ABC Co. v. XYZ Co.

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DMC/SandT/03/40
ABC Co v XYZ Co Ltd
Singapore High Court: Judith Prakash J: unreported: 8 May 2003)
Rajah & Tann for the ABC (not its real name), the applicant
Rajah & Tann for the XYZ (not its real name), the respondent
ARBITRATION: APPLICATION TO SET ASIDE AWARD UNDER ARTICLE 34 OF THE MODEL LAW: WHETHER APPLICANT MAY ADD NEW GROUNDS FOR SETTING ASIDE AFTER EXPIRY OF THREE MONTHS
Summary
The applicant applied to set aside an award made in an arbitration governed by the International Arbitration Act (Cap 143A) ("IAA"), which makes the UNCITRAL Model Law on International Commercial Arbitration part of Singapore law. After the time limit for filing an application to set aside an award, the applicant applied to the court to amend its application by adding six new grounds for setting aside. The court held that such an amendment could be allowed only if the new grounds arose out of the same facts or substantially the same facts as the original grounds.

Facts
ABC and XYZ were parties to an international arbitration that was governed by the International Arbitration Act (Cap 143A) ("the IAA"), which makes the UNCITRAL Model Law on International Commercial Arbitration part of Singapore law. ABC applied to set aside the award made in that arbitration. Article 34 of the Model Law provides the grounds for setting aside (supplemented by two additional grounds in section 24 of the IAA). Article 34 stipulates that the application must be made within three months of the applicant’s receipt of the award. The applicant stated two grounds in its application and applied to court to add six additional grounds after the three month period had expired.

Judgment
1. The court held that the Model Law is part of Singapore law by reason of the IAA. In respect of an arbitration in Singapore which is an international arbitration within the meaning of section 5 of the IAA, the governing legislation is the Model Law as implemented by the IAA. The principle of party autonomy is one that is central to the Model Law. Thus, the attitude to be adopted when a court is faced with such an issue is to look first to the Model Law for an indication as to how such issue is to be treated and, in the absence of such indication, to apply the applicable principles of the general law in the manner best suited to uphold the parties’ choice of arbitration as the appropriate method of dispute resolution.

2. Article 34 of the Model Law provides six grounds for setting aside an award and section 24 of the IAA provides two extra grounds. Article 34(3) sets out the time limit of three months from the date of receipt of an award by the applicant for making the setting aside application. Article 34 does not provide the procedure by which recourse to the courts is to be had. The procedure has been provided by Order 69A of the Rules of Court 1996.

3. Article 34 does not state that the ground on which the award is being challenged has to be stated in the application. This requirement must, however, be inferred since it is plain from Article 34 that only proof of one or more of the grounds enumerated in that paragraph will entitle a court to set aside an award. The proper interpretation of Article 34(3) must be, therefore, that a party seeking to set aside an award must, within the three months period, file an application which states the ground or grounds he intends to rely on.

4. The question whether a party may to amend the application to add an additional ground after the three month period is not answered by Article 34. Order 69A rule 2(1) of the Rules of Court 1996 prescribes that applications to set aside awards under the Model Law are to be made by originating motion. Order 20 is the rule dealing with amendment of court documents. Order 20, rule 5(1) empowers the Court "at any stage of the proceedings" to allow the plaintiff to amend his writ (or originating motion). But Order 20, rule 5(5) provides that an amendment may be allowed "notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment."

5. The applicant argued that Order 20, rule 5(1) applied. It asserted that "grounds" and "causes of action" were distinct and one could not apply the limitation on adding new causes of action imposed by rule 5(5) to the addition of new grounds in this case. The judge held that, although the matters quoted in Article 34 and section 24 have been described as "grounds", that in itself could not stop them from also constituting "causes of action" because they displayed all the characteristics of causes of action. They related to facts or grievances which entitled a party to claim a remedy from the court. The matters stated were statutorily created causes of action. Therefore, the judge agreed with the respondent that Order 20, rule (5) governed the application to amend the originating motion. Accordingly, the judge held that she was only able to allow such amendment if the new grounds proposed to be added arose out of the same facts or substantially the same facts as the grounds specified originally. Only one new ground satisfied these criteria.

Comments
In April 2002, after the setting aside application was filed, Order 69A was amended to specify that the notice of motion must state the grounds on which the application is made and must be accompanied by an affidavit that exhibits the relevant documents and sets out the evidence the applicant relies on. These amendments did not apply to the present case, but the judge’s inference that Article 34 of the Model Law required the application to state the grounds relied on is consistent with these amendments.

An arbitration in Singapore is governed by either the Arbitration Act (Cap 10, Revised Edition 2002) or the IAA. The IAA applies to international arbitrations and section 5 defines an international arbitration in terms comparable (but not identical) to Article 1(3) and (4) of the Model Law. The Arbitration Act is meant to apply to domestic arbitrations but "domestic" is not defined. The Arbitration Act acts instead as the default regime whenever an arbitration in Singapore falls outside the reach of the IAA. The Arbitration Act will also apply where parties to an international arbitration, which is otherwise subject to the Arbitration Act, opt out of the IAA.

The Singapore High Court held that it is able to allow such amendment only if the new grounds proposed to be added arise out of the same facts or substantially the same facts as the grounds specified originally. Only one ground satisfied this criteria and was allowed. The application to add the other proposed amendments was dismissed.

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