully review the award and the arbitration agreement that are filed pursuant to s 9(1) of the Act and determine whether those documents, whether considered alone or in combination with other evidence, satisfy the prima facie evidential requirements set out at [135] above. [2] STAGE 2: Considering Substantive Grounds for Refusing Enforcement: However it is noted that in considering the substantive grounds for refusing the enforcement, an enforcement court is required to consider undertaking a examination of the merits as the defendants is required to prove that such grounds exist Dallah Estate v Ministry of Religious Affairs, Pakistan [2010] UKSC The language of Article V.1 requires the party against whom enforcement is sought to furnish proof of the matters to which it refers (an expression accurately reflected in the more modern language of section 103(2) of the Act). In a case where the tribunal has determined its own jurisdiction there is an obvious possibility that a party opposing enforcement will wish to challenge some of its findings of fact or conclusions of law and I find it very difficult to interpret the expression furnish proof as meaning anything other than requiring proof in the manner and to the standard ordinarily required in proceedings before the enforcing court. It is impossible to formulate any satisfactory principle that falls somewhere between a limited review akin to that which the court undertakes when reviewing the exercise of a judicial discretion and a full re-hearing, not to mention one that is also capable of flexibility in its application. Moreover, for the court to defer to the tribunals conclusions when it is required to decide whether a particular state of affairs has been proved would be to give the award a status which the proceedings themselves call into question. It is for similar reasons that our courts have consistently held that proceedings challenging the jurisdiction of an arbitral tribunal under section 67 of the Arbitration Act involve a full rehearing of the issues and not merely a review of the arbitrators own decision

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Aloe Vera of America v Asianic Food [2006] I do not think that it is correct for a court that is asked to enforce an award under the Convention to go behind the holding on the merits on this aspect that has been made by the Arbitrator except to the extent that this is permitted by the Convention grounds during the second stage of the enforcement process Lawrence Boos view is that if it is an area of law that the tribunal has not gone into, the court should be able to consider it. Conversely, if it is clear that the tribunal has heard it, then the court cannot deal with it.

3.4 Grounds for Refusal of Enforcement Under New York Convention (Article V) The grounds for refusal of enforcement are set out in Article 5 of the New York Convention. Article V of the New York Convention (exception Article V(1)(e)) has been substantially reproduced in Article 34 of the Model Law, which concerns the setting aside of awards, and Article 36 for the recognition and enforcement of awards irrespective of the seat of arbitration o Corporacion Transnacionale de Inversiones SA v STET International (1999) Canada o The grounds for challenging an award under the Model Law are derived from Article V of the New York Convention. Accordingly, authorities relating to Article V of the New York Convention are applicable to the corresponding provisions in Article 34 and 36 of the Model Law. These authorities accept that the general rule of interpretation of Article V is that the grounds for refusal of enforcement are to be construed narrowly. There are 5 grounds of refusal as set out under the New York Convention o [1] Incapacity or Invalid Arbitration Agreement: Article V(1)(a) of the New York Convention refers to three situations in which the consent to arbitrate is defective Incapacity of Parties Under Personal Law: A party did not have the legal capacity under the law applicable to it to enter into the arbitration agreement May cases concern whether the parties had the proper authority to sign or otherwise enter into the arbitration agreement. Agreement Invalid: The arbitration agreement was not valid under the law chosen by the parties to govern that agreement Invalid under the law parties have subjected it to Invalid under the law where the award was made Enforcement Against a Non-Party: The question is whether the court will disturb the tribunals findings on whether a person is a proper party Javor v Francoeur [2003] BSCSC 350 Issue is whether a person who was not a party to an arbitration agreement but was found by an arbitrator to be a proper party to the arbitration proceedings can have an award for costs against him enforced. Held that enforcement is limited to parties to the arbitration agreement and hence award against X was not enforceable. Aloe Vera of America v Asianic Food [2006] SGHC The Singapore court will not disturb the finding of the tribunal on the proper party to the agreement even if it were a non-signatory Cf Altain and Dallah o [2] No Proper Notice or Inability to Present Case: Article V(1)(b) of the New York Convention identifies two violations of due process rights: No Proper Notice of Appointment of Arbitrators or Proceedings: The test as to whether notice is adequate is a question of fact. Requirement is not simply to raise no notice but also to prove it If steps were taken in the arbitration proceedings, absence of receipt of actual notice is irrelevant Inability of a Party to Present His Case: The test is whether a party was in fact prevented from presenting his case in arbitration Minmetals Germany GmbH v Ferco Steel [1999] All ER 317 Fact that tribunal had refused to extend time or allow adjournment of hearing itself is not a denial of the right to be heard, nor where the parties fail to take advantage of an opportunity to present their case

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for reasons within their control (the lawyers failure was deemed to be within parties control, hence not a denial of the right) Egson Constructions v Canteras Y Constructions (2008) Spain Spanish Court of Appeal set aside an award rendered in proceedings where the arbitrator had been refused access by the other party to the premises the construction which was the subject matter of the dispute Case 7 Ob 111/10i, 30 June 2010 Refusal of an arbitral tribunal to hold an oral hearing, despite the request of one party, to be a violation of the right to be heard Government of Philippines v Philippine Intl Air Terminals [2006] SGHC However where none of the parties had requested an oral hearing, presentation of one case may be made by other means [3] Outside Scope of Reference (Exceeding Jurisdiction): Article V(1)(c) of the New York Convention refers to instances where the tribunal has exceeded its jurisdiction Award dealing with matters in excess of jurisdiction Not contemplated by the arbitration agreement Not falling within the terms of the agreement Beyond the scope of arbitration agreement Award is enforceable in part if severable [4] Wrong Constitution of Tribunal or Procedure Article V(1)(d) of the New York Convention identifies two procedural defects Method of composing tribunal was not in accordance with agreement or in violation of the lex arbitri: Includes the lack of qualification or existence of disqualifications of arbitrator. Appointment made by wrong institution CLOUT Case No 662 (2002, Germany) AN award made by only 2 members of tribunal (without participation of the absent member) was set aside on ground that the tribunal was wrongly constituted The arbitral procedural adopted was not in accordance with the parties agreement, or failing such agreement, was in violation of the lex arbitri China Agribusiness Development v Balli Trading [1998] LLR Arbitration clause referred to FETAC arbitration. CIETAC (new name) the only arbitration institution in China, accepted reference. Award made under CIETAC rules. Respondents resisted enforcement. Objection disallowed; award enforced [5] Award Not Binding Yet or Suspended/Set Aside: Article V(1)(e) deals with refusal grounds relating to the awards status at the time of enforcement Award has not become binding on parties: An award is generally binding when it is made. Where local laws require it to be deposited in a court or registry to constitute it as binding, those steps need to have been done Relais Nordik v Secunda Marine Services Limited [1999] CLOUT No. 625 Where an application for correction is pending before the tribunal a Canadian court had declined to enforce the award within the 30-day period allowed for in paragraph (1), on the basis that the award had not yet become binding on the parties No requirement of confirmation/recognition by the courts of the seat needed Pending appeal in primary jurisdiction does not affect binding nature of award Award has been set aside or suspended: It is rare that sate courts will enforce awards set aside in other states; award that is set aside loses its binding force Baker Marine v Chevron (1999) USCA Award set aside in Nigeria, not enforced in the US Notwithstanding the general position, a number of awards set aside at the seat of arbitration have been enforced in a different country (particularly France reason being is that if an award is international, its existence should not be affected by or integrated with the local framework and it is not against international public policy to enforce it)

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Pabalk Ticaret Sirketi v Norsolor (1985) In a series of reversals of decision made over an arbitration award made in Austria resulted at one stage for an award set aside in Vienna to be enforced in France Hilmarton Ltd v Omnium de Traitement et de Valorisation (1994) French court enforced an award set aside at place of arbitration Direction Generale de lAviation Civile v International Be chtel (2005) Paris Court of Appeal upheld an enforcement order of an award rendered in Dubai and subsequently annulled by the highest civil court of the United Arab Emirates PT Putrabali Adyamulia v Rena Holding (2007) Affirming approach, justifying this position under French domestic law, made applicable through the more favourable right provision in Article VII of the New York Convention Some US Courts have also notably adopted the same view that an award set aside at the seat of arbitration can still be enforced in the enforcing state Chromalloy aero Services v Egypt (1996) USDC Concerned an arbitral award that was made in Cairo in an arbitration between Chromalloy and the State of Egypt that was set aside by the Egyptian court. The USDC, however, declared the arbitral award enforceable because recognizing the Egyptian courts decision nullifying the award would violate US public policy in favour of arbitration and reward Egypts breach of an express contractual provision by parties not to pursue an appeal to vacate the award However, in subsequent court decisions in the US, the US courts distanced themselves from the Chromalloy decision, particularly in the Court of Appeals TermoRio v Electranta (2007) Dismissed an action to recognize and enforce an award made in Colombia after it had been set aside by the countrys highest administrative court. The appeal court confirmed it was not empowered to second-guess the Colombia courts decision Telecordia Technologies v Telkon SA (2006) Declined to enforce award set aside in South Africa on the ground of comity of courts awards were subsequently restored by South African Supreme Court Lawrence Boo notes that if the setting aside was based on a New York Convention ground for refusal to enforce, there is little chance of arguing that it should be resurrected. But if it is based on some other ground, should the court shut its eyes to the matter? [6] Grounds Which May Be Raised By Court In Its Own Motion: Article V(2) differs from V(1) not supply because of the content of its refusal grounds but because a court may apply Article V(2) ex officio, on its own initiative under two grounds Subject Matter Not Arbitrable in Enforcement State: Assume an award is issued in an arbitration seated in Thailand and the subject matter is objectively arbitrable under Thai law. If enforcement proceedings are brought in Australia, the Australia court may still determine that the matter is not capable of settlement by arbitration under Australian law and refuse enforcement Enforcement of Award Contrary to Enforcement States Public Policy : Refer to public policy is associated with international rather than domestic standards of public policy. Not every breach of a mandatory rule in the enforcement state could justify refusing recognition or enforcement of an award, Such refusal is only justified where the award contravenes principles which are considered in the enforcement state as reflecting its fundamental convictions, or as having an absolute, universal rule Illegal Contracts (by virtue of nature of the transaction) Non-compliance with law in making of contract

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Unlawful acts or contravention of law in performance of contract When considering where public policy of Singapore is engaged, the court is to consider the meaning of public policy as narrow and also not reopen and examine the tribunals finding of fact AJU v AJT [2011] SGCA 41 When considering whether public policy of Singapore is engaged, the court would not reopen and examine the tribunals finding of fact. Furthermore, there is no difference in public policy treatment when considering setting aside of a Singapore made award and public policy considerations in the enforcement stage PT Asuransi Jasa Indonesia v Dexia Bank [2006] 1 SLR 507 With regards to public policy in setting aside: The general consensus of judicial and expert opinion is that public policy under the act encompasses a narrow scope. It should only operate in instances where the upholding of an award would shock the conscience or is clearly injurious to the public good or wholly offensive to the ordinary, reasonable and fully informed member of the public or where it violates the forums most basic notion of morality and justice When enforcing, it was the award rather than the contract (an illegal one) that was being enforced, thus allowed Westacre Investments v JugoimportSDPR [1999] LLR Arms trading; allegation of buying influence; tribunal found no illegality. Court took the approach that it was the award and not the contract that is being enforced and enforced the ICC award. Followed in AJU AJT.

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