Jurong Engineering v. Black & Veatch

[ Home ] [ Up ]

DMC/SandT/04/13
Jurong Engineering Ltd v. Black & Veatch Singapore Pte Ltd
Singapore High Court: Lai Kew Chai J: 26 November 2003: [2003] SGHC 292
Wong Partnership for Jurong Engineering
Rajah & Tann for Black & Veatch Singapore
ARBITRATION: CONSTRUCTION OF AN ARBITRATION CLAUSE: 
ARBITRATION CLAUSE MADE GENERAL REFERENCE TO RULES PROMULGATED
BY THE SINGAPORE INTERNATIONAL ARBITRATION CENTRE: ARBITRATION 
WAS A DOMESTIC ARBITRATION:- ARBITRATION COMMENCED UNDER SIAC 
DOMESTIC ARBITRATION RULES: SIAC DOMESTIC ARBITRATION RULES NOT 
IN EXISTENCE AT THE TIME OF CONTRACT WHILST SIAC ARBITRATION RULES 
(WHICH GOVERNS INTERNATIONAL ARBITRATION) IN EXISTENCE AT THE TIME
OF CONTRACT:- WHETHER SIAC DOMESTIC ARBITRATION RULES OR SIAC 
ARBITRATION RULES SHOULD APPLY
Summary
Jurong Engineering and Vetach Singapore entered into a contract for a plant in Singapore. The arbitration clause in their contract states that the parties agreed to submit to SIAC arbitration and to the rules of arbitration promulgated by the SIAC. The arbitration was a domestic arbitration. The trial judge held that in the absence of any specifications in the arbitration clause, SIAC Domestic Arbitration Rules would apply to domestic arbitration even though the rules were not in existence at the time of the contract.

This Case Note was contributed by Ang & Partners, the Website’s International Contributors for Singapore

Facts
The plaintiffs, Jurong Engineering and the Defendants, Veatch Singapore, both of which were locally incorporated companies, entered into a contract for steel works for a power plant in Singapore.

The relevant part of the arbitration clause read:
"Any arbitration will be conducted in English in Singapore under and in accordance with the rules of arbitration promulgated by the Singapore International Arbitration Centre" [emphasis added].

Differences then arose between the parties. Jurong Engineering commenced arbitration under the SIAC Domestic Arbitration Rules. However, only the Singapore International Arbitration Centre ("SIAC") Arbitration Rules (which govern international arbitration) existed at the time the parties made the contract, i.e. on 4 January 2000. The SIAC Domestic Arbitration Rules only came into existence on 1 May 2001.

Veatch Singapore argued that the words in the arbitration clause could only refer to the SIAC Arbitration Rules since the SIAC Arbitration Rules were the only rules of SIAC in existence at the time of the contract. Jurong Engineering were, therefore, in breach in commencing the arbitration under the SIAC Domestic Arbitration Rules.

Veatch Singapore did not challenge Jurong Engineering’s contention that the arbitration was a domestic arbitration within the meaning in rule 1.2 of the SIAC Domestic Arbitration Rules*

Jurong Engineering took out the present application to seek a declaration that on a true construction of the arbitration clause, the reference to any arbitration being conducted "under and in accordance with the rules of arbitration promulgated by the Singapore International Arbitration Centre" was a reference to the rules of arbitration of the SIAC generally, at the time of the submission of the dispute to arbitration, and not an express reference to the SIAC Arbitration Rules. Given the arbitration was a domestic arbitration, the SIAC Domestic Arbitration Rules should apply.

The judge granted Jurong Engineering’s application.

Judgment
1. The natural and ordinary meaning of the phrase "Any arbitration will be conducted in English in Singapore under and in accordance with the rules of arbitration promulgated by the Singapore International Arbitration Centre" was that the parties had agreed to submit to an SIAC arbitration and, generally, to the most appropriate institutional rules existing at the time of the submission to arbitration, regardless of whether those rules were in existence at the time of the contract.

2. While parties are free to specify SIAC Arbitration Rules to govern their arbitration even though it is a domestic arbitration, this must be done explicitly in the arbitration clause. In the absence of any such specification, the SIAC Domestic Arbitration Rules would apply to domestic arbitration (while the SIAC Rules would apply to international arbitration).

3. The subjective intention of Veatch Singapore in drafting the arbitration clause was irrelevant for the purposes of construing the arbitration clause.

Comments
There is an appeal pending against the judge’s decision. The present position is that, if the parties agree that the arbitration will be conducted in accordance with the rules of the SIAC but they have not made any explicit reference to a particular arbitral regime that will apply to the arbitration, then the SIAC Domestic Arbitration Rules will apply to domestic arbitration while the SIAC Arbitration Rules will apply to international arbitration. A party who wishes to adopt SIAC Arbitration Rules in domestic arbitration or SIAC Domestic Arbitration Rules in international arbitration should say so explicitly in the arbitration clause.

* A domestic arbitration is described in rule 1.2 of the SIAC Domestic Arbitration Rules as one where all the parties at the conclusion of the arbitration agreement had their place of business in Singapore and where a substantial part of the obligations of the commercial relationship was to be performed in Singapore; or where the subject matter of the dispute is most closely connected with Singapore.

These Case Notes have been prepared with care, but neither the Editor nor the International and other Contributors can guarantee that they are free from error, nor that they contain every pertinent point. Reliance should not therefore be placed upon them without independent verification. The Editor and the International and other Contributors disclaim all liability for any loss of whatsoever nature and howsoever arising as a result of others acting or refraining from acting in reliance on the contents of this website and the information to which it gives access. The Editor claims copyright in the content of the website.