Singapore Court of Appeal Holds Conditional Award Can Be Final Award, No Implied Reservation of Jurisdiction to Revisit

The Singapore Court of Appeal held on 2 May 2024 in Voltas Ltd v York International Pte Ltd that (1) a conditional award can be a final award; and (2) following the issuance of a final award and absent an express reservation of jurisdiction to determine further issues in the arbitration, there is “simply no room to imply such a reservation.”     

The case of Voltas Ltd v York International Pte Ltd [2024] SGCA 12 (Voltas v York) concerned an appeal by Voltas against the Singapore High Court’s decision in York International Pte Ltd v Voltas Ltd [2022] SGHC 153 (HC Decision) in which York successfully sought a ruling that an arbitrator who had issued a conditional (but final) award in 2014 was functus officio and had no jurisdiction to issue a further award.

BACKGROUND

The underlying substantive dispute originated between Voltas and York in 2011 when the motors of the chillers supplied by York to Voltas between December 2008 and November 2009 pursuant to a “Purchase Agreement” had failed during operation. For context, Voltas had purchased these chillers for the purposes of fulfilling its obligations under its contract with Resorts World Sentosa Pte Ltd (RWS) to carry out the design, supply, construction, completion and maintenance of a cooling plant (Main Contract). Voltas’ contract with RWS was subsequently novated to DCP (Sentosa) Pte Ltd (collectively, the “Project Owners”).

In February 2012, York commenced ad hoc arbitration against Voltas (Arbitration) claiming outstanding payments under the Purchase Agreement, and Voltas responded with a counterclaim arising from loss, damage, costs, and expenses suffered by Voltas as a result of York’s breach of the Purchase Agreement in supplying defective chillers. These counterclaims included a sum of SGD 1,132,439.46 for certain costs/expenses incurred by the Project Owners.  

The Arbitration took place between June 2013 and April 2014, and in August 2014, the arbitrator issued an award (2014 Award) allowing York’s claim for outstanding payments due under the Purchase Agreement, but also allowing Voltas’s counterclaims in part. However, the arbitrator ordered that any sums that York was liable to pay Voltas would accrue only upon Voltas making payment of the same to the Project Owners and that the amount would be capped at the sum of SGD 1,132,439.46.   

Thereafter, in August 2015, in view of the Project Owners’ obligation to pay Voltas for work done pursuant to the Main Contract, Voltas entered into a settlement agreement with the Project Owners under which the Project Owners agreed to pay Voltas SGD 1,000,000 (excluding GST). The monies that Voltas was to have paid to the Project Owners was set off therein. It is on this basis that Voltas considered that the sum of SGD 1,132,439.46 had been paid by it to the Project Owners.

Between 2015 to 2018, Voltas demanded payment of the sum of SGD 1,132,439.46 from York pursuant to the 2014 Award but York refused to make payment on the grounds that Voltas had not provided sufficient evidence that it had paid those monies to the Project Owners. Thus, Voltas in August 2020 applied to the arbitrator who issued the 2014 Award for a determination of whether Voltas had, in substance, paid the Project Owners the quantum of said payments and what sums were to be paid by York to Voltas (Further Award Application). York raised a jurisdictional objection to the Further Award Application contending that the arbitrator was functus officio and did not retain any jurisdiction after issuing the 2014 Award.

In August 2021, the arbitrator issued a ruling on jurisdiction (2021 Jurisdiction Ruling) concluding, inter alia, that he was not functus officio and retained jurisdiction to make the Further Award. Dissatisfied with the 2021 Jurisdiction Ruling, York commenced proceedings in the Singapore High Court pursuant to Section 21(9) of the Arbitration Act 2001 seeking a ruling that the arbitrator did not have jurisdiction to make the Further Award.  

In the HC Decision, the Court was of the view that the arbitrator did not have jurisdiction to issue the Further Award for five key reasons:

• The arbitrator chose to render a conditional award on quantum as opposed to adjourning his decision. This indicated that the arbitrator intended to fully resolve the parties’ dispute through the 2014 Award and had not reserved jurisdiction to make any future assessment on damages.
• As the 2021 Jurisdictional Ruling indicates, the arbitrator was aware that any reservation of jurisdiction had to be made “in clear and categorical language” (i.e., unequivocal). That was not the case in the 2014 Award and the arbitrator did not explain in the 2021 Jurisdictional Ruling how there was language to that effect in the 2014 Award.
• While the 2014 Award did not fix a specific sum to be paid by York to Voltas in respect of the costs/expenses incurred by the Project Owners, it did set out the method for deriving this sum.
• The mere fact that there might be difficulties in enforcement did not mean that the 2014 Award was not complete, final, and binding on the parties, nor did it mean that the arbitrator had reserved his jurisdiction in the 2014 Award.
• The 2014 Award possessed the indicia of a final award, as it was titled “Final Award” and contained a final order on costs which dealt with all the costs of the Arbitration.

Voltas thus sought to appeal against the decision to the Singapore Court of Appeal and was granted permission to do so on 28 November 2022.

THE APPEAL – VOLTAS V YORK 

In its 2024 judgement, the Court of Appeal identified two issues that arose for its determination:

• Whether the 2014 Award, being a conditional award, constituted a final award
• If so, whether the arbitrator had reserved his jurisdiction to issue a further award

THE 2014 AWARD CONSTITUTED A FINAL AWARD

In reaching the decision that the 2014 Award constituted a final award, the Court of Appeal addressed two questions: (1) whether a conditional award may constitute a final award; and (2) whether the 2014 Award was a final award in that it dispensed with all the substantive issues before the tribunal.

The Court of Appeal held that a conditional award may constitute a final award and this is “so long as there is sufficient clarity in both the award and any conditions stipulated therein.” Where a conditional award is “the last award made in an arbitration which disposes of all remaining claims [i.e.] a “final” award in the sense used in Art 32(1) of the Model Law,” there is no reason for thinking that it may not constitute a final award. The court then found that “a conditional award may constitute a final award if it disposes of all outstanding claims and if an enforcement court will be able to assess whether the conditions in the award have been satisfied.”     

In applying the above principles to the 2014 Award, the Court of Appeal concluded based on three indicators that the 2014 Award had disposed of the substantive issues in the dispute between Voltas and York and that the arbitrator did not contemplate any remaining issues to be decided.

• The substance of the dispute was decided and the only condition left to crystalise York’s liability regarding the Project Owners’ costs/expenses was for Voltas to show that it had made payments to the Project Owners in that respect.
• The arbitrator had decided on the costs of the arbitration.
• The arbitrator accepted in the 2021 Ruling that the 2014 Award was res judicata and that he was functus officio in respect of the matters decided therein. Further, in the 2014 Award, having considered between the option before him to adjourn the decision on quantum or make a conditional award, the arbitrator made an informed choice of choosing the latter and not keeping the question of York’s liability open.

THE ARBITRATOR DID NOT EXPRESSLY RESERVE HIS JURISDICTION TO ISSUE A FURTHER AWARD; IT IS NOT POSSIBLE FOR A TRIBUNAL TO IMPLIEDLY RESERVE JURISDICTION

Having noted that the arbitrator accepted in his 2021 Ruling that he had not expressly reserved his jurisdiction, the only question left before the Court of Appeal was whether there could have been an implied reservation by the arbitrator. It concluded that an implied reservation is not possible.

In the context of a domestic arbitration proceeding, Section 44 of the Arbitration Act 2001 provides that “except as provided in section 43, upon an award being made, including an award made in accordance with section 33, the arbitral tribunal must not vary, amend, correct, review, add to or revoke the award.”

There are limited exceptions to the termination of the tribunal’s mandate, termed the “slip rule,” prescribed under Section 43 of the Arbitration Act 2001—“correction or interpretation of award and additional award.” These exceptions consist of namely (1) correction of arithmetical mistakes in calculation or typographical errors in the award; (2) providing interpretation on a specific point or portion of the award so as to provide greater clarity; or (c) making an additional award dealing with claims which were presented during the arbitral proceedings but were omitted for some reason from the actual award.

The Court of Appeal held that the “the notion of implying such a reservation is inconsistent with s 43(4) of the [Arbitration Act 2001]” given that the act sets out a limited statutory exception to the termination of the tribunal’s mandate following the issuance of a final award, with a 30-day time limit.

The Court of Appeal also highlighted that a tribunal “is not entitled to ‘revisit issues canvassed and decided or to re-consider any part of the decisions consciously made’ when it revisits an award that was earlier issued, in the aforementioned situations.” To overcome the said issue, it is “necessary for the tribunal to reserve its jurisdiction when it purports to issue a final award.”

CONCLUSION

This decision provides welcome clarity that a conditional award can be a final award and it is a matter for the enforcement court to determine based on the evidence adduced whether the condition(s) had been fulfilled. It also serves as a reminder to arbitrators that any reservation of jurisdiction to deal with further issues and/or to issue a further award has to be expressly stated in the award.