[co-author: Yan Lai]*
The Singapore Court of Appeal has released its grounds for deciding that an arbitrator was functus officio with no jurisdiction to issue a further award in Voltas Ltd v. York International Pte Ltd [2024] SGCA 12.
In its grounds released on 2 May 2024, the Court dismissed Voltas’ appeal and found that an earlier award by the arbitrator was a final award disposing of all remaining issues in the arbitration, notwithstanding that it contained various conditional orders.
Further, the Court held that it was not possible for an arbitrator to impliedly reserve his/her jurisdiction to revisit an otherwise final award.
KEY TAKEAWAYS
- A conditional award can be regarded as a final award that disposes of all remaining claims in the arbitration, so long as the conditions in the award do not make it necessary for the tribunal to reopen or reconsider the matter, and an enforcement court would be able to assess whether the conditions in the award have been satisfied.
- A reservation of jurisdiction in an otherwise final award must be made expressly. It is not possible for such a reservation to be made impliedly.
- While this case was decided under the provisions of the Arbitration Act 2001 (2020 Rev Ed) (the “AA”), it is useful to illustrate how similar cases under the equivalent provisions of the International Arbitration Act 1994 (2020 Rev Ed) may be decided.
BACKGROUND
In 2008, the appellant, Voltas Ltd (Voltas), purchased water-cooled dual centrifugal chillers (Chillers) from the respondent, York International Pte Ltd (York).
The Chillers were purchased by Voltas to fulfil its obligations under a contract with Resorts World Sentosa Pte Ltd and DCP (Sentosa) Pte Ltd (the Project Owners), to construct and maintain a district cooling plant on Sentosa Island.
In 2011, disputes arose between Voltas and York over alleged defects in the Chillers. The parties agreed to submit their disputes to ad hoc arbitration before a sole arbitrator in Singapore. In August 2014, the arbitrator issued an award finding that York had supplied defective Chillers and allowing Voltas’ claims for the resulting loss and damage suffered (the 2014 Award).
Specifically, in the 2014 Award, the arbitrator allowed Voltas’ claims for the “Nitrogen Claim” and the “Removal Claim”, which represented sums that Voltas was liable to pay the Project Owners as a result of the defective Chillers.
However, as Voltas had not yet paid the Project Owners these sums, the arbitrator noted that Voltas would potentially obtain a windfall if York were made to pay Voltas immediately. Accordingly, the arbitrator ordered that York was liable to pay Voltas (a) only upon Voltas making payment to the Project Owners; and (b) “up to a maximum of” a certain fixed amount in respect of the Nitrogen and Removal Claims.
In August 2015, Voltas entered into a settlement agreement with the Project Owners, under which the Project Owners agreed to set off the sums owed by Voltas under the Nitrogen and Removal Claims. Voltas then demanded payment of the sums representing the Nitrogen and Removal Claims from York, but York disputed that payment was due.
In August 2020, Voltas applied to the arbitrator for determination of whether it had, in substance, paid the Project Owners for the Nitrogen and Removal Claims. York objected to this application on the basis that the arbitrator was functus officio following issuance of the 2014 Award.
In August 2021, the arbitrator issued a jurisdictional ruling (the 2021 Ruling) finding that he retained jurisdiction to make a further award. York then applied to the General Division of the High Court under s 21(9) of the AA, seeking to set aside the 2021 Ruling.
The High Court Judge allowed York’s application. Dissatisfied with the ruling, Voltas appealed to the Court of Appeal, arguing that the 2014 Award could not be a final award as it was a conditional award.
Further, Voltas contended that the arbitrator did not need to reserve his jurisdiction to decide on undetermined issues – and that in any event, a reservation of jurisdiction could be impliedly rather than expressly made.
COURT OF APPEAL DECISION
The Court of Appeal dismissed the appeal and upheld the decision to set aside the 2021 Ruling.
THE 2014 AWARD WAS A FINAL AWARD
First, the Court of Appeal found that the 2014 Award was a final award, in the sense that it disposed of all remaining claims in the arbitration. The Court observed that a conditional award could be a final award so long as the conditions in the award did not make it necessary for the tribunal to reopen or reconsider the matter, and an enforcement court would be able to assess whether conditions in the award had been satisfied.1
On the facts of the case, the Court found that the 2014 Award decided all substantive issues between the parties.2 The arbitrator himself did not contemplate that there were any issues left to be decided following the 2014 Award, as indicated by the fact that he decided on costs of the arbitration in the 2014 Award.3
Further, in the 2014 Award, the arbitrator expressly chose to make a conditional order on the Nitrogen and Removal Claims, rather than adjourn the matter until Voltas paid the relevant sums to the Project Owners.4 This suggested that the arbitrator did not intend to keep the question of York’s liability open.
The 2014 Award was therefore a final award, in the sense that there was no substantive matter left undecided.5
IMPLIED RESERVATION OF JURISDICTION
Next, the Court of Appeal rejected Voltas’ submission that a reservation of jurisdiction in the 2014 Award could be impliedly rather than expressly made.
The Court observed that the starting point was that a tribunal is functus officio once it renders an award.6 Termination of a tribunal’s mandate is immediate and absolute, and a tribunal would only be permitted to revisit its award pursuant to the statutorily prescribed grounds in s 43 of the AA.7
Accordingly, where a tribunal issued a final award disposing of all remaining issues in the arbitration – and absent any express reservation of jurisdiction – the tribunal was functus officio with no room to imply any such reservation.8
In addition, the Court noted that the notion of implying a reservation of jurisdiction was inconsistent with s 43(4) of the AA, which sets out a limited statutory exception to the termination of the tribunal’s mandate – namely, that the parties may within 30 days of receipt of the award request the tribunal to make an additional award on claims presented in the arbitration but omitted from the award.9
A tribunal therefore could not reserve its jurisdiction to revisit an otherwise final award, other than expressly.10
Given that it was undisputed between the parties that the arbitrator did not expressly reserve jurisdiction in the 2014 Award, it followed that the arbitrator did not have jurisdiction to issue a further award.11
COURT OF APPEAL’S OBSERVATIONS
The Court of Appeal concluded by observing that issues pertaining to whether the conditions in the 2014 Award had been met (and consequently, whether York’s liability to Voltas had accrued) could be answered by the enforcement court.
While there might be difficulties ascertaining from the settlement agreement what sums were paid by Voltas in relation to the Nitrogen and Removal Claims, this was a matter of evidence and did not justify resuscitating the arbitrator’s jurisdiction after he had been rendered functus officio.12
*Legal Assistant
1 At [42].
2 At [45]-[46].
3 At [47].
4 At [48].
5 At [49].
6 At [51].
7 At [58].
8 At [59].
9 At [60].
10 At [61].
11 At [50].
12 At [63]-[64].
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