CORRECTION OR INTERPRETATION OF AWARD EXTENDS THE TIMELINE TO SET ASIDE THE AWARD FOR ALL PARTIES
In CNA v CNB and another and another matter [2021] SGHC 192, the High Court held that the plaintiffs’ applications to set aside the arbitral award was not time-barred because the timeline was extended by an earlier application of one of the plaintiffs to correct and/or interpret the award.
This decision concerned the defendants’ application to strike out the two applications by the plaintiffs to set aside an international arbitration award which were filed almost six months after the plaintiffs received the arbitral award (at [1]-[2]).
The arbitration. The arbitration in question involved five parties. In 2017, CNB commenced an arbitration under the Arbitration Rules of the International Chamber of Commerce against CND and CNE, alleging that they had breached a software licensing agreement (the “SLA”) (at [12]). Several months later, CNC was joined as a co-claimant, and CNA was added as an additional respondent, to the arbitral proceedings (at [14]).
The ICC tribunal issued its partial award on the issue of liability on 8 June 2020 (the “Partial Award”) (at [15]). The tribunal found that CND and CNE had breached the SLA and found CNA to be jointly and severally liable with CND and CNE in assisting in their breaches of the SLA (at [17]).
CNA, CND and CNE received the original hard copy of the Partial Award on 26 June 2020 and, pursuant to Art 34(3) of the Model Law on International Commercial Arbitration (the “Model Law”), had three months to apply to set aside the Partial Award if they believed that they had any basis to do so (at [18]).
On 24 July 2020, CNA made an application under Art 36(2) of the ICC Arbitration Rules (“CNA’s Application”). CNA’s application contained two separate requests (at [19]-[21]):
An interpretation of sub-para 598(4) of the Partial Award: CNA sought a clarification on whether the declaratory relief applied to CNA or only to CND and CNE; and
A correction in respect of sub-para 598(10) of the Partial Award: CNA sought a correction of the tribunal’s order that it was liable to account for profits, as CNA believed that this order must have been “framed mistakenly” by the tribunal because CNB and CNC “never sought an accounting of profits from [CNA]”.
On 25 September 2020, the tribunal issued its decision to dismiss CNA’s Application entirely (at [22]).
On 18 December 2020, CNA filed its application to set aside the Partial Award in OS 1293/2020, and on 23 December 2020, CND and CNE filed their application to set aside the Partial Award in OS 1306/2020. CNA, CND and CNE (collectively, the “plaintiffs”) rely on Art 34(3) of the Model Law (at [24]):
“(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under Art 33, from the date on which that request had been disposed of by the arbitral tribunal.”
(emphasis added by High Court)
In turn, Art 33 refers to requests for corrections and interpretations of arbitral awards (at [25]):
“(1) Within thirty days of receipt of the award, unless another period of time has been agreed upon by the parties:
(a) a party, with notice to the other party, may request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature;
(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.”
CNB and CNC (collectively, the “defendants”) filed the present applications, seeking orders that both OS 1293 and OS 1306 be struck out and/or dismissed on the basis that they were filed out of time and thus time-barred (at [27]).
The dispute. Essentially, the parties differed on whether the three-month period for the plaintiffs’ two setting aside applications started on 26 June 2020 (being the date when the hard copy of the Partial Award was received by CNA, CND and CNE) or 25 September 2020 (being the date when the tribunal disposed of CNA’s Application).
BRS v BRQ. The High Court noted that the recent decision of the Court of Appeal in BRS v BRQ and another and another appeal [2021] 1 SLR 390 (“BRS (CA)”) was central to the defendants’ application to strike out.
In the High Court decision of BRS and another v BRQ and another and another matter [2019] SGHC 260 (“BRS (HC)”), the High Court had “declined to apply a qualitative test” and held that “as long as there was a correction request that was framed as one under Art 33, time for making the setting aside application would be extended” (at [29]).
This was overturned by the Court of Appeal which held that “the substance of a request under Art 33 must come within the scope of that article before it can have the effect of extending the time limit under Art 34(3)” and “a request that complied with Art 33 only in form would not suffice” (at [30]; emphasis added by High Court).
The setting-aside applications were made after BRS (HC) but before BRS (CA), although the High Court observed that given its findings, the issue of prospective ruling did not arise on the facts (at [36]).
The finding. The High Court ultimately found that the plaintiffs were not time-barred from making their applications to set aside the Partial Award because CNA’s request for correction fell within Art 33(1) of the Model Law such that CNA’s Application extended the timelines for the three plaintiffs to make their setting aside applications (at [69]).
Request for interpretation. The High Court found that “the substance of the request … was not one that fell within Art 33(1) of the Model Law because there was really nothing ambiguous about the way the declaratory relief was worded, such that it could have caused genuine confusion as to whether it applied to CNA. As already explained, given the way the issues had been contested in the arbitration, … it would be obvious that the declaration at sub-para 598(4) applied to all three of the respondents to the arbitration, and CNA ought to have been aware of this.” (at [50])
Request for correction. The High Court then considered CNA’s request for correction of the Partial Award which ordered that CNA was liable to account for profits. Although the position taken by CNB/CNC “could fairly be described as unclear” from the various documents submitted earlier, the final position of CNB and CNC, as clarified after submission of the post-hearing briefs, was that they “would not pursue” the relief for an account of profits against CNA (at [55]). Therefore, the High Court had to consider whether this was a correctable error within Art 33(1) of the Model Law.
After finding that it was not a computational error nor a clerical or typographical error (at [59]), the High Court considered whether it was an error “of similar nature” (at [60]).
Applying the ejusdem generis rule, the High Court was of the view that “these specifically enumerated types of errors … are all errors in the nature of inadvertent acts or omissions by the arbitral tribunal, which if corrected, do not affect the substance of what the tribunal intended to decide. … if a party had conveyed to the tribunal that it was abandoning its claim for a specific relief in the course of the closing submissions, but the tribunal had not noted this in the award, and then proceeded to grant that relief mistakenly … It would be an error that is similar to a computational, clerical or typographical error, because the tribunal would not have granted such an order, had it remembered that the specific prayer for relief had been expressly abandoned by the claimant. I would think that an arbitral tribunal must be presumed to intend to act within the scope of its mandate, and to not deliberately act beyond that scope.” (at [61]; emphasis added by High Court)
Therefore, there was a potentially correctable mistake under Art 33(1)(a) of the Model Law and Art 36(1) of the ICC Arbitration Rules, which provided a proper basis for CNA to have made a request to the tribunal to delete the order for an account of profits (at [62]).
CNA’s Application and extension of timeline for CND and CNE to set aside. Since CND and CNE did not seek any interpretation or correction of the Partial Award, there was an issue of whether CNA’s Application extended the timeline for CND and CNE to set aside the award.
The High Court stated that the starting point is the text in the article and proceeded to scrutinize the words in Art 34(3). Art 34(3) provides that the application for setting aside may not be made after three months has elapsed from the date “on which the party making that application had received the award or, if a request had been made under Article 33, from the date on which that request had been disposed of” (at [65]; emphasis added by High Court).
Since the drafters had not qualified this to be “a request by that party”, the High Court took the view that “a request by any party to the arbitration would extend the time for all parties to make their application to set aside the award … predicated on there being a request being made that properly falls within the ambit of Art 33(1), and, in this case, I have already found that CNA’s correction request does fall within that article.” (at [65]; emphasis added by High Court)
This was also in line with the fact that under Art 33(1) of the Model Law and Art 36(3) of the ICC Arbitration Rules, the interpretation of the award forms part of the award (at [66]). Therefore, “as a matter of policy, it makes perfect sense that all parties who intend to make a setting aside application should be given the extended timeline to do so. Otherwise, one is faced with the possibility that there may be different applications to set aside different versions of the arbitral award, one which has been corrected, and one which has not. Two different sets of timelines would provide an unnecessary complexity to the process of setting aside. That appears to me unprincipled, impractical and undesirable.” (at [66])
Since CNA's Application was a request that fell within the scope of Art 33(1) of the Model Law, the timeline to set aside the award was also extended for CND and CNE, so that they were not out of time in making their application in OS 1306 (at [68]).
Conclusion. In summary, this decision makes clear that as corrections and interpretations of an arbitral award would form part of the award, an application for such correction or interpretation which in substance falls under Art 33(1) of the Model Law will extend the timeline for all parties to set aside the award so that there is always only one version of the arbitral award, thus providing certainty to all parties.
This publication is not intended to be, nor should it be taken as, legal advice; it is not a substitute for specific legal advice for specific circumstances. You should not take, nor refrain from taking, actions based on this publication. Chancery Law Corporation is not responsible for, and does not accept any responsibility for, any loss or damage that may arise from any reliance based on this publication.