BYL V BYN [2020] SGHC(I) 06
In the recent decision of BYL v BYN [2020] SGHC(I) 06 (“BYL v BYN”), the Singapore International Commercial Court upheld an ICC Award that was challenged on the basis that (a) the Tribunal had failed to decide the dispute before it, and (b) the Tribunal’s conduct gave rise to a reasonable suspicion of bias.
Background. The Promoter set up a company (the “Company”) as a special purpose vehicle in respect of a development (the “Development”). The Investor became a shareholder of the Company under a Share Subscription and Shareholders Agreement. A dispute arose, and the Investor commenced arbitration against the Promoter and the Company under the ICC Rules. (BYL v BYN [1], [3])
The Tribunal consisted of 3 arbitrators, out of which the arbitrator nominated by the Plaintiffs (“SA”) practices as an independent counsel and as an arbitrator. The Defendant was represented by an Indian Firm [AAA], and an International Firm [BBB]. (BYL v BYN [5] – [6])
The Tribunal issued a Partial Award in favour of the Defendant. The dispositive part read (BYL v BYN [15]):
“(1) [The Promoter] is ordered, by way of specific performance, to pay to [the Investor] within 28 days of this Award, the sum of INR 761 crores pursuant to clause 17.2 of the [SSHA], as at March 31, 2019.
(2) The Tribunal orders, by way of specific performance, [the Promoter] to pay to [the Investor] within 28 days of this Award a further sum pursuant to clause 17.2 of the [SSHA], being 25% IRR to the date of this Award in an amount to be agreed between the parties, or, failing agreement, to be determined by the Tribunal.
(3) Upon payment of the sums in (1) and (2) above, [the Investor] shall deliver to [the Promoter] executed transfers and any other title documents relating to its shares in [the Company].
(4) If for any reason the awards in (1) and/or (2) above are declared unenforceable in whole or in part by any court or tribunal, [the Promoter] shall pay to [the Investor] the sum of INR 160.2 crores pursuant to clause 14.2 of [the SSHA] (or such lesser sum as shall be sufficient to satisfy the awards in (1) and (2) above, after taking account of any amounts paid by [the Promoter] pursuant thereto) upon delivery by [the Investor] to [the Promoter] of executed transfers and any other title documents relating to its shares in [the Company].
...”
Finality of award. The Plaintiffs sought to set aside the Partial Award arguing inter alia (BYL v BYN [30] – [35]):
· that the Tribunal failed to resolve the dispute, as the award had left it to the supervising or enforcing court to determine the amount (if any) due to the Investor from the Promoter for the transfer of shares in the Company, and
· that the Tribunal purported to confer upon itself the power to alter its decision ex post facto, if its order that the Promoter pay the Investor an amount under clause 17 should be set aside or refused enforcement for any reason.
The Court held that when read as a whole and in context, the Award was a cumulative award, which was complete and final. The Court found nothing unusual about the references to the enforcement of the Award:
“[39] Since the ICC Award expressly refers to problems in connection with the enforcement of sub-paragraphs (1) and (2) of the dispositive, the Tribunal was cognisant that the Investor could face difficulties in enforcing those subparagraphs of the ICC Award. There is nothing unusual about this. Arbitrators are duty-bound to use their best endeavours to produce an enforceable award. Conscientious arbitrators thus invariably worry about whether their award can be enforced. The proviso to sub-paragraph (4) of the dispositive (that is, the words “If for any reason the awards in (1) and/or (2) above are declared unenforceable in whole or in part by any court or tribunal”) (the “Proviso”) does no more than highlight, presumably out of an abundance of caution on the Tribunal’s part, the fact that:
(a) the award of INR 761 crores (that is, the total of Amounts 1 and 2) under sub-paragraph (1) of the dispositive and the award of Amount 3 to be assessed under sub-paragraph (2) of the dispositive; and
(b) the award of INR 160.2 crores (that is, Amount 1) under subparagraph (4) of the dispositive,
are distinct and severable. If the award under sub-paragraphs (1) and (2) of the dispositive are held for any reason to be unenforceable with the result that the award of the total of Amounts 1, 2 and 3 falls away, the award of Amount 1 under sub-paragraph (4) of the dispositive will still remain standing and be enforceable. Contrary to what the Plaintiffs assert, there is nothing strange about this. Arbitrators frequently make awards consisting of a number of component amounts A, B, C, etc. The mere fact that component A is held to be unenforceable for some reason will not mean that components B, C, etc are likewise unenforceable.”
The Court held that the finality of an award is distinct from the certainty of its enforcement:
“[42] On the other hand, if the Plaintiffs are merely saying that the ICC Award is “contingent” because, if the Plaintiffs refuse to honour the same, the recovery by the Investor of the total amount of INR 761 crores awarded for the period up to 31 March 31 2019, depends on the extent to which courts find sub-paragraph (1) of the dispositive to be enforceable, then the Plaintiffs would only be stating a truism characteristic of every award for the payment of money. Such truism can hardly constitute a criticism of the ICC Award or be said to lead to “circularity”. The extent to which a creditor can recover money awarded by a tribunal will self-evidently depend on the degree to which relevant courts hold that the award is enforceable. This must especially be the case where a money award consists of components, such as a component for the payment of principal and a component for the payment of interest. Some courts may refuse to enforce one or more components of an award, resulting in a creditor obtaining less than the total sum awarded or anything at all. A creditor cannot be 100% certain of obtaining all of its entitlement (such as here the amount of INR 761 crores) until the relevant award is recognised and enforced by relevant courts.”
The Plaintiffs thus failed to set aside the Partial Award on this ground.
Alleged apparent bias. The Plaintiffs also sought to set aside the Partial Award on the ground of apparent bias. This was because in an unrelated UNCITRAL Arbitration, SA (the Plaintiffs’ nominated arbitrator) had been instructed to act with the International Firm (which was representing the Defendant in the ICC Arbitration). (BYL v BYN [16] – [23])
The Plaintiffs had challenged SA’s ability to act as independent arbitrator, and SA ultimately resigned. (BYL v BYN [24] – [29])
In seeking to set aside the Partial Award, the Plaintiffs argued that SA failed to make timely disclosure when he was approached or engaged to act with the International Firm. (BYL v BYN [53])
The Court was not persuaded that the nature and extent of SA’s associations with the International Firm supported a conclusion of apparent bias:
· “[55] … the mere fact of SA being engaged or potentially engaged to act as co-counsel with the Firm would not of itself give rise to apparent bias. For there to be cause for concern, there must be something about SA’s actual contact with the Firm’s representatives that gives rise to a reasonable suspicion of bias.”
· The lead lawyer of the International Firm in the ICC Arbitration was also involved in the UNCITRAL Arbitration, but SA had only met him after issuing the Partial Award. The other representatives of the International Firm who met with SA were not involved in the ICC Arbitration and were not in a position to discuss anything about the ICC Arbitration with him. Thus, SA’s views could not have been influenced. (BYL v BYN [56])
The Court declined to draw adverse inferences as to SA’s good faith, as there were no other circumstances other than the alleged belated disclosure to support an inference of apparent bias:
“[66] A court must therefore be wary about drawing inferences of bad faith merely because an arbitrator has been laconic in his or her responses to disclosure requests or has expressed personal regret and hurt in a resignation letter. That does not mean that an arbitrator in SA’s position can be economical with the truth and make misleading statements. Helpful guidance on how a court should approach the matter was given by Hamblen LJ in Halliburton at [76] (see [59] above). Loh J expressed a like view in UES, where he stated at [42] that “a failure to disclose will only give rise to apparent bias if there are other circumstances which support such a finding”. Loh J added at [43] of UES that “the nature and extent of a tribunal’s associations is a crucial factor in determining whether the failure to disclose the same supports a reasonable suspicion of bias.” Here I do not see any “other circumstances” (UES at [42]) or “something more” (Halliburton at [76]) apart from the posited belated disclosure (see [53] above) to support an inference of apparent bias. For the reasons that I have given, I do not accept that there has been deliberate (or any) insufficient disclosure by SA or Mr. [N]. In particular, I have not found the Plaintiffs’ tendentious reading of what SA and Mr. [N] have written as any basis for inferring bad faith on SA’s or Mr. [N]’s part.”
The Plaintiffs thus also failed to set aside the Partial Award on this ground.
Tags: Arbitration award; finality of award; apparent bias
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