CONDITIONAL FINAL AWARD
The Court of Appeal in Voltas Limited v York International Pte Ltd [2024] SGCA 12 dealt with whether a conditional arbitral award can be a final award, as well as whether an arbitral tribunal may impliedly reserve jurisdiction to issue a further award after the final award.
Salient facts. Previously, we had addressed the first instance decision in our previous blog.
But to recap, the salient facts have been set out by the Court of Appeal at [1] – [2] of its judgment:
“ 1 On 25 August 2014, an arbitrator (the “Arbitrator”) rendered a conditional award (the “2014 Award”). He decided, amongst other things, that York International Pte Ltd (“York”) was liable to Voltas Limited (“Voltas”) for sums amounting to $1,132,439.46. However, the 2014 Award conditioned this liability on Voltas showing that it had paid these sums to a third party, which would have caused Voltas to suffer the loss of $1,132,439.46 which it claimed against York. Following disagreements between the parties on whether this sum was payable, Voltas sought a further award from the Arbitrator. On 23 August 2021, the Arbitrator issued a ruling (the “2021 Ruling”) holding that he was not functus officio and that he could determine whether the conditions set out in the 2014 Award had been satisfied.
2 York applied to the General Division of the High Court pursuant to s 21(9) of the Arbitration Act 2001 (2020 Rev Ed) (the “AA”) seeking, amongst other reliefs, an order that the Arbitrator did not have jurisdiction to make the further award. The court allowed the application and Voltas appealed against its decision. At the heart of this dispute lie the questions of whether a conditional award can be a final award, and whether, if an arbitral tribunal has not made an express reservation of jurisdiction, it may yet be found that it has done so by implication. For the reasons that follow, we dismissed the appeal after hearing the parties.”
We will focus on just some key points made by the Court of Appeal.
Conditional Award can constitute a final award. The Court of Appeal held that a conditional award may constitute a final award ([35]).
The Court of Appeal agreed with Cooke J’s decision in Konkola Copper Mines v U&M Mining Zambia [2014] EWHC 2374 (Comm) (“U&M Mining“) that an award may be final if the award “clearly provides for specific relief, including payments of money, which only bites at a point in the future” and the tribunal “has made decisions which are final and complete and are not subject to further decisions on its part or of any other person or body unless a specified contingency occurs”: in short, “so long as there is sufficient clarity in both the award and any conditions stipulated therein, a conditional award may be a final award.” ([38] – [39]).
In doing so, the Court of Appeal made clear that a key issue is whether the conditions stipulated in the award would make it necessary for the tribunal to “reopen or reconsider the matter”: if the award disposes of all outstanding claims, and the enforcement court is able to determine if the conditions in the award have been satisfied, then the award would be a final award ([42]).
The Award was a final award. Turning to the facts, the Court of Appeal found that the 2014 Award was a final award as it disposed of the substantive issues in dispute and the arbitrator did not contemplate that there were any other issues left to be decided ([45]). The Court of Appeal reached this conclusion based on three indicators:
Firstly, “only condition left to crystallise York’s liability for the Nitrogen and Removal Claims was for Voltas to show that it had paid the specified sums to the Project Owners that were claimed under the two Claims” (at [46]).
Secondly, the arbitrator had also decided on the costs of the arbitration, which suggested that the arbitrator “had intended to finally decide on all the issues in the dispute between York and Voltas in the 2014 Award” (at [47]).
Thirdly, the arbitrator had also accepted that the 2014 Award was res judicata and the arbitrator himself was functus officio in respect of the matters that were decided in the 2014 Award (at [48]).
Reservation of jurisdiction. The Court of Appeal then held at [59] – [61] that the arbitrator could not have impliedly reserved his jurisdiction.
This is because an implied reservation is inconsistent with Arbitration Act 2001, s. 43(4), and a tribunal must expressly reserve its jurisdiction in order to revisit an otherwise final award.
Of course, there are limited exceptions provided by the Arbitration Act 2001, s. 43(1) and 43(3).
But as the Court of Appeal pointed out at [54] – [55], these exceptions are limited in nature, and the tribunal “… is not entitled to “re-visit issues canvassed and decided or to re-consider any part of the decisions consciously made” when it revisits an award that was earlier issued” under these exceptions.
And on the facts of the case, it was not in dispute that the arbitrator did not expressly reserve his jurisdiction ([50]).
Conclusion. For a tribunal, the easiest way to avoid this issue is to not issue a final award unless the tribunal is satisfied that all issues that should have been dealt with have been dealt with. So, the tribunal should be careful to ensure that awards rendered prior to a final award are designated as a partial award (see [56]). Additionally, the substance of the condition imposed is important. The Court of Appeal observed at [41] that in U&M Mining, the condition, which was for the applicant, Konkola Copper Mines Plc “to show cause, within 14 days, why certain orders should not have been made”, was one which “went to the substance of the dispute“ as the merits of the dispute had not been fully dealt with. This is because the case was not one where “… the liability was to be incurred upon a particular condition being satisfied. Rather, the award in that case allowed the parties to revisit and reopen the tribunal’s orders if [Konkola Copper Mines Plc] appeared to show cause.“
Lastly, as the Court of Appeal observed at [64], Voltas Limited may face an issue as the settlement it entered into with the third party was a global settlement, which may potentially render it unclear what sums were paid as consideration for the settlement of the relevant claims. But “this is a matter on which evidence can be led [and if] difficulties arise, these would just be a result of the way the Settlement Agreement was drafted.” This is important to note for parties who enter into global settlements: while the settlement may be between Party A and Party B, it may potentially impact on Party A’s and Party B’s claims / disputes with other parties.
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