Voltas Ltd v York International Pte Ltd [2024] SGCA 12

Introduction

On 25 August 2014, an arbitrator (the “Arbitrator”) rendered a conditional award (the “2014 Award”). He decided, amongst other things, that York International Pte Ltd (“York”) was liable to Voltas Limited (“Voltas”) for sums amounting to $1,132,439.46. However, the 2014 Award conditioned this liability on Voltas showing that it had paid these sums to a third party, which would have caused Voltas to suffer the loss of $1,132,439.46 which it claimed against York. Following disagreements between the parties on whether this sum was payable, Voltas sought a further award from the Arbitrator. On 23 August 2021, the Arbitrator issued a ruling (the “2021 Ruling”) holding that he was not functus officio and that he could determine whether the conditions set out in the 2014 Award had been satisfied.

York applied to the General Division of the High Court pursuant to s 21(9) of the Arbitration Act 2001 (2020 Rev Ed) (the “AA”) seeking, amongst other reliefs, an order that the Arbitrator did not have jurisdiction to make the further award. The court allowed the application and Voltas appealed against its decision. At the heart of this dispute lie the questions of whether a conditional award can be a final award, and whether, if an arbitral tribunal has not made an express reservation of jurisdiction, it may yet be found that it has done so by implication. For the reasons that follow, we dismissed the appeal after hearing the parties.

Facts

Background to the dispute

The appellant, Voltas, is a foreign company registered in Singapore. The respondent, York, is a company incorporated in Singapore.

On 3 March 2008, Voltas was engaged by Resorts World Sentosa Pte Ltd (“RWS”) to carry out the design, supply, construction, completion and maintenance of a District Cooling Plant (“DCP”) on Sentosa Island, Singapore (the “Project”). As part of the Project, Voltas was to supply chilled water to the Resorts World at Sentosa as well as to some other developments on Sentosa Island. A contract between Voltas and RWS was entered into pursuant to this engagement (the “Main Contract”). The Main Contract was novated on 27 May 2008 by RWS to DCP (Sentosa) Pte Ltd (“DCP Sentosa”). We will refer to RWS and DCP (Sentosa) collectively as the “Project Owners”.

On 3 April 2008, Voltas entered into an agreement with York, under which York was to provide Voltas with five water-cooled dual centrifugal chillers (the “Chillers”) for a lump sum price of $5,230,000 (the “Purchase Agreement”). The Chillers were components of the DCP and were each powered by two motors. York delivered the Chillers to Voltas sometime between December 2008 and November 2009.

The Arbitration

In 2011, a dispute arose between the parties with respect to the quality of the Chillers supplied under the Purchase Agreement. In particular, between March 2011 and May 2011, seven of the Chillers’ motors had failed during operation. On 17 November 2011, York commenced S 821/2011 in the High Court against Voltas. On 29 November 2011, Voltas made an application in SUM 5415/2011 for a stay of all further proceedings in S 821/2011 pending arbitration pursuant to the Purchase Agreement.

On 13 January 2012, the parties entered into an agreement for ad hoc arbitration (the “Arbitration Agreement”) to settle their disputes by way of arbitration. Clause 1 of the Arbitration Agreement stated as follows:

Voltas thus sought to recover a total of $1,132,439.46 (being the sum of the Nitrogen and Removal Claims) from York in the Arbitration as part of its counterclaim.

The 2014 Award

The Arbitration took place between June 2013 and April 2014. On 25 August 2014, the Arbitrator issued the 2014 Award allowing York’s claim for outstanding payments due under the Purchase Agreement, but also allowing Voltas’s counterclaims in part. In particular, the Arbitrator found York liable for supplying defective motors for the Chillers, and thus allowed the Nitrogen and Removal Claims.

However, the Arbitrator also ordered that any sums that York was liable to pay Voltas: (a) would accrue only upon Voltas making payment of the same to the Project Owners; and (b) that the amount that York would be liable to pay Voltas would be “up to a maximum of” $1,099,162.46 in respect of the Nitrogen Claim and $33,277 in respect of the Removal Claim:

The Arbitrator reasoned that while it was not necessary for Voltas to have made payment to the Project Owners first before York could be said to be liable for the Nitrogen and Removal Claims, there was a “need for some degree of caution” because Voltas had not yet paid the Project Owners for the sums due under the Nitrogen and Removal Claims and hence there was a danger of a windfall in favour of Voltas if York was required to pay the amount in question at once. The Arbitrator considered various options to address this concern before deciding that York’s liability to pay Voltas in respect of these claims be made conditional on Voltas’s payment of the same to the Project Owners.

Voltas’s settlement with the Project Owners

On 12 August 2015, Voltas entered into a settlement agreement with the Project Owners (the “Settlement Agreement”), under which the Project Owners agreed to pay Voltas $1,000,000 (excluding GST) in full and final settlement of all claims each party may have against the other under the Main Contract. In arriving at that sum, Voltas and the Project Owners agreed to set off the sums in respect of the Nitrogen and Removal Claims from the sums that the Project Owners were supposed to pay Voltas for work done pursuant to the Project. Voltas considered on this basis that the sums comprising the Nitrogen and Removal Claims had been paid by it to the Project Owners by way of the set-off pursuant to the Settlement Agreement.

The 2020 Arbitration

From 2015 to 2018, Voltas demanded payment of the sum of $1,132,439.46 from York pursuant to the 2014 Award. York refused to make payment, contending that Voltas had not provided sufficient evidence that it had paid the Project Owners for the Nitrogen and Removal Claims.

On 24 August 2020, Voltas applied to the Arbitrator for a determination of: (a) whether Voltas had, in substance, paid the Project Owners in respect of the Nitrogen and Removal Claims; (b) if so, what sums Voltas had paid in respect of these claims; and (c) what sums were to be paid by York to Voltas (the “Further Award Application”).

On the same date, and without prejudice to its Further Award Application, Voltas also issued a notice of arbitration (the “NOA”) seeking to commence fresh arbitration proceedings against York under the Arbitration Agreement claiming payment for the Nitrogen and Removal Claims.

On 16 September 2020, York wrote to Voltas contending that the disputes referred to in the NOA did not fall within the scope of the Arbitration Agreement. On 19 October 2020, York sent a letter to the Arbitrator and Voltas raising a jurisdictional objection in respect of the Further Award Application and contending that the Arbitrator was functus officio in relation to the Arbitration and did not retain any jurisdiction following the issuance of the 2014 Award.

The 2021 Ruling

The Arbitrator issued the 2021 Ruling on jurisdiction on 23 August 2021. The Arbitrator concluded, amongst other things, that he was not functus officio and thus retained jurisdiction to make the Further Award. According to the Arbitrator, the issues in the Further Award Application (the “Disputed Issues”) were issues falling within the scope of reference to the Arbitration. Further, the Arbitrator explained that he was not functus officio in respect of these matters as he had only ordered York to pay Voltas a maximum amount, without determining the precise quantum due from York to Voltas. This was so, given that the precise quantum was unknown at the point of the 2014 Award and depended on Voltas making payment to the Project Owners. The relevant portion of the 2021 Ruling stated as follows:

Decision below

Dissatisfied with the Arbitrator’s decision in the 2021 Ruling, York filed HC/OS 952/2021 (“OS 952”) pursuant to s 21(9) of the AA on 21 September 2021 seeking a ruling that the Arbitrator did not have jurisdiction to make the Further Award.

The matter came before a judge of the General Division of the High Court (the “Judge”) who allowed York’s application: York International Pte Ltd v Voltas Ltd [2022] SGHC 153 (the “Judgment”). The Judge found that the 2014 Award did deal with all the issues that formed the subject of the Arbitration, such that the Arbitrator was functus officio. Accordingly, the Judge held that the Arbitrator did not have the jurisdiction to issue the Further Award: see the Judgment at [90].

First, the Arbitrator had chosen to render a conditional award on quantum, as opposed to adjourning his decision on the same. This indicated that the Arbitrator had intended to fully resolve the parties’ dispute over the Nitrogen and Removal Claims in the 2014 Award and had not reserved his jurisdiction to make a future assessment on this issue: the Judgment at [56] and [58]–[60]. To that end, the Judge disagreed with the Arbitrator’s 2021 Ruling in which he held that the 2014 Award reserved the question of damages for the Nitrogen and Removal Claims for a future assessment: the Judgment at [61].

Second, the Arbitrator had, in the 2021 Ruling, indicated that any reservation of jurisdiction would have been made “in clear and categorical language”. This clearly showed that the Arbitrator was aware that any reservation of jurisdiction had to be unequivocal. Yet, the Arbitrator did not explain in the 2021 Ruling how the 2014 Award contained a reservation of jurisdiction, nor was there language to such effect in the 2014 Award. This showed that the Arbitrator had not intended to reserve his jurisdiction in the 2014 Award: the Judgment at [62]–[64] and [66].

Third, the 2014 Award had fully resolved all the disputes that formed the subject of the Arbitration. Although the 2014 Award did not fix a specific sum to be paid by York to Voltas in respect of the Nitrogen and Removal Claims, it nevertheless did set out the method for deriving this sum. In particular, the quantum that York was liable to pay Voltas was to be determined by reference to whatever sum Voltas ultimately paid the Project Owners, up to a maximum amount of $1,099,162.46 in respect of the Nitrogen Claim and $33,277 in respect of the Removal Claim: the Judgment at [72]–[73].

Fourth, the mere fact that there might be difficulties in enforcement did not mean that the 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 Judgment at [75]–[76].

The parties’ cases on appeal

On 18 August 2022, Voltas applied to this Court in CA/OA 9/2022 (“OA 9”) for permission to appeal against the Judge’s decision in OS 952, and on 28 November 2022, Voltas was granted permission to appeal on the following four questions of law:

Appellant’s Case

In essence, Voltas’s submissions in respect of the four questions were as follows:

During the hearing of the appeal on 22 February 2024, counsel for Voltas, Mr Karnan s/o Thirupathy, submitted that, in essence, the 2014 Award was not a final award because it was a conditional award and such an award does not decide all the substantive issues in a dispute.

Respondent’s Case

York contended as follows in relation to the four questions of law:

At the hearing of the appeal, counsel for York, Mr Ng Kim Beng (“Mr Ng”), submitted that the question of whether the conditions in the 2014 Award were fulfilled was one that fell within the remit of the enforcement court, not the tribunal.

Issues that had to be determined

There were two issues that came to the fore. The first pertained to whether the 2014 Award constituted a final award. Specifically, the question was whether a conditional award may constitute a final award. If the 2014 Award was not a final award, there was no need to consider the questions of law pertaining to the reservation of a tribunal’s jurisdiction.

However, if the 2014 Award did constitute a final award, then we had to consider the question of whether the Arbitrator had reserved his jurisdiction. This, in turn, entailed an analysis of how an Arbitrator may reserve his jurisdiction. This would have required us to engage with the four questions of law that were specified in the Order of Court for OA 9 (see [26] above).

To summarise, the two issues that arose for our determination were as follows:

Issue 1: Whether the 2014 Award constituted a final award.

We were satisfied that the 2014 Award constituted a final award. In so finding, we addressed two questions: (a) whether a conditional award may constitute a final award; and (b) whether the 2014 Award was a final award in that it dispensed with all the substantive issues before the tribunal.

Whether a conditional award may constitute a final award

Contrary to Voltas’s submission, a conditional award may constitute a final award (see [28] above). Section 2(1) of the AA defines an “award” as “a decision of the arbitral tribunal on the substance of the dispute and includes any interim, interlocutory or partial award but excludes any order or direction made under section 28” [emphasis added]. A final award has been described as follows (Arbitration in Singapore: A Practical Guide (Sundaresh Menon CJ ed-in-chief) (Sweet & Maxwell, 2nd Ed, 2018)):

In PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (“PT Perusahaan”) [2015] 4 SLR 364, we observed as follows:

Notably, a final award, as used in Art 32(1) of the UNCITRAL Model Law on International Commercial Arbitration 1985, is one that disposes of all remaining claims. In Konkola Copper Mines v U&M Mining Zambia [2014] EWHC 2374 (Comm) (“U&M Mining”), the award (termed the “Second Award”) issued by the tribunal included an order that the applicant, Konkola Copper Mines Plc (“KCM”), pay certain invoices to the respondent unless KCM “shows cause, supported by evidence, within 14 days of the [Second Award], why such an order should not be made”: U&M Mining at [83(ii)]. Counsel for KCM argued that the Second Award was “legally defective and not truly an award because of the form that it took” and that the tribunal “had either to make an outright award which left nothing in abeyance at all and was final and conclusive … so it could immediately be enforced or to make a provisional order only which had to be the subject of reconsideration at a later stage leading to a ‘final’ Award”: U&M Mining at [85].

Cooke J rejected KCM’s argument and held that the award in U&M Mining was a final and binding award. In particular, he found as follows (U&M Mining at [97]):

We agreed with Cooke J’s finding that a conditional award may constitute a final award, though, as we explain below, we do not think that the award in that case was necessarily a final award. However, we do agree that so long as there is sufficient clarity in both the award and any conditions stipulated therein, a conditional award may be a final award.

Voltas referred to U&M Mining at [100], where Cooke J held that: “If it be the case that a further Award is needed, consequent upon the Second Award, which states that no representations were made or cause shown within the 14 day time limit, no doubt an application could be made to the tribunal for it.” Voltas submitted that a tribunal retained the jurisdiction to issue a further award on undetermined issues arising from the conditions contained in the original award. We disagreed with this contention.

U&M Mining could be distinguished because the condition in the Second Award was for KCM to show cause, within 14 days, why certain orders should not have been made. Such a condition went to the substance of the dispute. It was clear that the merits of the dispute had not been finally dealt with, and the Second Award which, by definition, had not decided on all the issues before the tribunal, would only take effect and become a final award if nothing was done within the specified period that might prevent that outcome. U&M Mining was not a case where the liability was to be incurred upon a particular condition being satisfied. Rather, the award in that case allowed the parties to revisit and reopen the tribunal’s orders if KCM appeared to show cause. It follows that U&M Mining did not support Voltas’s submission that a conditional award allows a tribunal to retain its jurisdiction over undetermined issues. Indeed, as we explain below, once a final award is issued, the arbitrator’s mandate comes to an end.

We see no reason for thinking that a conditional award may not constitute a final award in the third sense as laid down in PT Perusahaan. The key inquiry is whether the conditions in such an award make it necessary for the tribunal to reopen or reconsider the matter. 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 Flender Corporation v Techna-Quip Company and another 953 F.2d 273 (7th Cir. 1992) (“Flender Corporation”), the appellant entered into a sales agency agreement with the first respondent in 1984. Under the agreement, the first respondent was appointed as the appellant’s sales agent in a specified territory. The agreement was valid for a three-year term, which could be extended, and provided for the first respondent to be compensated by way of commissions. The agreement also contained an arbitration clause. On 1 February 1987, the agreement was renewed for three additional years till 31 January 1990. However, the appellant terminated the contract on 4 June 1987: Flender Corporation at 275. The arbitrator, in his award dated 4 November 1988, found that the appellant breached the agreement and ordered the appellant to pay the second respondent commissions on all sales within the specified territory through 31 January 1990, and to supply the necessary documentation to verify the accuracy of the payments made: Flender Corporation at 276. The arbitrator could not compute the entire sum due under the award because the term of the contract had not yet ended at the date of the award: Flender Corporation at 280, n (11).

Amongst other submissions, the appellant contended that the award should be set aside because it was not final and definite in that the arbitrator had not fixed or specified the quantum of the commissions payable: Flender Corporation at 279. The court held, at 280, as follows:

The court in Flender Corporation held that the arbitrator’s award was final and definite despite some potential uncertainty as to the appellant’s liability because the enforcement court could readily answer that question. This must be correct. In such cases, the arbitral tribunal would have disposed of all the outstanding claims such that the award can be considered as “final”. All that remains is an assessment of the extent to which any liability has accrued; this would fall within the remit of the enforcement court.

Whether the 2014 Award was a final award

We next explain why we considered that the 2014 Award was a final award. The 2014 Award disposed of the substantive issues in the dispute between Voltas and York. The Arbitrator did not contemplate that there were any other issues left to be decided following the 2014 Award. There are three indicators of this.

First, the substance of the dispute was already decided. The only condition left to crystallise York’s liability for the Nitrogen and Removal Claims was for Voltas to show that it had paid the specified sums to the Project Owners that were claimed under the two Claims.

Third, the 2021 Ruling confirmed our finding that the 2014 Award was a final award. The Arbitrator accepted that the 2014 Award was res judicata and the Arbitrator himself was functus officio in respect of the matters decided in the 2014 Award. Although the Arbitrator went on to consider whether there were undetermined issues that preserved his jurisdiction over the dispute, we agreed with the Judge that this was a “change in tack”: the Judgment at [61]. In the 2014 Award, the Arbitrator had considered Biffa Waste Services Ltd v Maschinenfabrik Ernest Hese GMBH and another [2008] EWHC 2210 (TCC) (“Biffa”), where the court held that in certain circumstances where a windfall might occur, it is appropriate for the court to either: (a) adjourn the decision on quantum; or (b) make a quantum award on condition that the money is paid to a third party or that it is held on trust for that purpose. Having set out the two options in Biffa, the Arbitrator went on to issue the conditional award, thus opting for the latter course. In particular, the Arbitrator decided against adjourning the matter till after Voltas had paid the specified sums to the Project Owners. Instead, the Arbitrator found York liable “up to a maximum” of the sums of $1,099,162.46 and $33,277.00. This could only mean that the Arbitrator did not intend to keep the question of York’s liability open, but rather meant to and did finally dispose of the matter by rendering the 2014 Award, leaving it to Voltas to show, at the appropriate time, that the requisite condition for payment had been fulfilled.

For these reasons, we found that the 2014 Award was a final award in the third sense of PT Perusahaan. There was no substantive matter that was left undecided. This then raised the question of whether the Arbitrator had reserved his jurisdiction.

Issue 2: Whether the Arbitrator had reserved his jurisdiction to issue a further award.

In his 2021 Ruling, the Arbitrator accepted that he had not expressly reserved his jurisdiction. This was not challenged by parties on appeal. The only question left, on Voltas’s case, was whether there could have been an implied reservation of jurisdiction by the Arbitrator. We rejected this submission on the basis that it is not possible for a tribunal to impliedly reserve its jurisdiction in the first place.

Overview on tribunal’s jurisdiction

The starting point is that a tribunal is functus officio once it renders an award – that is, the tribunal has “completed its mandate by making an award with res judicata effect”. The tribunal is thus said to have lost its jurisdiction to reconsider the merits of the parties’ dispute, once it renders an award determining the issues: see L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2014] 1 SLR 1221 (“L W Infrastructure”) at [28]–[29].

In the context of a domestic arbitration proceeding, this rule is contained in s 44 of the AA: see L W Infrastructure at [31]. Section 44 provides as follows:

There are, however, limited exceptions to the termination of the tribunal’s mandate. In the context of domestic arbitrations, these exceptions, which are often referred to in court proceedings as the “slip rule” (BRS v BRQ and another and another appeal [2021] 1 SLR 390 at [70]), are prescribed under s 43 of the AA:

Section 43 of the AA thus prescribes three situations in which a tribunal may revisit a published final award, namely: (a) to correct arithmetical mistakes in calculation or typographical errors in the award (see s 44(1)(a) of the AA); (b) to provide interpretation on a specific point or portion of an award so as to provide greater clarity (see s 44(1)(b) of the AA); or (c) to make an additional award dealing with claims which were presented during the arbitral proceedings, but which were omitted for some reason from the actual award (see ss 43(4) to 43(6) of the AA).

The tribunal, however, is not entitled to “re-visit 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: see Econ Piling Pte Ltd and another (both formerly trading as Econ-NCC Joint Venture) v Shanghai Tunnel Engineering Co Ltd [2011] 1 SLR 246 at [116], citing The Review of Arbitration Laws – Final Report (Law Reform and Revision Division, Attorney-General’s Chambers, 2001) at paras 2.32.2).

To overcome this, it is necessary for the tribunal to reserve its jurisdiction when it purports to issue a final award. As the authors of Nigel Blackaby et al, Redfern and Hunter on International Arbitration (Oxford University Press, 7th Edn, 2023) note, it is necessary for the tribunal to take steps to indicate that the award is not a final award, such as by designating the award as a partial award, to avoid a situation where the tribunal is rendered functus officio following the publication of the award (at para 9.19):

A similar observation regarding the need for an express reservation of a tribunal’s jurisdiction was made in Ray Turner, Arbitration Awards: A Practical Approach (Blackwell Publishing, 2005) (at p 80):

In our judgment, this is correct. The termination of the tribunal’s mandate following the issuance of a final award takes effect immediately and is absolute. A tribunal may revisit the final award only in the limited circumstances prescribed under s 43 of the AA (see [54] above). It is thus necessary for a tribunal to reserve its jurisdiction to deal with any contingency that may arise in order to preserve its jurisdiction to do so.

Implied reservations

Where a tribunal issues a final award in the third sense of PT Perusahaan, the tribunal would be functus officio and would no longer have the jurisdiction to determine any further issues in the arbitration. Absent an express reservation, there is simply no room to imply such a reservation where a tribunal has delivered what appears to be a final award.

The notion of implying such a reservation is inconsistent with s 43(4) of the AA. As stated at [54] above, s 43(4) of the AA sets out a limited statutory exception to the termination of the tribunal’s mandate following the issuance of a final award. It is clear that if nothing is done within the 30-day time limit set out in s 43(4) of the Act, that avenue cannot be used to seek a further award dealing with any issue that may have been omitted by the tribunal. The reason for this was, likely, the desire for finality and expedition in arbitration proceedings. It would be inconsistent with s 43(4) and its underlying rationale to recognise the possibility of an implied reservation of jurisdiction to deal with issues arising from the implementation of an award, or to deal with unresolved issues, even where the conditional award is a final award.

We were therefore satisfied that a tribunal cannot reserve its jurisdiction to revisit an otherwise final award, other than expressly. The Arbitrator held in the 2021 ruling that he had not expressly reserved his jurisdiction, and we held that he could not impliedly do so.

Final observations

We dismissed this appeal on the basis of the holdings set out above. We close with some observations.

A conditional award can be a final award. Issues pertaining to whether the conditions in the award have been met would fall within the remit of the enforcement court. Mr Ng accepted, and in our judgment correctly, that the question of whether Voltas had met the conditions in the 2014 Award such that York’s liability thereunder had accrued, was a question that could be answered by the enforcement court.

In establishing that the conditions in the 2014 Award have been satisfied, Voltas may face the task of showing that the Settlement Agreement with the Project Owners included the specific sums claimed in the Nitrogen and Removal Claims. The Settlement Agreement itself was a global settlement under which Voltas agreed to pay $1,000,000 to the Project Owners in exchange for the settlement of all of the latter’s claims against Voltas. On the face of the Settlement Agreement, it may be unclear what sums were paid as consideration for the settlement of the relevant claims, but this is a matter on which evidence can be led. If difficulties arise, these would just be a result of the way the Settlement Agreement was drafted. But that does not justify a finding that Arbitrator’s jurisdiction could be resuscitated after a final award had been delivered and he had been rendered functus officio.

Lastly, on a procedural note, Voltas did not apply for an ex parte order for leave to enforce the 2014 Award as it had envisaged difficulty identifying the precise quantum to be enforced in the same manner as if the 2014 Award was a judgment of the court. We did not see force in this because Voltas always maintained that it was due payment of the sum of $1,099,162.46 and $33,277 that were the respective maximum sums stated on the face of the 2014 Award. Hence, this is the amount in respect of which it could have sought permission to enforce the 2014 Award. However, as we have just noted, whether the conditions for such payment to be made had been fulfilled would be a matter for the enforcement court to determine based on the evidence led.

Conclusion