Daimler South East Asia Pte Ltd v Front Row Investment Holdings (Singapore) Pte Ltd

Woo Bih Li J:

[1] The issue between the parties was whether they had agreed to exclude the right of appeal to the High Court under s 49(1) of the Arbitration Act (Cap 10, 2002 Rev Ed) (“the AA”) when they agreed to submit any dispute under a joint venture agreement to arbitration to be conducted under the Rules of Arbitration of the International Chamber of Commerce (“the ICC”). It was common ground that under s 49(2) of the AA, the parties could exclude the right of appeal under s 49(1) of the AA and that the reference to the ICC rules was to the ICC Rules of Arbitration in force as from 1 January 1998. I will refer to such rules as “the ICC Rules 1998” for convenience.

[2] After hearing arguments, I made a declaration that the parties had excluded the right of appeal. As I was informed that this was the first time that the High Court had decided the point, I set out my reasons below.

[3] On 15 September 2005, the parties had entered into a joint venture agreement in which they agreed “to work together in order to carry on the business of AMG Experience/lifestyle in the territory of South East Asia”. I will refer to the plaintiff as “DSEA” and the defendant as “FR” and to their joint venture agreement as “JVA”.

[4] The JVA provided, inter alia, that:

[5] Disputes arose between the parties. DSEA brought a claim against FR for the payment of the salary of an employee. FR counterclaimed for contractual breach and misrepresentation.

[6] DSEA’s claim and FR’s counterclaim were dismissed by an arbitrator in an award dated 3 July 2009 (“the 1Award”).

[8] Pursuant to Justice Ang’s decision, FR commenced fresh arbitration proceedings against DSEA on 20 September 2010 to recover damages for contractual breach and misrepresentation (“the 2Arbitration”). For the present purposes, the material provisions of the terms of reference for the 2 Arbitration were paras 44(a) to 44(d) which stated:

[9] The new arbitrator issued a partial award dated 29 February 2012 (“the Partial Award”) which stated, inter alia, that FR was not precluded from pleading its claim for breach of contract in the 2Arbitration.

[10] DSEA then filed the present Originating Summons (“the OS”) to seek leave of the High Court to appeal against the Partial Award on a question of law, which DSEA framed as follows:

[11] In turn, FR filed Summons 1927 of 2012 to set aside the OS on the ground that the parties had agreed to exclude their right of appeal to the High Court under s 49(1) of the AA when they had agreed to submit any dispute under the JVA to arbitration under the ICC Rules 1998.

[12] Both Summons 1927 of 2012 and the OS were fixed for hearing on 27 June 2012 before me. Parties proceeded on the basis that if I was able to and did decide FR’s summons in its favour, then there was no need to hear the OS itself.

[14] As mentioned above, the relevant provisions were ss 49(1) and 49(2) of the AA, which stated:

[15] It was undisputed that the parties could exclude the right of appeal by adopting rules of arbitration. For example, Halbury’s Laws of Singapore vol 1(2) (LexisNexis, 2011 Reissue) states at para 20.126, that the “adoption of the institutional rules which excludes an appeal to court without specific reservation has the effect of an exclusion agreement”. It then refers to footnote 4, which states:

The reference in footnote 4 to “ICC Rules Art 24” is to the predecessor of the ICC Rules 1998.

[16] The relevant provision in the ICC Rules 1998 is Art 28(6), which states:

[17] The predecessor of Art 28(6) was Art 24 which states:

[18] It is stated in Yves Derains and Eric A Schwartz, A Guide to the ICC Rules of Arbitration (Kluwer Law International, 2005 2 Ed) (“the Guide”) at p 320 that:

[19] It was quite clear, from the previous Art 24, the present Art 28(6) and the Guide, that the purpose of the present Art 28(6) was to widen the scope of the previous Art 24. It was also quite clear that, by adopting the ICC Rules 1998, the parties had agreed to exclude the right of appeal under s 49(1) of the AA.

[20] DSEA did not attempt to rely on the case cited by the Guide in respect of the Swiss Private International Law Act to persuade me otherwise. Instead, it referred to, inter alia, two cases.

[21] First, DSEA referred to American Diagnostica Inc v Gradipore Ltd [1998] 44 NSWLR 312 (“Diagnostica”) for the proposition that it was insufficient to exclude a right of appeal by saying that an arbitration award should be final, conclusive and binding.

[22] Second, DSEA also referred to Holland Leedon Pte Ltd v Metalform Asia Pte Ltd [2011] 1 SLR 517 (“Holland Leedon”) to show how the High Court had granted leave to appeal even though the contractual provision there appeared to exclude the right of appeal under s 49(1) of the AA.

[23] I did not think that Diagnostica assisted DSEA. Article 28(6) stated more than that an award would be binding and final and conclusive.

[24] As for Holland Leedon, the provision there was different. The High Court there found that it was meant to apply to a different provision, ie, s 45 of the AA rather than s 49 AA. Justice Philip Pillai said at [6]:

[25] On the other hand, FR relied on a number of English authorities on the basis that ss 49(1) and 49(2) of the AA were modelled on s 69(1) of the English Arbitration Act 1996. Indeed, in the Parliamentary Reports of 5 October 2001, the Minister of State for Law, Assoc Prof Ho Peng Kee said at the second reading of the Arbitration Bill:

[26] It is stated in Robert Merkin and Johanna Hjalmarsson, Singapore Arbitration Legislation Annotated by (Informa London, 2009) at p 166 that:

[27] A few of the various English decisions which FR relied on dealt with the previous Art 24. Nevertheless, in Lesotho Highlands Development Authority v Impregilo SpA and others [2006] 1 AC 221, Lord Steyn stated at p 224-225 that, “The parties are free to exclude this right of appeal by agreement. They did so by ICC Rules, article 28.6 in the case before the House”. Therefore, Lord Steyn proceeded on the basis that Art 28.6 (of the ICC Rules 1998) did exclude the right of appeal there. The actual dispute in that case was on another point.

[28] DSEA did not dispute that ss 49(1) and 49(2) of the AA were modelled on s 69(1) of the English Arbitration Act 1996. Instead, it submitted that the regime for an appeal in arbitration under the English statute was different from the AA because, in England, the avenue for appeal is available to both international and domestic arbitration, whereas in Singapore, it is only available to the latter, which is governed by the AA. The submission was that because the avenue for appeal was also available to international arbitration and because the regime for such an arbitration generally eschewed intervention by the courts, the English courts were more likely to conclude that there was an agreement to exclude the avenue for appeal to the courts there than if the avenue was restricted to domestic arbitration.

[29] I did not find such a submission to be persuasive. In England, the principle was a general one for domestic and international arbitration. An interpretation that Art 28(6) was an agreement to exclude the right to appeal would apply equally to all arbitration agreements which adopted such rules.

[30] Furthermore, the background leading to the drafting of the terms of Art 28(6), as mentioned in the Guide, made it clear that adopting Art 28(6) meant an agreement to exclude the right of appeal. It was not a question of distinguishing between international and domestic arbitration.

[31] DSEA also submitted that FR’s interpretation would mean that everyone who adopted the ICC Rules 1998 would be found to have agreed to exclude the right of appeal under s 49(1) of the AA even if he had not addressed his mind to the specific issue.

[32] In my view, that was not a legal argument. It is trite law that parties are bound by the terms of their contract, regardless of whether they had addressed their minds specifically to each and every term. Otherwise, there would be confusion rather than certainty.

[33] Besides, DSEA’s argument cut both ways. If I were to conclude that the adoption of the ICC Rules 1998 did not constitute an agreement to exclude the right of appeal, then that would equally bind all parties even if they had not addressed their minds to the specific issue.

[34] I would add that FR had said, in one of its supporting affidavits, that it believed that DSEA had consulted “lawyers and/or its in-house legal team before entering into the [JVA]” which was not disputed.

[35] In the circumstances, I made the declaration stated at [2] above.