CZT v CZU 2023 SGHC-I 22 - 27 November 2023
Country
Year
2023
Summary
This is an application by the plaintiff to set aside an arbitral award issued by an arbitral tribunal in arbitration proceedings seated in Singapore and conducted in accordance with the Rules of Arbitration of the International Chamber of Commerce 2017 ("ICC Rules 2017").
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On 25 April 2019, the defendant commenced arbitration proceedings against the plaintiff (the "Arbitration"). In due course, the arbitration tribunal (the "Tribunal") was constituted, comprising Professor Douglas Jones AO ("Prof Jones"), Professor Keechang Kim ("Prof Kim") and Dr Philipp Habegger ("Dr Habegger"). Prof Kim was the defendant's nominee while Dr Habegger was the plaintiff's nominee. Prof Jones was appointed by the International Court of Arbitration of the International Chamber of Commerce as President of the Tribunal pursuant to Art 12(2) of the ICC Rules 2017.
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The Final Award and Dissent
On 20 September 2021, the ICC sent the final award (the "Final Award")
dated 14 September 2021 to the parties. The Final Award was a majority award by Prof Jones and Prof Kim (the "Majority"). The Majority concluded that the defendant had a valid claim against the plaintiff for breach of contract under the Provisional Contract with respect to the plaintiff's delivery of defective Material Packages, which constituted incomplete performance under Art X of the Code. The Majority ordered the plaintiff to pay the defendant damages, interests and costs.
In brief, the Majority found that:
(a) At the time that the Provisional Contract was entered into, the plaintiff's obligations under the Provisional Contract, including delivery of the Material Packages to the Contractor, were owed to the defendant.
The phrase "deliver to the [Contractor]" in Art 1.1 of the Provisional Contract referred to a physical location of delivery, and must have referred to rights and obligations between the defendant and the plaintiff.
(b) Pursuant to the Transfer Agreement, the rights and obligations that remained with the defendant were identified in the Attachment by listing the Articles in the left-hand column of the table in the Attachment.
The Comments clarified ambiguous aspects of the Articles that were identified. Based on the words of the Transfer Agreement and Attachment, the logical meaning was that the rights and obligations in Art 1.1 of the Provisional Contract, as identified in the left-hand column of the table in the Attachment, remained with the Claimant.
The Majority's reasons for its interpretation of the Transfer Agreement included the following:
(a) The interpretation was consistent with the wording of Art 1.1 of the Provisional Contract and the Supply Contract.
If the rights and obligations of the defendant were transferred by virtue of the Transfer Agreement, one would have expected the wording of Art 1.1 to change from the Provisional Contract to the Supply Contract. Instead, Art 1.1 of the Supply Contract retained the same wording as Art 1.1 of the Provisional Contract. In other sections of the Supply Contract, the parties quite carefully changed the expression '[the defendant/the Contractor]" into "[the defendant]" or "[the Contractor]" when they saw that such a change was needed, eg, in Arts 3.3.2, 3.3.3, 3.3.4, 22.8.1 and 12.3.1.
(b) The plaintiff's reading of the Attachment would create inconsistency and render meaningless the parties' express agreement about the defendant's remaining obligations to the plaintiff under the Provisional Contract.
Under Art 1.1 of the Provisional Contract, the defendant/Contractor had the obligation, among others, to "effect the payments to the [plaintiff]".
According to the plaintiff's interpretation of the Attachment, by virtue of the Transfer Agreement, the defendant would no longer have the obligation to effect payments to the plaintiff. If this was correct, it would not make much sense for the parties to expressly agree that Art 12 of the Provisional Contract (which stipulates the consequences of termination) shall also apply to the defendant "to the extent it refers to remaining rights and obligations" of the defendant.
(c) For example, Art 12.4.1 of the Provisional Contract provided that the defendant/Contractor and the plaintiff "shall both have the right to terminate this Contract ..., without prejudice to any other rights or remedies the terminating party may have, if ... the other party has become insolvent or entered into liquidation ..."
If the plaintiff terminated the Provisional Contract pursuant to Art 12.4.1 upon the insolvency of the Contractor, the plaintiff must be entitled to claim payment in respect of Material Packages already delivered or any services already rendered, from the defendant as well as the Contractor.
According to the plaintiff's interpretation, however, the plaintiff would have no recourse to the defendant when it most needed to have such a recourse because of the insolvency of the Contractor.
On the same day (20 September 2021), Dr Habegger (the "Minority") sent a copy of his dissenting opinion (the "Dissent")
to the parties' lawyers. The Dissent dealt with Part Q1 of the Final Award. Part Q1 of the Final Award dealt with the defendant's entitlement to claim against the plaintiff for the plaintiff's incomplete performance of its obligation to deliver the Material Packages under the Contract. The Minority found the plaintiff not liable.
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