Mango Boulevard P/L v Mio Art P/L & Ors

This decision considers an application to set aside arbitral awards under s 34 of the Commercial Arbitration Act 2013. Justice Jackson considered a number of questions raised by the parties. First, his Honour considered the effect of an order setting aside an award and whether this would terminate the arbitrator’s jurisdiction or mandate. Second, Jackson J gave some consideration to the court’s power to suspend the setting aside of the arbitral award. Finally, his Honour considered the grounds advanced to set aside the awards: first, that the arbitrator had acted in excess of his jurisdiction by departing from the “contractually stipulated methodology”; and second, that the methodology involved a fundamental departure from the requirements of procedural fairness. His Honour held that at most the argument advanced in respect of the first ground could only reveal an error of law by the arbitrator and not an excess of jurisdiction, and as to the second ground, that there was no error that caused real practical injustice to the applicant, although it was at least “arguable” that there had been a breach of natural justice.

Jackson J

18 May 2017

This matter concerned two applications to set aside arbitral awards under s 34 of the Commercial Arbitration Act 2013. [1]. However, as the second award depended on the first, Jackson J disposed of both applications by considering whether the first award should be set aside. [12].

His Honour categorised the grounds pressed by the applicant as falling into two categories. First, relying on s 34(2)(a)(iii) of the Act, the applicant argued that the award dealt with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contained decisions on matters beyond the scope of the submission to arbitration. [15]. Secondly, relying on ss 34(2)(a)(ii) and 34(2)(b)(ii) of the Act, the applicant contended that the arbitrator failed to afford procedural fairness, or acted in breach of the rules of natural justice, such that the applicant was unable to present its case or the award was in conflict with the public policy of the State. [15].

Jackson J identified three issues which were raised by the application: (i) whether the grounds were made out, (ii) whether an order setting aside the award would terminate the arbitrator’s jurisdiction or mandate, and (iii) whether the court should suspend the setting aside of the arbitral proceedings. [16]. His Honour dealt with (ii) and (iii) before turning to consider (i).

In relation to issue (ii), Jackson J noted the following. First, a final award terminates the arbitral proceedings. [28]. Secondly, on an application to set aside an award other than a final award (a “partial award”), the court may suspend the proceeding and give the arbitral tribunal an opportunity to resume and revisit the subject matter of the award. [29]. Thirdly, aside from this power, “if the court proceeds to set aside an award, nothing in the scheme of s 34 of the [Act] expressly provides for either a remitter or a new hearing in respect of the award that is set aside”. [30].

His Honour ultimately followed the decision of the Court of Appeal of Singapore in AKN v ALC [2015] SGCA 63, which held that the court has no power to remit an award after it has been set aside, and importantly, that the arbitral tribunal has no continuing jurisdiction in relation to the matters dealt with by the award. [32]–[34]. His Honour explained that the “outcome on an order to set aside an award made under s 34 of the [Act] is that the arbitral proceedings are set at naught but the parties to the arbitration agreement may be able to refer the dispute again”. [35].

As for (iii), Jackson J clarified that the power to suspend the setting aside of proceedings under s 34(4) is one to give the arbitral tribunal an opportunity to resume the arbitral proceedings; “[i]t is not a power to substitute or appoint a new arbitrator”. [47]. His Honour found that the power to suspend the setting aside of proceedings was only “loosely analogous” to the power of a Court of Appeal to remit proceedings to a differently constituted court. [50]. His Honour then noted that if the applicant could make out its case for setting aside the award the alternatives were (i) to suspend the setting aside of proceedings for a time to give the arbitral tribunal the opportunity to resume the arbitral proceedings and make a further award (or set aside the award), or (ii) to return the parties “to the point of referring their dispute to arbitration before a new arbitral tribunal in respect of the subject matter of the partial award”. [51].

In the result, however, the grounds for setting aside the award were not made out. As for the ground that the arbitrator had acted in excess of jurisdiction, the applicant submitted that in making one of the partial awards, the arbitrator had departed from the “contractually stipulated methodology”. [63]. The difficulty with this argument, as noted by Jackson J, was that:

“[O]n no analysis [did] the applicant’s challenge rise to the level that it could be found that the arbitrator dealt with a dispute not contemplated or not falling within the terms of the submission to arbitration or that his award contains decisions on matters beyond the scope of the submission to arbitration.” [79].

His Honour noted that even if the arbitrator had erred in this respect, “that would be an error of law in the proper construction of the contract …, not something that was an excess of jurisdiction of the kind that engages the s 34(2)(a)(iii) of the [Act]”. [80]

As for the applicant’s argument that the methodology adopted by the arbitrator involved a fundamental departure from the requirements of procedural fairness, Jackson J accepted that there were “reasonable contentions” that there was a breach of natural justice, but was unconvinced that any alleged error “amounted to or caused real practical injustice to the applicant”, and accordingly, could not “form the basis of effective review of the award on an application to set it aside under s 34”. [107], [117], [129].

The grounds for setting aside the award were therefore not made out and the application was dismissed. [130].

J English