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Nature of Matter

Enforcement of a foreign award

Case Summary

1. The Defendant has been the Claimant’s franchisee in Singapore under 4 agreements which were periodically renewed (“Agreements”).
2. On 25 May 2022, the Claimant commenced arbitration proceedings against the Defendant with the International Centre for Dispute Resolution (“ICDR”) seeking reliefs that included reliefs to enforce post-termination provisions in the Agreements.  The arbitration was governed by Pennsylvanian law and seated in Pennsylvania.  The ICDR appointed Mr Grant Hanessain as the Emergency Arbitrator (“EA”).
3. In his award (“Award”), the EA granted reliefs which restored the status quo of the Parties to the position as if the Claimant did not treat the Agreements as terminated.
4. On 29 June 2022, the Claimant sought to enforce the Award in Singapore and was issued an Enforcement Order.
5. On 22 July 2022, the Defendant filed the present application to set aside the Enforcement Order.
6. The issues before the High Court were as follows:

(1) Whether s. 29 of the IAA applies to awards made by emergency arbitrators (“1^st Issue”);

(2) Whether the Award was binding within the meaning of s. 29(2) of the IAA (“2^nd Issue”);

(3) Whether the Award exceeded the EA’s jurisdiction (“3^rd Issue”);

(4) Whether the Award breached the rules of natural justice (“4^th Issue); and

(5) Whether the Award was infra petita (“5^th Issue”)

1. 1st Issue: The Court was of the view that on a purposive interpretation, the term “arbitral award” in s. 27(1) of the IAA includes awards by emergency arbitrators and hence, s. 29 of the IAA applies to foreign awards by emergency arbitrators.
   

   Applying the purposive interpretation on the facts, the court held that:

(1) The text is capable of being interpreted to include emergency arbitrators and such interpretation is consistent with the context of the IAA as a whole given that the definition of “arbitral tribunal” in s. 2(1) includes emergency arbitrators;

(2) In 2012, amendments to the IAA speak of an intention to make the IAA applicable to all awards including foreign interim awards by emergency arbitrators. This intention was confirmed by the Ministry of Law in its statement on the amendment;

(3) The interpretation that the term “arbitral award” in s. 27(1) of the IAA includes awards by emergency arbitrators was clearly consistent with the legislative purpose of the IAA. This conclusion was further supported in Timothy Cooke, International Arbitration in Singapore: Legislation and Materials (Sweet & Maxwell, 2018).

2. 2nd Issue: The court held that it was unarguably clear from Art 7(4) of the ICDR’s International Arbitration Rules (“ICDR”) that the Award was binding.

3. 3rd Issue: The Claimant’s original case in the arbitration was that the Agreements were terminated and it was entitled to enforce post-termination provisions in the Agreements (“Claimant’s Original Case”). However, in the Award, the EA granted interim reliefs on the basis that the Claimant did not agree that the Agreements had been terminated (“Claimant’s New Case”). It was the Defendant’s contention that the Claimant’s New Case was clearly different from the Claimant’s Original Case and the EA had therefore exceeded his jurisdiction.
   
   In addressing this issue, the court set out that the legal principles for assessing whether an arbitral award should be set aside for an excess of jurisdiction were to be by referring to the (a) the parties pleading, (b) the list(s) of  issues, (c) the opening statements, (d) evidence adduced, and (e) closing submissions at the arbitration to answer the following questions:

(1) Identification of matters that were within the scope of submission to the arbitral tribunal;

(2) Whether the arbitral award involved such matters or is outside such matters.

Applying the legal principles, the court held that the Claimant’s New Case came about as a result of questions raised by the EA during the Emergency Hearing and was therefore a live issue that had been submitted for the EA’s decision.  Accordingly, the Award was not beyond the scope of the submission to the Arbitration.

4. 4^th Issue: Pursuant to s. 31(2)(c) of the IAA, a court may refuse enforcement of a foreign award if the party against whom the enforcement is sought proves that it was otherwise unable to present its case in the arbitration proceedings (this being a breach of natural justice).
   
   The grounds for curial intervention in arbitration proceedings are said to be as follows: “parties ….only [have] the right to a decision that is within the ambit of their agreement to arbitrate, and that is arrived at following a fair process; however, where either ground for curial intervention can be shown, the court must not hesitate to intervene.”
   
   The court held that the circumstances in which the Award was made did not give the Defendant an opportunity to present its case with respect to the Claimant’s New Case as:

(1) The Claimant’s New Case was raised only in its post hearing submissions and raised in the alternative; and

(2) The EA made the Award without hearing any further submissions and the Defendant was thus denied the opportunity to make legal submissions, adduce factual evidence or address the EA in regards to the Claimant’s New Case.

The Defendant further adduced expert evidence that under Pennsylvanian contract law, the Claimant would not be able to seek relief if the Agreements had not been terminated, to which the Claimant did not adduce any expert opinion to the contrary.

On the reasons above, the Court set aside the Award on the basis that it breached s. 31(2)(c) of the IAA.

5. 5^th Issue: The court was of the opinion that the Defendant had not established its case on this ground and therefore did not deal with it.