Coal & Oil Co LLC v GHCL Ltd [2015] SGHC 65

In Coal & Oil Co LLC v GHCL Ltd (“Coal & Oil Co LLC”), the Singapore High Court dealt with the interpretation of Rule 27.1 of the 2007 Singapore International Arbitration Centre Rules (the “2007 SIAC Rules”). In particular, the court was faced with the issue of whether an arbitral tribunal had breached its duty under Rule 27.1 by failing to declare the arbitral proceedings closed before releasing its arbitral award. The plaintiff also argued that the arbitral award should be set aside on the basis that it was issued after an inordinate delay of 19 months after the parties’ final closing submissions.

Background facts

The plaintiff and the defendant had entered into an agreement regarding the supply of coal to the defendant (the “Agreement”). The parties agreed that any dispute would be resolved by arbitration governed by the 2007 SIAC Rules.

A dispute arose between the parties and the defendant commenced arbitration proceedings against the plaintiff. A sole arbitrator (the “Tribunal”) was appointed by the Singapore International Arbitration Centre (the “SIAC”). Subsequently, in its Final Award dated 14 March 2014 (the “Award”), the Tribunal found in favour of the defendant. The plaintiff then applied to set aside the Award under the following provisions of the International Arbitration Act (the “IAA”):

  • Article 34(2)(a)(iv) of the UNCITRAL Model Law on International Commercial Arbitration 1985 (the “Model Law”) (as set out in the First Schedule to the IAA) in that the issuance of the Award was in breach of the parties’ agreed procedure;
  • Article 34(2)(b)(ii) of the Model Law in that the Award was in conflict with the public policy of Singapore; and
  • Section 24(b) of the IAA in that there was a breach of natural justice.

Rule 27.1 of the 2007 SIAC Rules

This rule states that:

“Before issuing any award, the Tribunal shall submit it in draft form to the Registrar. Unless the Registrar extends time or the parties agree otherwise, the Tribunal shall submit the draft award to the Registrar within 45 days from the date on which the Tribunal declares the proceedings closed. The Registrar may suggest modifications as to the form of the award and, without affecting the Tribunal’s liberty of decision, may also draw its attention to points of substance. No award shall be issued by the Tribunal until it has been approved by the Registrar as to its form.”

[emphasis added in italics]

According to the Singapore High Court, the 2007 SIAC Rules should be construed as imposing a mere power - as opposed to a duty - on the tribunal to declare proceedings closed before issuing the arbitral award. The reasons for this were as follows:

  • First, such an interpretation would be consonant with the drafting history of the SIAC Rules.
  • Second, the arbitral tribunal’s declaration of closure function is a case management tool. Hence, imposing a duty on the Tribunal to declare proceedings closed is inconsistent with this case management function.
  • Third, construing Rule 27.1 of the 2007 SIAC Rules otherwise is not commercially sensible given that the drafters of the SIAC Rules were mindful of the need to avoid impeding the arbitration process with pointless formalities.

Whether issuance of Award was in breach of the parties’ agreed procedure

The Singapore High Court declined to set aside the Award on the basis of Article 34(2)(a)(iv) of the Model Law. In particular, the court held that the plaintiff had failed to show why the event of a declaration of closure was of “such critical importance such that non-compliance justifies the setting aside of the award”.

In relation to the plaintiff’s complaint of delay regarding the issuance of the Award, the court noted that apart from Rule 27.1, the 2007 SIAC Rules do not provide for any time limits for the release of international arbitral awards. The plaintiff’s argument on delay was untenable because the 45-day time limit provided under Rule 27.1 did not begin to run until the Tribunal declared the proceedings closed, which it did not do.

Whether the Award was in conflict with the public policy of Singapore

The Singapore High Court was of the view that, the Award was not contrary to the public policy of Singapore. The violations of public policy that would justify the setting aside of an arbitral award relate to acts which are “so egregious that elementary notions of morality have been transgressed”.

Whether there was a breach of natural justice

Lastly, the Singapore court held that there was no breach of natural justice because the plaintiff did not have a right under the 2007 SIAC Rules to be heard before the Tribunal decided whether to declare the proceedings closed before issuing the Award. Moreover, the court was not convinced that the plaintiff had successfully shown that he had been prejudiced by any breach of natural justice.

In respect of the Tribunal’s alleged delay in issuing the Award, the court opined that the plaintiff had failed to identify which particular rule of natural justice had been infringed, and that in any case, the court did not see how the rules of natural justice had been breached.

Conclusion

This case provides useful clarification on whether Rule 27.1 of the 2007 SIAC Rules imposes a duty on an arbitral tribunal to declare the proceedings closed before issuing an arbitral award and affirms the judicial policy of minimal curial intervention in respect of arbitral awards.