View source for Daimler South East Asia v Front Row Investments (Singapore)

DMC/Arbn/12/03

'''Singapore'''

'''Singapore High Court'''

'''Daimler South East Asia Pte Ltd v. Front Row Investment Holdings (Singapore) Pte Ltd [2012] SGHC 157 : Judgment delivered by Woo Bih Li J on 31 July 2012'''

Drew & Napier LLC for the Plaintiffs, Daimler South East Asia Pte Ltd

Rajah& Tann LLP for the Defendants, Front Row Investment Holdings (Singapore) Pte Ltd

'''ARBITRATION: WAIVER OF RIGHT OF RECOURSE UNDER ICC RULES OF ARBITRATION (1998): EXCLUSION OF APPEAL ON QUESTION OF LAW ARISING OUT OF ARBITRATION AWARD PURSUANT TO SECTION 49(2) ARBITRATION ACT'''

This note has been contributed by Leong Lu Yuan (LLB) of Ang & Partners, Singapore. Ang & Partners are the International Contributors to this website for Singapore.

'''Summary'''

In this case, the court held that parties which had agreed to refer all disputes arising out of or in connection with a joint venture agreement to arbitration under the ICC Rules of Arbitration (1998) had, by adopting the Rules including Article 28(6) of the said Rules, excluded the right of appeal to the Singapore Courts under Section 49(1) of the Arbitration Act. 
on a question of law arising out of an award made in arbitration proceedings.

This is the first decision of a Singapore Court on the exclusion of the right of appeal under Section 49(1) of the Arbitration Act. 

'''Facts'''

The Plaintiffs and Defendants were parties to a joint venture agreement (“JVA”) which contained the following arbitration clause:-

“All disputes arising out of or in connection with the present agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one arbitrator in accordance with the said Rules. Place of arbitration will be Singapore.” 

Disputes arose between the parties in connection with the JVA and were referred to arbitration. On 3 July 2009, an arbitrator dismissed the Plaintiffs’ claim for payment of an employee’s salary and the Defendants’ counterclaim for breach of contract and misrepresentation (“the 1st Award”).

The Defendants applied to the Singapore Courts to set aside the findings in the 1st Award relating to the counterclaim, and for the counterclaim to be tried afresh by a newly appointed arbitrator. The Defendants’ application was granted and the Defendants commenced fresh arbitration proceedings for their claim for breach of contract and misrepresentation (“the 2nd Arbitration”). 

A partial award was issued in the 2nd Arbitration, which stated that the Defendants were not precluded from pleading their claim for breach of contract in the 2nd Arbitration (“the Partial Award”).

The Plaintiffs then filed an Originating Summons to seek leave to appeal against the Partial Award on a question of law. The Defendants applied to set aside the Originating Summons on the ground that the parties had agreed to exclude their right of appeal to the High Court under Section 49(1) of the Arbitration Act (“AA”), as they had agreed to submit any dispute under the JVA to arbitration under the ICC Rules of Arbitration (1998)  (“ICC Rules 1998”) 

The relevant provisions of the ICC Rules 1998 and the AA read as follows:-

“ICC Rules 1998, Article 28(6)

Every Award shall be binding on the parties. By submitting the dispute to arbitration under these Rules, the parties undertake to carry out any Award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made.” 

“Arbitration Act (Cap 10, 2002 Rev. Ed.)

49. – (1) A party to arbitration proceedings may (upon the 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. 

(2) 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 tribunal’s awards shall be treated as an agreement to exclude the jurisdiction of the Court under this section.” 

'''Judgment'''

1.	The Court held that parties could exclude the right of appeal by adopting rules of arbitration which excluded an appeal to court. The arbitral rules adopted did not need to make specific reference to the provisions of the AA.

2.	The Court accepted that the reference in Article 28(6) of the ICC Rules 1998 to “any form of recourse” was wider than the reference to “any forms of appeal” in Article 24 of the previous version of the ICC Rules of Arbitration, and included an appeal to Court. 

3.	The Plaintiffs made the following arguments to support their contention that the right of appeal was not excluded:-

a.	A statement that an arbitration award should be final, conclusive and binding was insufficient to exclude the right of appeal. The Australian case of American Diagnostica Inc v. Gradipore Ltd [1998] (“Diagnostica case”) was said to stand for this proposition.

b.	The Singapore High Court in Holland Leedon Pte Ltd v. Metalform Asia Pte Ltd [2011] (“Holland Leedon”) had granted leave to appeal even though the arbitration clause there appeared to exclude the right of appeal under Section 49(1) of the AA.

c.	The English authorities on Section 69(1) of the English Arbitration Act 1996 (on which Sections 49(1) and (2) of the AA were said to be based) did not apply, as appeal was available for both international and domestic arbitration in England and such a regime generally eschewed intervention by the courts. The English courts were therefore more likely to conclude that there was an agreement to exclude appeal to the courts than if such appeal was restricted to domestic arbitrations, as is the case in Singapore. 

d.	If Article 28(6) was held to exclude the right of appeal, any party who adopted the ICC Rules 1998 would be found to have agreed to exclude the right of appeal under Section 49(1) even if he had not addressed his mind to the specific issue. 

4.	The Court rejected the Plaintiffs’ arguments on the following grounds:-

a.	The wording of Article 28(6) provided that parties were deemed to have waived their right to any form of recourse and did not merely provide that awards made were binding on the parties.

b.	The exclusion in Holland Leedon was an agreement to “exclude any right ot application in any court or tribunal of competent jurisdiction in connection with questions of law arising in the course of any arbitration”, and was not sufficient to exclude a right to appeal under Section 49(1) “on a question of law arising out of an award made in the proceedings.” 

c.	The Court did not consider the Plaintiffs’ arguments in relation to the English regime for appeal from arbitration to be persuasive. The Court cited Lesotho Highlands Development Authority v Impregilo SpA and others [2006] as authority for the interpretation that Article 28(6) was an agreement to exclude the right of appeal, and took the view that such an interpretation applied equally to all arbitration agreements which adopted such rules, whether the arbitrations were international or domestic. 

d.	It is trite law that parties are bound by the terms of their contract, regardless of whether they had addressed their minds specifically to each and every term. 

5.	The court therefore held that by adopting the ICC Rules 1998, the parties had agreed to exclude the right of appeal under Section 49(1) of the AA.