Challenge to Arbitrator for Apparent Bias – What happens if the final award is rendered before the court determines challenge?

The recent Singapore High Court decision of PT Central Investindo v Franciscus Wongso and others and another matter, [2014] SGHC 190 involved a rare challenge to an arbitrator for apparent bias. The case also addressed a novel legal issue: what would happen when a party seeks to disqualify and remove a sole arbitrator, but that sole arbitrator then renders her/his final award before the courts determine the removal application? Continue reading

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SIAC-CII Bangalore Conference 2014

The SIAC, in conjunction with the Confederation of Indian Industry (CII) will be jointly conducting a conference on Protecting Business Interests through International Arbitration in an Evolving Indian Economy on Friday, 26th September 2014 in Bangalore, India. The conference will be held at Vivanta, By Taj in Bangalore, India from 9:30am to 6:00pm.

The conference will examine the challenges for businesses in an evolving Indian economy and arbitration as a mode of dispute resolution for Indian parties in various sectors. The detailed programme can be found here.

Olswang Partner, Jonathan Choo, will be presenting together with Vyapak Desai (Partner, Nishith Desai Associates) on “Does International Arbitration Work For The Technology Sector?” – a topic which will be of particular relevance to businesses in the thriving technology sector within Bangalore.

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Time limited obligations to engage in “friendly discussions” before proceeding to arbitration may be binding

[We are grateful for the following guest post from Charlotte Bamford, a Trainee Solicitor currently sitting in the Commercial Litigation Group of our London office.]

In Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 (Comm), the Commercial court considered whether a contractual clause requiring the parties to “first seek to resolve the dispute or claim by friendly discussion” before proceeding to arbitration was enforceable, and – if it was – whether it would constitute a condition precedent to issuing arbitration proceedings.  In a departure from the existing stance demonstrated by the courts, Teare J’s judgment proclaims that such an obligation is indeed both enforceable and likely to constitute a condition precedent.

The clause in question reads as follows: Continue reading

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Case Update: Unavailability of a particular source may operate to frustrate contracts

[Thanks to Daniel Jung, Associate, Olswang Asia LLP for a summary of the case and the first draft of this post]

We previously discussed  the case of Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd, [2013] SGHC 127 (see our previous post: “The Interpretation of Force Majeure Clauses and Frustration in Singapore”) in which the Singapore High Court examined the issues of frustration and the interpretation of force majeure clauses in relation to the so-called “Sand Ban” which affected the construction contract between parties (the “Supply Agreements”).

On the facts of that case, the High Court found that the plaintiff appellant, Alliance, had not been rendered incapable of performing its obligations under the Supply Agreements at the material time and furthermore, nothing had occurred that radically altered the obligations undertaken by Alliance under the Supply Agreements. The High Court, therefore, held that the Supply Agreements were not frustrated by the Sand Ban and, therefore, Alliance should not be discharged from its contractual obligation to supply concrete to Sato by way of the doctrine of frustration. Alliance appealed.

In Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd, [2014] SGCA 35, the Singapore Court of Appeal reversed the decision of the High Court.  The main issues in the appeal were whether Alliance was discharged from its contractual obligation to supply concrete to Sato by way of the doctrine of frustration and whether Alliance was in breach of the relevant contracts.

This post will only focus on the Court of Appeal’s holding on frustration. Continue reading

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Contract drafted without legal advice was unenforceable “piece of legal nonsense”

We enter into contracts, many of them in fact, every single day. At its heart, a contract is a series of legally enforceable promises and obligations between the parties to that agreement. It can be as simple as a sale and purchase of a pen from a stationery shop, or as complex as a long term sourcing contract for the provision of global IT services to an MNC. The length of a written contract will often reflect the complexity and importance of that particular contract.

What happens when contracts are badly drafted, for example, with key terms and conditions missing? Sometimes, the law does step in to assist the parties. One such example is the Sale of Goods Act (Cap. 393) which applies to any contract for the sale of goods in Singapore. In most instances, the failure to set out the purchase price of the goods would be fatal to an agreement between the parties. However, section 8 of the Sale of Goods Act provides that the Singapore courts are entitled to look to the course of dealings between parties or failing which, the buyer must pay a reasonable price for the goods.

However, the recent Singapore Court of Teo Chong Nghee Patrick and others v Han Cheng Fong and another appeal, [2014] SGCA 29, provides an important warning to commercial parties that the courts may not strain themselves to rescue parties from their bad drafting. Continue reading

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Case Update: Seat of Arbitration and Implied Choice of Governing Law of Arbitration Agreement

[Update: the paragraphs on the Singapore High Court’s analysis of the arbitration clause and its implications has been updated to more closely reflect the language at paragraph [17] of the Singapore High Court’s decision.] 

A party may rely on a valid and enforceable arbitration clause to obtain a stay of court proceedings commenced by the counterparty to the arbitration agreement. The applicant party may even obtain an anti-suit injunction to prevent a party to the arbitration agreement from commencing court proceedings (see Power of the Singapore Court to grant permanent anti-suit injunction in aid of arbitration proceedings as well as English Court has power to issue an anti-suit injunction in support of non-existent arbitration).

On the other hand, if an arbitration clause is defective, then a party may resist the stay application on the basis that the arbitration agreement is unenforceable or that the dispute between the parties does not fall within the scope of the arbitration agreement. These issues of enforceability and scope of the arbitration agreement are determined  by the governing law of the arbitration agreement (see The Laws Governing an Arbitration as well as the case of Piallo GmbH v Yafriro International Pte Ltd[2013] SGHC 260, which is analysed here).

What happens then when parties do not expressly provide for the governing law of the arbitration agreement? The legal analysis can get complicated.

The Singapore High Court case of FirstLink Investments Corp Ltd v GT Payment Pte Ltd and others, [2014] SGHCR 12 had to deal with these two issues concurrently. Continue reading

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Draft Arbitration Bill in Myanmar

We have written about Myanmar signing up to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 as well as the Investment Regime and Arbitration in Myanmar. A key issue we had noted was the lack of a legal framework for the enforcement of international arbitration awards,

“…Myanmar’s Arbitration Act 1944 only provides for domestic arbitration and does not provide a framework for the recognition and enforcement of foreign arbitral awards. We anticipate that the Arbitration Act 1944 will either have to be revised or a new international arbitration act enacted in order to make the New York Convention operative. It is still unclear when such an act will be enacted in Myanmar.” 

In recent developments, we have become aware that there is now a draft Arbitration Bill that is being considered by the Myanmar parliament. In the latest issue of their newsletter, Polastri Wint & Partners’ Sebastian Pawlita and Thitsar Khine discuss the draft Arbitration Bill and its implications for foreign investors.

The passing of the Arbitration Bill will be a positive step in bringing Myanmar into the international arbitration community. An arbitration act would also provide reassurance to foreign investors that there is the option of enforceable arbitration proceedings – a neutral, independent and impartial tribunal to settle their disputes with Myanmar commercial parties, with the resulting arbitration awards being enforceable in Myanmar.

Some points for commercial parties to note:

  1. The Arbitration Bill is based on the UNCITRAL Model Law on International Commercial Arbitration (1985) with an expanded definition of what constitutes an arbitration agreement.
  2. The definition of an arbitration award includes interim awards for purposes of enforcement by the Myanmar courts. However, unlike the Singapore International Arbitration Act (Cap. 143A) (“IAA”), theArbitration Bill is silent on whether orders and directions issued by the arbitral tribunal are also encompassed in the definition of an arbitration award.
  3. The appointing authority for arbitrator(s) is the “chief justice of the Union”. It remains to be seen if the Chief Justice will delegate his powers to any other person or institution.
  4. There is an entire section that deals with how the Myanmar courts should deal with claims involving insolvency situations or insolvency related claims in arbitration. The section provides that the Myanmar courts have a discretion to refer such cases to arbitration on application by a party.
  5. Finally, the draft Arbitration Bill explicitly provides that the Myanmar courts have the power to extend a time bar to commence arbitration, but only for arbitrations seated in Myanmar. There is no similar provision in the IAA or in the Model Law.

By way of explanation, in a previous post, we had discussed the English case of Wholecrop Marketing Ltd v Wolds Produce Ltd, [2013] EWHC 2079 (Ch) and how contractual time limit to commence arbitration operates as a time bar to claim itself.

There remains work to be done. Even after the draft Arbitration Bill is passed into law, the Myanmar courts will have to introduce its own rules and court procedures for parties who seek the assistance of the Myanmar courts in obtaining interim relief in aid of arbitration, or for the recognition and enforcement of international arbitration awards. We look forward to these further developments and will update our readers accordingly.

We are very grateful to Polastri Wint & Partners and Sebastian Pawlita for providing us with an English translation of the draft Arbitration Bill. Readers who wish to obtain an English translation of the Arbitration Bill should contact Sebestian Pawlita directly at

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LexisNexis Newsletter – Bills of Exchange and Arbitration Clauses

Our short article on the Singapore High Court case of Piallo GmbH v Yafriro International Pte Ltd, [2013] SGHC 260 has been featured on LexisNexis Newsletter June 2014 (Issue 1). The article focuses on the Singapore court’s decision on the ambit of arbitration clauses (presumption of arbitration) and whether disputes arising out of bill of exchanges issued pursuant to the underlying contract fall within that contract’s arbitration clause.

Our article can be found here. For a more detailed analysis of the case, see “Case Update: (1) Governing law of the arbitration agreement determines scope of arbitrability; (2) Disputes on bills of exchange fall within arbitration clause” as well as “Can a claim on dishonoured cheque(s) avoid a stay for arbitration?

To subscribe to the LexisNexis newsletter, click here.

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Arbitrability of intra-corporate disputes

Arbitration is a consensual process. It is axiomatic that parties may only arbitrate those disputes that they have agreed to submit to arbitration. In some cases, after a dispute has arisen, parties to that dispute may agree to refer the dispute to arbitration. Alternatively, and more commonly, parties agree by virtue of arbitration clauses drafted into their contracts to submit any subsequent disputes that may arise to arbitration.

There are good reasons why parties should pay attention to how their arbitration clause are worded. Where a dispute does not fall within the scope of the arbitration clause, that dispute would fall outside the jurisdiction of the arbitral tribunal and any award rendered on that basis is liable to be set aside or refused recognition and enforcement: see Article 34(2)(a)(iii) of the UNCITRAL Model Law; Article V(1)(c) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (“New York Convention”).

Parties should also note that there are certain subject matters that are non-arbitrable: see Article 34(2)(b)(i) of the UNCITRAL Model Law; Article V(2)(a) of the New York Convention). These tend to involve issues of Continue reading

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Case Update: Separate but Related Contracts with Different Dispute Resolution Clauses

A long running dispute before the Singapore courts recently came to an abrupt and unresolved end when the Singapore Court of Appeal decided that parties had to resolve their dispute in arbitration instead.

The case of Burgundy Global Exploration Corp v Transocean Offshore International Ventures Ltd and another appeal [2014] SGCA 24 demonstrates the pitfalls of having separate but related contracts governed by different dispute resolution clauses.

The appellant, Burgundy Global Exploration Corp (“Burgundy”), brought 2 appeals before the Court of Appeal. This post will only discuss the appeal in respect of the two interrelated contracts with different dispute resolution clauses – one stipulating arbitration and the other, the Singapore courts.

Facts of the case

Background to the dispute

Burgundy is  a Philippines company engaged in the business of exploring and developing oil and gas resources in the Philippines. The Respondent, Transocean Offshore International Ventures Ltd (“Transocean”), is a company which supplies mobile offshore drilling units and provides drilling services for oil and natural gas reserves.

Under an offshore drilling contract and a novation agreement (collectively, the “Drilling Contract”), Transocean agreed to supply a semi-submersible drilling rig and provide offshore drilling services to Burgundy. Article XI of the Drilling Contract provided that Burgundy and Transocean were to enter into an escrow agreement (the “Escrow Agreement”). The Escrow Agreement required Burgundy to deposit certain amounts into an escrow account, failing which Transocean would be entitled to terminate the Drilling Contract. The Drilling Contract was governed by an arbitration agreement while the Escrow Agreement was governed by a jurisdiction clause in favour of the Singapore courts.

Burgundy failed to make the initial deposit into the escrow account. Transocean accordingly exercised its right to terminate the Drilling Contract.

Proceedings before the Singapore Courts

On 29 January 2009, Transocean commenced proceedings against Burgundy for its breach of the Escrow Agreement and, amongst other things, claimed damages for Transocean’s loss of net profits under the Drilling Contract as well as Transocean’s wasted costs and expenses in entering into the Escrow Agreement.

On 5 June 2009, Burgundy applied for a stay of the proceedings in favour of arbitration pursuant to Art 25.1 of the Drilling Contract, which provided that any dispute, controversy or claim arising out of the Drilling Contract shall be exclusively and finally settled by arbitration. Art 25.1 further provided that, unless otherwise expressly agreed in writing, indirect, consequential or exemplary damages shall not be allowed.

The stay application was granted at first instance, but the appeal against the order was allowed by Andrew Ang J (“Ang J”), see Transocean Offshore International Ventures Ltd v Burgundy Global Exploration Corp[2010] 2 SLR 821. Ang J held that Art 25.1 of the Drilling Contract did not apply to claims arising from Burgundy’s failure to pay the escrow amount into the escrow account. Rather, the Escrow Agreement was governed by the non-exclusive Singapore court jurisdiction clause. Ang J’s decision was affirmed by the Singapore Court of Appeal.

Subsequently, Transocean applied for summary judgment against Burgundy and this was granted by the learned Assistant Registrar Teo Guan Siew on 7 October 2010. That decision was upheld on appeal by the Honourable Justice Quentin Loh.

On 23 April 2012, Transocean was awarded damages amounting to US$105,536,922 plus interest, being the net profit that Transocean would have earned under the Drilling Contract plus the cost of mitigation reasonably incurred by Transocean. Burgundy appealed against that award for damages. However, its appeal was dismissed by the Singapore High Court in Transocean Offshore International Ventures Ltd v Burgundy Global Exploration Corp [2013] 3 SLR 1017.

In coming to its decision, the Singapore High Court rejected Burgundy’s argument that Transocean’s claim for damages (profits under the Drilling Contract) fell within the scope of the arbitration agreement in the Drilling Contract. The Court reached the decision on the basis that the Drilling Contract was not itself the source of the parties’ rights and obligations giving rise to Transocean’s claim. Rather, the High Court thought that the Drilling Contract was only a point of reference for ascertaining the financial consequences of Burgundy’s breach of the Escrow Agreement.

The Parties’ arguments on appeal

On appeal, Burgundy submitted that insofar as Transocean was claiming losses arising from the termination of the Drilling Contract, such a claim gave rise to a dispute under the Drilling Contract and therefore was subject to arbitration pursuant to Art 25.1 of that agreement.

Transocean argued that the question of whether it could claim its losses under the Drilling Contract in these proceedings was res judicata as Burgundy’s application for a stay of proceedings in favour of arbitration had already been finally dismissed by the Court of Appeal. Transocean further argued that the assessment of damages was a factual quantification of the losses caused by Burgundy’s breach of the Escrow Agreement and was distinct from a determination of substantive liability under the Drilling Contract.

Court of Appeal’s Decision

Threshold Question – no res judicata

Transocean submitted that an issue estoppel arose in this case because the damages issue had already been litigated and decided during the stay proceedings, and therefore Burgundy was estopped from raising the damages issue at the assessment of damage stage.

The Court of Appeal disagreed. Since the damages issue had not been decided on its merit, nor had it been necessary for it to be decided in the courts below, the matter was not res judicata.

Could Transocean recover its loss of profits under the Drilling Contract in a claim for breach of the Escrow Agreement?

As a preliminary observation, the Court of Appeal highlighted that this was a case where the parties had entered into two contracts to give effect to a single transaction. The Drilling Contract was the main contract setting out the parties’ obligations, including the services to be provided by Transocean and the rates to be paid by Burgundy for those services. The Escrow Agreement was a separate contract making provision for the question of how Burgundy should pay for Transocean’s services.

The Court of Appeal had “no real doubt” that these two contracts were closely linked (see paragraph [43]). Nonetheless, the Court of Appeal held that the parties “had deliberately carved out escrow matters from the transaction and subjected it to a separate agreement”. The Court of Appeal held that Transocean’s interest under the Escrow Agreement was to obtain security for Burgundy’s performance of its payment obligations under the Drilling Contract. This ought not to be confused with Transocean’s interest under the Drilling Contract, which was to make profits from carrying out the contracted services (paragraph [44]).

As such, the Court of Appeal concluded that the true damage caused by Burgundy’s breach of the Escrow Agreement was the loss of its security, not the loss of profits under the Drilling Contract. The proper cause of action for recovering such loss of profits had to be a claim under the Drilling Contract. The Court of Appeal held that “[h]aving deliberately chosen to carve out the security aspect and deal with it in a separate contract, Transocean could not seek to vindicate its performance interest under the Drilling Contract by bringing a claim founded on breach of the Escrow Agreement” (see paragraph [45]).

The Court of Appeal added that the fact that clause 3.2 of the Escrow Agreement entitled Transocean to terminate the Drilling Contract upon a breach of the Escrow Agreement was immaterial to the above analysis. This was because a breach of the Escrow Agreement was not necessarily a breach of the Drilling Contract. The Court of Appeal held at [46],

“…The contractual right to terminate the Drilling Contract upon a breach of the Escrow Agreement is just that – a right to terminate; it does not serve to import all the obligations under Drilling Contract into the Escrow Agreement and allow Transocean to treat them as a single composite contract. This is a matter of some significance where, as here, each contract has unique features including distinct dispute resolution mechanisms.”

Hence, the Court of Appeal held that in order for Transocean to recover its losses flowing from the termination of the Drilling Contract, the proper course for Transocean was to bring a claim in arbitration under the dispute resolution clause in the Drilling Contract and prove that the Drilling Contract had been breached by Burgundy and that Transocean was therefore entitled to damages for those losses.

Burgundy had not waived its right to arbitration

On a separate point, Transocean argued that because Burgundy had engaged Transocean in the assessment process and taking out numerous adjournment applications to allow itself to do so, Burgundy must be taken to have waived its right to arbitration. The Court rejected this argument on the basis that in order to establish a waiver by one party of certain contractual rights, there must be an unequivocal representation from that party that it is forgoing those rights. No such representation could be found in this case. In fact, Burgundy consistently insisted on its right to arbitration.

Conclusion and Takeaways

For the above reasons and despite the years of court proceedings which started in 2009, the Court of Appeal allowed the appeal.

Transocean’s claim for damages in this case was therefore limited to its alternative claim for wasted costs and expenses for US$55,001.46, insofar as these were the costs that were incurred in entering into the Escrow Agreement (see paragraph [58]).

There may be good reasons for commercial parties to have interrelated contracts governed by different dispute resolution clauses. This usually crops up in the case of construction projects which have a “chain” of contracts (Owner-Developer, Developer-Main Contractor, Main Contractor-Sub-Contractor) and parties may not want to have a single forum to resolve all their disputes.

Alternatively, in cases involving escrow arrangements, the escrow agent may not want to be party to an arbitration agreement (see e.g. Astrata (Singapore) Pte Ltd v Portcullis Escrow Pte Ltd and another and other matters, [2011] 3 SLR 386; [2011] SGCA 20).

However, Burgundy Global Exploration Corp v Transocean Offshore International Ventures Ltd and another appeal [2014] SGCA 24 should now serve to caution parties of the risks in such an approach – Claimants may potentially need to commence separate proceedings before both the courts and in arbitration to pursue their rights.



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