Finality in arbitration: A tribunal's mandate terminates upon disposing of all issues in dispute, unless it expressly reserves its jurisdiction to reopen its award

An arbitrator ordered a party to pay certain sums to the counterparty if the counterparty proved sufficiently that it had incurred those expenses.  Could the arbitrator reopen the case later to decide if the condition had been satisfied?

Singapore's Court of Appeal decided in Voltas Ltd v York International Pte Ltd [2024] SGCA 12 that a conditional award will be considered final if it disposes of all remaining claims in the arbitration. A tribunal is then unable to reopen the case and to issue a further award.  If a tribunal wishes to reserve its jurisdiction to revisit an award already rendered, it must do so expressly as the court will not imply such a reservation.

The conditional award

An arbitrator issued an award in 2014 in a dispute over the quality of five water-cooled dual centrifugal chillers. The arbitrator decided that the claimant (York) was liable to pay certain sums to the Respondent (Voltas) on condition that Voltas could demonstrate later that it had in fact paid those sums to a third party (they had not been paid at the time the award was issued).

However, the Final Award did not specify precisely how this condition could be satisfied.

From 2015 to 2018, Voltas demanded payment of those amounts from York. However, York refused to pay, claiming that there was insufficient evidence of the third party having been paid.

Voltas then applied to the arbitrator for a further award ("Further Award Application"). In a Ruling on Jurisdiction issued in August 2021, the arbitrator decided that he was not functus officio and retained jurisdiction to make the further award. The arbitrator considered that he had not yet determined the precise quantum due from York to Voltas and that the issues raised in the Further Award Application fell within the scope of reference to the arbitration.

York then applied to the Singapore Court under s 21(9) of the Arbitration Act 2001 ("AA") for an order that an arbitrator lacked jurisdiction to make a further award. The application succeeded.  Voltas appealed to the Court of Appeal.

Conditional awards can constitute a final award

The Court of Appeal began by referring to its decision in PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] 4 SLR 364, where it had held that the term "final award" could be understood in three ways:

1. An award which resolves a particular claim or matter in an arbitration with preclusive effect, such that the same claim or matter cannot be re-litigated.
2. An award which has achieved a sufficient degree of finality under the laws in the arbitral seat, such as where the award is granted 'confirmation or exequatur' or can no longer be appealed against or subject to annulment proceedings.
3. An award which disposes of all remaining claims (this being the sense used in Article 32(1) of the Model Law, 'Termination of Proceedings').

In the context of a conditional award, the Court of Appeal held that 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" (at [42]).

Undertaking the inquiry in this case, Sundaresh Menon CJ noted that the substance of the dispute had already been decided in the 2014 Award, with Voltas simply required to show it had paid the sums to the third party. Further, costs of the arbitration had also been decided in the 2014 Award and the arbitrator himself observed in his Ruling on Jurisdiction that the 2014 Award was res judicata. Accordingly, the 2014 Award had disposed of all remaining claims in the arbitration and should be regarded as "final".  The question of whether the condition had been satisfied could and should have been canvassed before an enforcement court, not the tribunal.

Reservations as to jurisdiction cannot be implied

When a tribunal renders a final award, the tribunal has completed its mandate to decide the dispute and is functus officio.

The finality of an award is reflected legislatively in s 44 of the AA (and correspondingly in s 19B of the IAA), with a tribunal only permitted to revisit an award for three narrow purposes:

1. to correct any computational, clerical or typographical error (s 43(1)(a) AA; Article 33(a)(a) UNCITRAL Model Law 1985);
2. to provide interpretation on a specific point or part of the award if all parties to the arbitration so agree (s 43(1)(b) AA; Article 33(a)(b) UNCITRAL Model Law 1985); or
3. to make an additional award dealing with claims presented during the arbitral proceedings but omitted from the award (s 43(4) – 6) AA; Article 33(3) – (4) UNCITRAL Model Law 1985).

Given the narrowly circumscribed statutory scope for revisiting an award, the Court of Appeal held that it would be inconsistent to hold that a reservation of jurisdiction could be implied. If a tribunal wishes to reserve any part of its jurisdiction for future purposes, it must do so expressly, for example by designating the award as a partial award.  Otherwise, absent an express reservation, the tribunal's mandate is terminated absolutely and immediately upon the issuance of the final award.

Comment

This decision promotes certainty, finality and expedition in arbitral proceedings. It ensures that parties and tribunals cannot reopen decisions once a final award has been rendered and clarifies that the appropriate forum for working out issues with enforcement is the enforcement courts.  It precludes an argument that reservation of the tribunal's jurisdiction can be implied.

Although this case was decided under the AA, the relevant statutory provisions are similar to those in the IAA and UNCITRAL Model Law 1985. Accordingly, the principles articulated in this decision would apply with equal force to international arbitrations seated in Singapore.

From a practical perspective, parties should review an award quickly and carefully upon receipt.  If necessary, they must seek recourse on one of the statutory grounds for revisiting the award. Speed is crucial because unless parties have agreed otherwise, these avenues are only available for 30 days after the issuance of the award, following which any issues (including issues as to fulfilment of conditions laid down in the award) must be taken up with the enforcement court. It will not be possible to argue that the tribunal impliedly retains jurisdiction to address such concerns later.

For more information, please contact Alastair Henderson, Partner, Daniel Walek, Partner, Daniel Chia, Managing Director, Prolegis, Gitta Satryani, Partner, Tomas Furlong, Partner, or your usual Herbert Smith Freehills contact.