The Singapore High Court has opined that an award passed by a foreign seated Emergency Arbitrator (hereinafter referred to as “EA”) is enforceable under Singapore International Arbitration Act, 1994 (hereinafter referred to as “IAA”) if purposive interpretation is used. It was observed that the term “arbitral tribunal” is not defined in Section 27 or anywhere in Part 3 of the IAA and therefore, it can be interpreted to include Emergency Arbitrators. This interpretation is also in consonance with the context of the IAA as a whole as Section 2(1) of the IAA includes EA.
It was held that the “foreign award” as per Section 29 of the IAA includes under its ambit a foreign interim award made by an emergency arbitrator and hence, the award can be enforced in Singapore. The award passed did not breach Section 31(2)(d) of the IAA but it did breach Section 31(2)(c) of the IAA as the Defendant was unable to present its case during the arbitration proceedings. This is why the application of Defendant to set aside the order of enforcement was passed and permission to enforce the award by Claimant was rejected.
Brief Facts:
The Defendant was the Claimant’s franchisee in Singapore since 1997 and the same was governed by four agreements that were renewed from time to time. The defendant was also allowed to distribute the products over the Internet and operate the website of the Claimant.
In 2020, Claimant applied for bankruptcy and was acquired by another company. Thereafter disputes arose between Claimant and Defendant and arbitration proceedings commenced.
In 2022, a notice of default was sent by Claimant to Defendant alleging breaches of the Agreements. Thereafter, agreements were terminated by Defendant on grounds of material breaches committed by Claimant. Subsequently, Defendant took steps to de-identify the franchise store as after termination, the proprietary marks of the Claimant could not be used. In response to this, Claimant disabled Defendant from ordering or procuring new products to sell cancelled pending orders and sold the products directly in Singapore via its website.
It was contended by Defendant that the steps taken by Claimant prove that termination of the Agreements by Defendant has been accepted by the Claimant.
Thereafter, Claimant filed for Arbitration along with Emergency measures of Protection including injunctive relief with the International Centre for Dispute Resolution (hereinafter referred to as “ICDR”). The relief sought was the enforcement of post-termination provisions in the Agreements. The Claimant did not ask for the termination of the Agreements to be enjoined. The Arbitration was seated in Pennsylvania and governed by Pennsylvanian law.
ICDR appointed an emergency arbitrator and an emergency hearing took place during which the Claimant confirmed that enjoinment of the termination would not be asked. On being asked by the emergency arbitrator whether Claimant wanted the distribution channel to continue in case emergency reliefs are not granted to Claimant, the counsel of the Claimant replied that he would talk to the Claimant.
The Claimant however after the hearing took place took a contrary stand and said that as per the Claimant the Agreements were not terminated. The Award issued by the Emergency Arbitrator restored the status quo of the parties and was made on the basis that the Claimant did not treat the Agreements as terminated.
Thereafter, an application was filed by the Claimant seeking enforcement of the award in Singapore. Pursuant to this, an Enforcement order was made. It is against this Order that Defendant filed the present application.
Contentions of the Defendant:
The Defendant contended that the term arbitral award in Section 27(1) of the IAA excludes awards by Emergency Arbitrators and therefore, the award passed by an Emergency Arbitrator cannot be enforced in Singapore and is not even a foreign award under the ambit of Section 29 of the IAA.
Observations of the Court:
On the question of whether Section 29 of the IAA applies to awards issued by Emergency Arbitrators, the Court noted that the Convention on the Recognition of Enforcement of Foreign Arbitral Awards, 1958 is silent on whether the term “arbitral award” included awards passed by the Emergency Arbitrators.
The Bench noted that with the help of purposive interpretation, Section 27 of the IAA would include awards passed by the Emergency Arbitrators, and hence, Section 29 would apply to foreign awards passed by the Emergency Arbitrators. It was observed that the term “arbitral tribunal” is not defined in Section 27 or anywhere in Part 3 of the IAA and therefore, it can be interpreted to include Emergency Arbitrators. This interpretation is also in consonance with the context of the IAA as a whole as Section 2(1) of the IAA includes Emergency Arbitrators.
Further, it was noted that the 2012 amendments intended to make IAA applicable to all awards including foreign interim awards by Emergency Arbitrators, and the same were ratified by the Ministry of Law in a press release.
On the issue of whether the award was binding, the High Court observed that the award was binding as per Section 29(2) of the IAA. The Court differentiated between the award being “binding” and the award being “final”. Observing Article 7(4) of the ICDR Rules, it was held that the award was binding.
On the issue of whether the award exceeded the jurisdiction of the Emergency Arbitrator, the factors that need to be considered are:
- Matters that fall within the ambit of submission to the Arbitral Tribunal
- Whether the award involved such matters
- Whether the award involved a new difference that was outside the scope of the submission to Arbitration
In the present case, the position of the Claimant concerning the termination of the Agreements came to light when the Emergency Arbitrator asked questions during the hearing. The Counsel of the Claimant replied that he would talk to the Claimant about whether the distribution channel should be continued pending determination by the full Tribunal. On being specifically asked whether Claimant considered the Agreements to be terminated, the Claimant replied that he did not consider the Agreements to be terminated and submitted that there should be restored the status quo between the parties. Since this submission was raised in the post-hearing list of issues, the award passed was not beyond the scope of the submission to the Arbitration.
The decision of the Court:
However, the High Court noted that in the circumstances in which the award was issued, Defendant did not get a chance to present his case against the submission of the Claimant during the post-hearing submissions. The opportunity to resist the Claimant’s alternative application was not provided to Defendant. Therefore, based on this, the Enforcement order was set aside by the High Court and the application of the Claimant to enforce the award was dismissed.
Case Title: CVG v. CVH
Coram: Hon’ble Mr. Justice Chua Lee Ming
Case No.: [2022] SGHC 249
Advocates for Claimant: Advs. Melvin See Hsien Huei, Lavan Vickneson, Alexander Kamsany Lee
Advocates for Defendant: Advs. Lok Vi Ming SC, Joseph Lee, Qabir Singh Sandhu, Law May Ning, Joshua Ho Jun Ling
Read Judgment @LatestLaws.com:
Picture Source :
