Arbitration - Award, Arbitration - Agreement , Arbitration - Conduct of arbitration.
1 When a company receives a claim on a contract of which it has no record and where its purported signatory has ceased to be its employee, does it waive any jurisdictional objection to the arbitration based on forgery of the arbitration agreement if it unsuccessfully defends the arbitration without alleging forgery? If it contests the claim on its merits with the defence that the contract was entered into by its employee without authority, but without specifically alleging that the arbitration agreement contained in the contract was itself made without authority, can it after the award is given against it raise a jurisdictional challenge that the arbitration agreement was made without authority? These were the principal questions that arose in this challenge to an arbitration award.
2 The claimant in this application seeks to set aside an award of an arbitral tribunal ("the Tribunal") dated 8 December 2022 ("the Award"), which awarded damages in favour of the defendant. The Tribunal's putative jurisdiction was based upon an alleged arbitration agreement between the Parties contained in a letter dated 26 June 2008 ("the Guarantee Letter") within which the claimant had purportedly guaranteed the sums owed to the defendant in another related contract. The claimant had disputed the legal validity of the Guarantee Letter during the arbitration, but the Tribunal was unconvinced by that submission.
3 Upon challenge of that Award before this court, our task is to determine whether the claimant has waived its rights to adduce the following challenges before us - (1) that the defendant had forged the signatures of its former officer, Mr Rajesh Agrawal, on the Guarantee Letter; and (2) in the alternative, if he did sign it, that Mr Agrawal had no authority to bind the claimant to an agreement to arbitrate with the defendant.
Factual background of the dispute
4 The claimant seeking to set aside the Award is Reliance Infrastructure Limited ("Reliance Infrastructure"), a company incorporated in the Republic of India, and the defendant, Shanghai Electric Group Co Ltd ("Shanghai Electric"), was incorporated in the People's Republic of China.1
5 Both Parties had been involved in a major construction project for an electricity generating power plant in Sasan Village, India ("the Sasan Project"),2 and it is from the Sasan Project that this dispute between the Parties arose.
The Supply Contract between Reliance (UK) and Shanghai Electric
6 On 24 June 2008, the owner of the Sasan Project, an Indian company known as Sasan Power Limited ("Sasan Power"), entered into a contract with an English company, Reliance Infra Projects (UK) Limited ("Reliance (UK)"), that is related to Reliance Infrastructure ("the Sasan Project Contract"). Under the Sasan Project Contract, Reliance (UK) was to procure for Sasan Power the supply of equipment and services needed for the Sasan Project.3
7 On 26 June 2008, Reliance (UK) and Shanghai Electric then entered into a contract that provided for Shanghai Electric to supply the requisite equipment and services for the Sasan Project ("the Supply Contract").4 It was Mr Agrawal, Reliance Infrastructure's Additional Vice-President at the material time,5 who signed the Supply Contract on behalf of Reliance (UK).6
8 Although Reliance (UK)'s board of directors had provided express authorisation for Mr Agrawal to execute the Supply Contract with Shanghai Electric by passing a board resolution to that effect,7 there is no evidence in the record indicating that that board resolution had ever been furnished to Shanghai Electric as the grounds of Mr Agrawal's authority to do so.8 The validity of the Supply Contract is not a matter of dispute between the Parties.
9 The final version of the Supply Contract did not contain any `parent company guarantee' clause,9 owing to a request from Mr Agrawal to Shanghai Electric on 25 May 2008 seeking the deletion of such a clause.10
10 It is undisputed that Mr Agrawal had been involved in the negotiations over the Supply Contract, although the nature of his involvement is disputed.
While Reliance Infrastructure characterises his role as a purely facilitative one of coordinating the negotiations between the Parties' senior managements,11 Shanghai Electric argues instead that he led the negotiations between them and all entities within the wider Reliance Group (including Reliance Infrastructure) in relation to multiple power plant projects they were both involved in, inclusive of the Sasan Project.12
The events surrounding the disputed Guarantee Letter between Reliance Infrastructure and Shanghai Electric
11 Unlike with the Supply Contract, the validity of the Guarantee Letter was put in issue in the underlying arbitration, and remains a matter of dispute before us. We summarise here the relevant facts that surrounded the execution - or alleged execution - of the Guarantee Letter between the Parties.
12 On 9 February 2007, Reliance Infrastructure, under its previous name: Reliance Energy Limited,13 agreed to indemnify Shanghai Electric in relation to claims that the owner of another power plant project in Hisar, India may institute against Shanghai Electric for any matters relating to that project ("the Hisar Indemnity").14
13 Paragraph 6(b) of the Hisar Indemnity contained an agreement to arbitrate disputes between the Parties,15 and it was Mr Agrawal who signed the Hisar Indemnity on behalf of Reliance Infrastructure (as Reliance Energy Limited).16
14 On 20 May 2008, the Parties entered into a Framework Agreement that established that "[t]he Purchaser shall provide suitable guarantee letter from its parent company acceptable to the Contractor".17 Ex facie, that "Purchaser" was defined as referring to Reliance Infra Projects International Limited ("RIPIL"), while "Contractor" was defined as a reference to Shanghai Electric. At that time, Reliance (UK) was the wholly-owned subsidiary of RIPIL while Reliance Infrastructure held 10% of the shareholding of RIPIL (with the remaining shares being held by other Reliance Group entities).18
15 While Mr Agrawal did not sign the Framework Agreement for Reliance Infrastructure, he did initial at the bottom of every page thereof.19 Paragraph 3.7 also contained an agreement to arbitrate disputes between the Parties.20
16 On 23 June 2008, another officer of Reliance Infrastructure sent an email to Shanghai Electric, copying Mr Agrawal, with an attached draft of a guarantee letter dated 25 June 2008.21 Under that draft guarantee, Reliance Infrastructure would have guaranteed the performance of Reliance (UK)'s obligations owed to Shanghai Electric under another contract,22 which related to a different power plant project in India that was owned by the Damodar Valley Corporation ("the DVC Draft Guarantee").23
17 Paragraph 10 of the DVC Draft Guarantee contained an agreement to arbitrate disputes between the Parties,24 but the draft was never executed by the Parties.25
18 On 26 June 2008, the Guarantee Letter was allegedly signed by Mr Agrawal on behalf of Reliance Infrastructure at a signing ceremony in Shanghai, China. According to Ms Yu Liwen, who was Shanghai Electric's sales and business development manager at the time,26 she printed out the Guarantee Letter, delivered it to Mr Agrawal, and then witnessed him sign it.27
19 According to Ms Yu, Mr Agrawal attended that ceremony on behalf of the senior management of the Reliance Group,28 as said to be demonstrated by the contents of Mr Agrawal's speech which he delivered thereat.29
20 In the Guarantee Letter, Reliance Infrastructure guaranteed (or is alleged to have guaranteed) the performance of Reliance (UK)'s obligations owed to Shanghai Electric in the Supply Contract.30 Paragraph 10 contained a putative agreement to submit all disputes between the Parties to arbitration, seated in Singapore, and administered by the Singapore International Arbitration Centre ("SIAC").31
141 We conclude that Reliance Infrastructure, having had knowledge of the underlying facts to mount its objections to the jurisdiction of the Tribunal, on the grounds of both forgery and want of authority, and lacking good reason not to do so, must now be deemed to have waived its rights to make those arguments here by its failure to pursue those objections to jurisdiction in the SIAC arbitration.
142 This finding is, of course, fatal to Reliance Infrastructure's setting aside application; however, for completeness, we find that, in any event, the objections raised were without merit. We would have dismissed them even if Reliance Infrastructure had not waived its right to pursue them.
143 Consequently, we dismiss Reliance Infrastructure's application to set aside the Award in SIC/OA 1/2023. We also award costs to Shanghai Electric.
If parties are unable to agree on the amount of costs within 14 days of the date of this judgment, they are to file within 7 days thereafter submissions on costs limited to ten pages each, excluding any tables of time spent or work done.