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Extending the time to challenge an arbitration award

Posted on 04 July 2019

One of the attractions of international arbitration is the limited scope to challenge an award. This includes a tight timetable for making a challenge: the deadline is usually a month or so after the award is issued. Two recent judgments in Singapore and England have looked at how that deadline might be extended.

The Singapore arbitration

The Singapore International Commercial Court (SICC), which was set up in 2015, has recently heard its first application to challenge an arbitration award (BXS v BXT [2019] SGHC(1) 10). The arbitration concerned the sale of shares in two companies by a Mauritian company to a Thai company. The contract included a tax indemnity, provided the seller claimed under the indemnity within three years of the date of the contract.

Three and a half years after the contract was signed, the Thai tax authorities demanded an additional tax payment of THB 102 million (around US$ 3.3 million). The buyer claimed under the indemnity but the seller refused to pay because the deadline had passed. The buyer then started an arbitration in Singapore under the SIAC Rules. The arbitrator issued an award in June 2018, dismissing the claim and awarding costs to the seller. In November 2018, the buyer applied to the Singapore courts to set aside the award.

The challenge to the award

The buyer challenged the award on several grounds. First, it complained that the arbitration was heard by a sole arbitrator, under the SIAC Expedited Procedure Rules, rather than by three arbitrators as specified in the arbitration agreement. Secondly, it argued that the arbitrator had misapplied the governing law of the contract (Thai law). Finally, it said that the costs awarded to the seller were more than permitted under Thai law.

The seller opposed the grounds for the challenge, and also highlighted that Article 34(3) of the UNCITRAL Model Law on International Commercial Arbitration, which has been incorporated into Singapore law, requires that any challenge must be made within three months of the date of receipt of the award – which in this case meant a deadline of 12 September 2018. The buyer's application was almost two months late.

The SICC judgment

The challenge was heard by Anselmo Reyes IJ who is a distinguished former Hong Kong judge, now sitting as an international judge in the SICC. He concluded that the grounds for the challenge had no merit. Having agreed to the SIAC Rules, the Claimant had consented to a sole arbitrator being appointed via the Expedited Procedure. He also saw no basis for the award to be challenged for misapplication of the governing law; while, since the award of costs was governed by Singapore law, the limit on recoverability of costs in Thailand was irrelevant.

The major part of the judgment, however, was devoted to the question of whether the challenge was made out of time. This was because, while there have been Singapore judgments concerning Article 34(3) of the Model Law which have concluded that the Singapore courts have no specific power under that Article to extend the time-limit, there has been no ruling yet on whether the general power of Singapore judges to extend time might apply. That general power is found in the Supreme Court of Judicature Act (Cap 322) and says that the courts can extend any time prescribed by any written law, except if the law "relates to limitation".  

Having reviewed various authorities, not only from Singapore but also from Malaysia, England, New Zealand and Hong Kong, the judge concluded that he had no power to extend time. There was no specific power under the Model Law, as noted above, while the general power did not apply because Article 34 of the Model Law was a law "related to limitation" because it extinguished a right of action - namely, the right to challenge an award.

The arbitration in England

A few weeks before the SICC judgment, the English Commercial Court also considered a challenge to an arbitration award where this timing question came up (ZCCM Investments v Kansanshi Holdings plc and another [2019] EWHC 1285 (Comm)). The arbitration had taken place in England under the UNCITRAL Rules and concerned a mining company which was 20% owned by the Claimant and 80% owned by the Respondent. The mining company had transferred substantial amounts of money (over US$ 2.2 billion) to another company related to the Respondent. The money had been repaid to the mining company with interest, but the question was whether the Respondent had misrepresented the nature of the transfers and whether more interest should have been paid. Given the sums involved, the additional interest claimed was substantial: over US$ 260 million.

There was a preliminary issue about whether the Claimant could bring the claim by way of a derivative action (in practice that was the only way the Claimant could pursue the claim since it did not control the mining company). The tribunal decided in February 2018 that it could not. The Claimant challenged that decision in March 2018 by way of an application under section 68 of the Arbitration Act 1996. It then sought to amend its application in June 2018, to bring in a new ground relating to certain correspondence with the Zambian tax authorities about the transfers which, according to the Claimant, contradicted what the Respondent had said in the arbitration.

The Commercial Court judgment

Just as in the SICC case, the English judge dismissed the Claimant's challenge. One of the key points that the judge concluded was that the tribunal's ruling was not actually an "award", but was instead a procedural decision about who could bring the claim (i.e. the tribunal had not ruled on the substantive claim, but had simply said that it could only be brought by the mining company and not by the Claimant as a shareholder in the mining company). That meant no challenge could be brought under section 68 of the Arbitration Act.

This disposed of the case but, just as in Singapore, the judge proceeded to consider all the other arguments including the new ground that the Claimant had applied to introduce in June 2018. Under English law, the time-limit for challenging an arbitration award is 28 days from the date of the award and the new ground had been advanced after that time-limit had expired. However, unlike in Singapore, there is an express provision in the Arbitration Act for an extension of time.

The judge considered the various factors that have been identified in previous English cases relating to such extensions of time, including the reasons for the delay, any prejudice that might be caused for the respondent, and the strength of the challenge to the award. She concluded that, while the reasons for the delay here might be excused, the correspondence with the Zambian tax authorities that the Claimant now sought to rely on would probably not have affected the outcome of the arbitration if it had been presented to the tribunal. This meant the challenge was unlikely to succeed, so she dismissed the application to extend time.

Comment

These two cases illustrate the different approaches to applications to extend the time to challenge an award, in different countries. In Singapore, the three-month time-limit is absolute and cannot be extended. In England, it is possible to extend the 28-day time-limit, but there is a high hurdle to overcome and, in particular, there will need to be good grounds for the underlying challenge. Of course, the best approach is to ensure that the challenge is made within the time-limit so that there is no need to apply for more time.

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