Resurrecting the Right to Challenge a Tribunal s Jurisdiction After a Final Award

Transcription

1 Resurrecting the Right to Challenge a Tribunal s Jurisdiction After a Final Award Chan Leng Sun, SC The jurisdiction of a tribunal is fundamental to the validity of an arbitration and the enforceability of an arbitral award. It is, therefore, not unusual to encounter challenges to the tribunal s jurisdiction at various stages of arbitration. But when can a party be deemed to have given up his right to challenge a tribunal s jurisdiction? This article updates and elaborates on some of the issues raised in the authors previous article discussing various time limits in challenging a tribunal s jurisdiction and the risks of a party not raising a jurisdictional objection within the time lines imposed by national laws. 1) In particular, it will discuss the Court of Appeal s recent reversal of the Singapore High Court s decision 2) in PT First Media v Astro. 3) The tribunal s competence to rule on its own jurisdiction is recognised in most jurisdictions, although the courts of many jurisdictions would retain, to varying extents, the power to rehear the parties on the question of jurisdiction after the tribunal has made its ruling. In Singapore, both positive and negative jurisdictional rulings of a tribunal are also subject to the court s power to rehear de novo the question of jurisdiction. This allocation of jurisdictional competence is reflected in s10 of the International Arbitration Act (Cap 143A) (2002 Rev Ed) ( IAA ) 7) read with Article 16 of the UNCITRAL Model Law on International Commercial Arbitration 1985 ( Model Law ), which are set out in full below: I. Jurisdictional Challenge at Different Stages Jurisdictional issues may arise at different stages of arbitration. They include the following stages: (i) Prior to the commencement of arbitration 4) (ii) At the commencement of arbitration 5) (iii) During the arbitral proceedings 6) (iv) After a final award is made, by an application to set aside the award or to resist enforcement. 1) Chan Leng Sun, SC and Yewon Han Time Limits in Challenging a Tribunal's Jurisdiction, Journal of Arbitration Studies, Vol. 23 No.3. 2) PT First Media TBK v Astro Nusantara International BV [2014] 1 SLR ("PT First Media v Astro"). 3) Astro Nusantara International BV v PT Ayunda Prima Mitra [2013] 1 SLR ("Astro v Lippo"). 4) Most Model Law jurisdictions allow interlocutory judicial resolution of jurisdictional disputes generally through Article 8(1) (or its equivalent provision) of the UNCITRAL Model Law on International Commercial Arbitration ("Model Law"). 5) When an arbitral institution is involved, their rules sometimes prescribe procedures for dealing with jurisdictional objections after they have been made. E.g. Article 6(5) of the 2012 ICC Rules and Rules 25.1 of the 2013 SIAC Rules. [Article 16 of the UNCITRAL Model Law ( Article 16 )] Article 16. Competence of arbitral tribunal to rule on its jurisdiction (1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. 6) Article 16(1) of the Model Law gives the tribunal the power to rule on its jurisdiction and Article 16(3) provides the tribunal the discretion to rule on jurisdictional pleas either as a preliminary question or in an award on the merits. 7) In Singapore, the IAA gives the Model Law, with the exception of Chapter VIII thereof, "the force of law in Singapore". s10 of the IAA modifies Article 16(3) of the Model Law to provide that appeal to the Court of Appeal is permissible with leave. s10(3)(b) of the IAA also permits an appeal from a tribunal's negative jurisdictional ruling. 2 The Korean Commercial Arbitration Board

2 (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified. (3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this Article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in Article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award. [s10 of the IAA ( s10 of the IAA )] Appeal on ruling of jurisdiction 10. (1) This section shall have effect notwithstanding Article 16(3) of the Model Law. (2) An arbitral tribunal may rule on a plea that it has no jurisdiction at any stage of the arbitral proceedings. (3) If the arbitral tribunal rules (a) on a plea as a preliminary question that it has jurisdiction; or (b) on a plea at any stage of the arbitral proceedings that it has no jurisdiction, any party may, within 30 days after having received notice of that ruling, apply to the High Court to decide the matter. (4) An appeal from the decision of the High Court made under Article 16(3) of the Model Law or this section shall lie to the Court of Appeal only with the leave of the High Court. (5) There shall be no appeal against a refusal for grant of leave of the High Court. (6) Where the High Court, or the Court of Appeal on appeal, decides that the arbitral tribunal has jurisdiction (a) the arbitral tribunal shall continue the arbitral proceedings and make an award; and (b) where any arbitrator is unable or unwilling to continue the arbitral proceedings, the mandate of that arbitrator shall terminate and a substitute arbitrator shall be appointed in accordance with Article 15 of the Model Law. (7) In making a ruling or decision under this section that the arbitral tribunal has no jurisdiction, the arbitral tribunal, the High Court or the Court of Appeal (as the case may be) may make an award or order of costs of the proceedings, including the arbitral proceedings (as the case may be), against any party. (8) Where an award of costs is made by the arbitral tribunal under subsection (7), section 21 shall apply with the necessary modifications. (9) Where an application is made pursuant to Article 16(3) of the Model Law or this section (a) such application shall not operate as a stay of the arbitral proceedings or of execution of any award or order made in the arbitral ARTICLES Korean Arbitration Review 3

3 proceedings unless the High Court orders otherwise; and (b) no intermediate act or proceeding shall be invalidated except so far as the High Court may direct. (10) Where there is an appeal from the decision of the High Court pursuant to subsection (4) (a) such appeal shall not operate as a stay of the arbitral proceedings or of execution of any award or order made in the arbitral proceedings unless the High Court or the Court of Appeal orders otherwise; and (b) no intermediate act or proceeding shall be invalidated except so far as the Court of Appeal may direct. Article 16(1) sets out the two general principles of Kompetenz-Kompetenz and separability. Article 16(2) deals with the prescribed procedures for raising a plea of the tribunal s lack of jurisdiction, including the relevant time limits for raising it. Article 16(3) then shows how such a plea is dealt with initially by the arbitral tribunal and later by the court, which is the last word on the issue of the arbitrator s jurisdiction. If the tribunal decides to postpone the decision on its jurisdiction until the award stage, a party may try to set aside the award or refuse enforcement of the award. 8) Where an application under s.10 of the IAA and Article 16(3) of the Model Law has been made by either party and the court has rendered judgment on the question of the tribunal s jurisdiction, such a decision is res judicata with respect to the question of the tribunal s jurisdiction in any subsequent application to set aside the award and/or to enforce the award in Singapore. 8) P Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions (Sweet & Maxwell, 3rd Ed, 2010) at pp ). Article 16 is, however, silent on the consequence of a party s failure to raise a plea of non-competence, which will be dealt with in Part IV of this article. This article will illustrate that different scenarios could arise out of a jurisdictional challenge made pursuant to Article 16 of the Model Law. In PT First Media v Astro, the relevant question was whether after a positive jurisdictional ruling by a tribunal, a party has to actively challenge that ruling under Article 16(3) or Article 34 (settingaside) or, alternatively, whether he may wait and only challenge the tribunal s jurisdiction at the enforcement stage. II. The Decision of the Court of Appeal - PT First Media v Astro The facts in PT First Media v Astro are reproduced in this article for the readers benefit. In PT First Media v Astro, a dispute arose out of a failed joint venture between the members of a Malaysian media group and the members of an Indonesian conglomerate. The terms of the joint venture were set out in a Subscription and Shareholders Agreement ( SSA ) between the Astro-affiliated parties and the Lippo-affiliated parties. When the Astro-affiliated signatories to the SSA ( Astro ) commenced arbitration against the Lippo-affiliated signatories ( Lippo ) pursuant to the arbitration agreement provided in the SSA, it also applied to join three other subsidiaries of the Astro group (who were not signatories to the SSA) ( Third Parties ) to the arbitration under Article 24.1(b) of the 2007 SIAC Rules. Lippo disputed the application, but the Tribunal determined in a preliminary award that it had the power and would exercise its discretion to join the Third Parties to the Arbitration. Lippo did not appeal the Tribunal s 4 The Korean Commercial Arbitration Board

4 decision within the stipulated time, but participated in the arbitration while expressly reserving its rights. The Tribunal subsequently issued its final awards (in total 5 awards) in favour of Astro ( Awards ). Lippo did not apply to set aside the Awards under Article 34 Model Law. When Astro sought to enforce the Awards in Singapore, Lippo resisted enforcement of the Awards on the basis that the Tribunal lacked jurisdiction to join Third Parties to the arbitration. (i) Decision of the High Court Justice Belinda Ang held that Lippo could no longer resist enforcement on the ground that the tribunal lacked jurisdiction. The judge interpreted Article 16(3) as the exclusive route through which a preliminary decision on jurisdiction could be challenged. Once the time limit for bringing a challenge under Article 16(3) had elapsed without an application having been made, the preliminary ruling on jurisdiction became final and could not be challenged subsequently, whether by way of a setting-aside application or at the enforcement stage. It was, therefore, no longer open to the Singapore court to revisit the jurisdictional objection. (ii) Decision of the Court of Appeal The main question before the Court of Appeal ( CA ) was whether a party may invoke the jurisdictional challenge as a ground to refuse enforcement of an award made in Singapore under the IAA ( Singapore International Awards ), in the absence of any active attack against the tribunal s affirmative ruling on its jurisdiction at an earlier stage (the Issue ). In Singapore, the enforcement of Singapore International Awards 9) is governed by Section 19 of the IAA ( Section 19 ) which reads as follows: 9) c.f. enforcement of foreign awards is governed by provisions under Part III (ss 27-33), Sch 2 of the IAA, which gives effect to the New York Convention. Enforcement of Awards 19. An award on an arbitration agreement may,by leave of the High Court or a Judge thereof, be enforced in the same manner as a judgment or an order to the same effect and, where leave is so given, judgment may be entered in terms of the award. Section 19 must be distinguished from provisions governing enforcement of foreign awards. Unlike Section 19 of the IAA, Section 31(2) of the IAA sets out the grounds for refusal of the foreign awards, which is based on the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention ). Further, for foreign awards, a party who fails to challenge an award before the supervisory court at the seat of the arbitration is not precluded from resisting enforcement in Singapore. 10) In contrast, Section 19 of the IAA is silent on whether the Court has the same power to refuse enforcement of a Singapore International Award, where the award could have been but was not attacked by a setting aside application. Choice of Remedies In the absence of any local authority interpreting Section 19, the CA examined the history of Section 19, which revealed that Section 19 originated from Section 20 of the Singapore Arbitration Act (Cap 10, 1985 Rev Ed) 11), which in turn was modelled on Section 26 of the 1950 English Arbitration Act ( EAA ). Prior to the enactment of the IAA and the adoption 10) Aloe Vera of America, Inc v Asianic Food (S) Pte Ltd [2006] 3 SLR (R) 174. c.f. If a challenge has been mounted at the supervisory court and failed, it is unlikely that an enforcement court would entertain a similar objection to be raised. In Galsworthy Ltd of the Republic of Liberia v Glory Wealth Shipping Pte Ltd [2011] 1 SLR 727, Choo J refused a challenge to enforcement of an award because he found that the defendant was barred by the default dismissal of its setting-aside application in the supervisory court (London) notwithstanding that the issues in question had not been decided on the merits in London. 11) The relevant provision under the current Arbitration Act (Cap. 10, 2002 Rev Ed) is s46. ARTICLES Korean Arbitration Review 5

5 of the Model Law, it was clear from persuasive English case law that the parties have a choice of passive remedies and active remedies after an award has been released. This is often known as the system of choice of remedies. Under this system, a party may either choose to actively attack the award by setting aside the tribunal s award or avail himself of a passive remedy of resisting enforcement of an award. However, the Court noted that the scope of the Court s power to refuse enforcement in Section 19 could no longer draw direct or complete inspiration from the English authorities once the IAA came into force. The Court held that the content of the Court s power had to be consonant with the underlying philosophy of the Model Law on the enforcement of all awards generally and more specifically, awards made in Singapore under the IAA. 12) The CA held that this philosophy of choice of remedies was enshrined in the IAA and the adoption of the Model Law did not change this position. In fact, the Model Law s travaux préparatoires showed that the same idea of choice of remedies was also fundamental to the Model Law s philosophy towards the enforcement of domestic (as opposed to foreign) awards. The CA held at paragraph [65] of the decision that choice of remedies is not just a facet of the Model Law enforcement regime; it is the heart of its entire design. [emphasis from the original text]. The Content of the Court s Power to Refuse Enforcement Under Section 19 Having recognised that the principle of choice of remedies is available under the IAA and Model Law, the Court had to determine for itself the content of its power to refuse enforcement under Section 19 of the IAA. Unlike Section 31(2) of the IAA which set out clearly the grounds upon which a Singapore court may refuse enforcement of foreign awards for arbitrations seated outside Singapore, Article 19 did not expressly provide for the test to be applied in deciding whether leave would be granted to enforce an award where the seat of arbitration was in Singapore. In this regard, the CA studied the legislative intentions behind the IAA and the Model Law and held that: Given that de-emphasising the seat of arbitration by maintaining the award debtor s choice of remedies and alignment with the grounds under the New York Convention are the pervading themes under the enforcement regime of the Model Law, the most efficacious method of giving full effect to the Model Law philosophy would, in our view, be to recognise that the same grounds for resisting enforcement under Art 36(1) are equally available to a party resisting enforcement under s19 of the IAA. [emphasis added in bold] 13) Article 36(1) of the Model Law sets out the grounds for refusing enforcement of the award, which does not have force of law in Singapore by virtue of Section 3 of the IAA. The CA held that Section 3 was never intended to remove the system of choice of remedies but to ensure that there would not be any conflict between Article 36 of the Model Law and the provisions of the New York Convention. Lippo could, therefore, rely on any of the grounds found in Article 36(1) of the Model Law to refuse enforcement of the Award. Article 16(3) - Whether a Party is Time Barred from Raising the Jurisdictional Challenge Another hurdle the CA had to overcome was Article 16(3), which had limited Lippo s right to bring the jurisdictional challenge at the enforcement stage in the High Court s decision. Astro argued that once an arbitral tribunal decides to make a preliminary ruling on jurisdiction, the only option left to an aggrieved 12) Paragraph [55] of PT First Media v Astro. 13) Paragraph [84] of PT First Media v Astro. 6 The Korean Commercial Arbitration Board

6 party is to invoke the appellate route to the court as provided for in Article 16(3) if that route is not taken, there can be no further opportunity to revisit the jurisdictional objection at the setting aside stage after the substantive award has been rendered or at the enforcement stage. [emphasis from the original text]. 14) The CA disagreed with Astro s argument that Article 16(3) is the sole route to appeal the tribunal s ruling on its jurisdiction. It was clear from the drafting history of Article 16(3) that the availability of the instant court control under Article 16(3) did not remove the system of the choice of remedies. The CA, therefore, concluded that Article 16(3) was not intended to be a one-shot remedy and a party has the right to preserve his right to invoke the passive remedy of resisting enforcement of the award on the jurisdictional ground. The CA, however, drew an important distinction in obiter dicta. The CA considered that it would be surprised if a party retained the right to bring an application to set aside a final award on the merits under Article 34 on a ground which they could have raised via other active remedies before the supervising court at an earlier stage when the arbitration process was still ongoing. 15) Update from the Previous Article PT First Media v Astro now brings Singapore in line with the underlying principles of the Model Law and other jurisdictions 16) that employ the system of choice of remedies. PT First Media v Astro clarifies an important procedural point for parties challenging a 14) Paragraph [101] of PT First Media v Astro. 15) Obiter dicta at paragraph [130] of PT First Media v Astro. 16) England: see Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763. Hong Kong: Section 86(2)(c) of Cap 609 Arbitration Ordinance allows a party to pursue a "passive" level of review in order to resist the enforcement of an arbitral award, where that party has not previously pursued the "active" level of review of, for example, challenging a preliminary award on jurisdiction within time specified in section 34 of the Arbitration Ordinance. Section 86(2)(c) provides that "[e]nforcement of an award referred to in section 85 may also be refused if..(c) for any other reason the court considers it just to do so." See Dylan McKimmie and Meriel Steadman, "Parties choose your remedies: the Singapore Court of Appeal has spoken", December tribunal s jurisdiction, by removing any doubt a party might have had after the decision of the High Court on his right to revive the jurisdictional challenge at the enforcement stage. In Singapore at least, a party is not precluded from reviving the jurisdictional challenge at the enforcement stage even if he failed to actively attack the tribunal s decision on its jurisdiction. Although the decision is quite unique to the interpretation of the IAA, the CA s detailed analysis of the travaux of the Model Law may be of use to practitioners in other jurisdictions should similar questions arise as to the choice of remedies in other Model Law jurisdictions. III. Divergent Approaches In contrast, some national courts have applied doctrines akin to waiver or estoppel to hold that, if a party fails to seek annulment of an award on jurisdictional grounds before the courts of the seat, it may not subsequently raise jurisdictional objections where it is seeking to have the award recognised by a court for the purposes of enforcement. For example, in a German case, 17) the court held that a defendant who fails to impugn an unfavourable arbitral decision on jurisdiction before the state courts and participates in the discussion on the merits of the case violates the principle of fair conduct of proceedings (Gebot redlicher Prozessführung) if it raises the objection of lack of an arbitration agreement again in the enforcement proceedings. Further, in a Netherlands case, the court recognized an award made in London and rejected jurisdictional objections raised. The Netherlands court noted that the award-debtor had not sought to annul award before the English courts in the seat of arbitration and stated that: a party which has not exhausted all the possibilities at his disposal against an arbitrator s 17) German No.90, Consultant v. German company, Oberlandesgericht [Court of Appeal] Hamm, 7 September 2005 ARTICLES Korean Arbitration Review 7

7 finding that he has jurisdiction may not rely later on the arbitrator s lack of jurisdiction. 18) The court of first instance (the High Court) in Astro v Lippo did refer to various decisions 19) from other Model Law jurisdictions on Article 16, ruling that all preliminary awards on jurisdiction should be subject to instant court control under Article 16(3), or else treated as final and binding. In contrast, the CA did not follow these decisions. 20) Nonetheless, these other cases represent differing approaches taken in other jurisdictions that practitioners should bear in mind at all times. IV. Doctrine of Estoppel Further, a party should not assume that he will never lose his right to raise the jurisdictional challenge. A party may be estopped from questioning the jurisdiction of the tribunal at the enforcement stage if he participated in the arbitral proceedings without raising any objection to the tribunal s jurisdictions. As noted earlier, Article 16(2) fails to state expressly what are the consequences of a failure to raise a plea of non-competence. Article 4 of the Model Law 21) ( Article 4 ) does deal with the deemed waiver of the right to object to non-compliance with any provision of the Model Law from which parties may derogate. One view is that Article 4 does not apply to a question on the arbitral tribunal s lack of jurisdiction under Article 16, because the requirement of jurisdiction is not 18) Netherlands No. 26, Société d'etudes et de Commerce SA v. Weyl Beef Products BV, Arrondissementsrechtbank [Court of First Instance], Almelo, 19 July For more cases that adopt similar approaches, refer to Chapter 7: International Arbitration Agreements and Competence-Competence in Gary B. Born, International Commercial Arbitration, Second Edition (Kluwer Law International 2014) p1105, fn ) Astro Nusantara International BV v PT Ayunda Prima Mitra [2013] 1 SLR at [145]-[151]. 20) The CA, however, disagreed with the High Court's construction of the enforcement regimes in Germany and Québec. The CA basically held at paragraphs [78]-[83] of the decision that the enforcement regime in Québec is no different from Singapore and the approach taken by German (abandoning the 'choice of remedies' and legislating a separate enforcement regime that departs from the Model Law) is not the appropriate representation of the enforcement regime under the Model Law. something that the parties may derogate from. 22) Parties should still proceed with caution however because in some jurisdictions the concept of estoppel or waiver may still operate against a party who does not choose to raise any jurisdictional objection at the earliest opportunity. 23) In any event, Article 16(2) does require a party to expressly challenge jurisdiction, failing which it should be precluded from raising such objections not only during the later stages of the arbitral proceedings but also in other contexts, in particular, in setting aside proceedings or enforcement proceedings. 24) In PT First Media v Astro, Lippo did indeed raise the issue of lack of jurisdiction before the Tribunal, although it did not apply to appeal the Tribunal s preliminary ruling on jurisdiction or set aside the award. However, in a recent decision of the Court of Appeal in Malaysia, a party was estopped from bringing a jurisdictional challenge because it had participated in the entire arbitration proceedings without any objections to the tribunal s jurisdiction. 25) In this case, after the tribunal rendered its final award, the award debtor tried to resist enforcement of the award on the ground that the tribunal had no jurisdiction to hear and determine the disputes between the parties. 21) Article 4 provides as follows: A party who knows that any provision of this Law from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a timelimit is provided therefor, within such period of time, shall be deemed to have waived his right to object. 22) Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions (Sweet & Maxwell, 3rd Ed, 2010) at pp and 218). 23) See the discussions below. 24) Report of the Working Group on International Contract Practices on the work of its seventh session (New York, 6-17 February 1984), UN Doc A/CN.9/246 AT [51]; UNCITRAL Analytical commentary on Draft Text of a Model Law on International Commercial Arbitration: Report of the Secretary-General, UN GAOR 9th Comm, 18th Sess, UN Doc A/CN.9/246 (1985), Art 16, [8]. 25) Agrovenus LLP v Pacific Inter-Link Sdn Bhd and another appeal Civil Appeal Nos W-02(NCC) /2012 and W-02(NCC) /2012 (CA). 8 The Korean Commercial Arbitration Board

8 The award debtor relied on the grounds for refusal of enforcement set out in Section 39(1)(a)(ii), (iv) and (v) of the Malaysia s Arbitration Act ) The opposing party relied on the principle of estoppel to argue that the award debtor was estopped from raising any objection as to the tribunal s jurisdiction since it had never challenged the tribunal s jurisdiction at its inception but had instead participated in the arbitration proceedings. The High Court, applying the principles established in the English case of Dallah Real Estate and Tourism Co v Ministry of Religious Affairs, Government of Pakistan [2010] 3 WLR 1472, held that it has the power to examine the issue of the tribunal s jurisdiction regardless of whether the issue is raised for the first time, and it is immaterial that the parties did not raise or object to the tribunal s jurisdiction at the relevant time of the arbitral proceedings. 27) The Court of Appeal in Malaysia overturned the High Court s decision, holding that the party resisting enforcement of the award rendered by the tribunal was estopped from challenging the tribunal s jurisdiction at the enforcement stage. The Court of Appeal noted that [g]iven that arbitral tribunal proceedings are not informal proceedings, but are undertaken by parties with the clear intention of obtaining a decision that settles the dispute between the parties, parties cannot be unaware if the arbitral tribunal lacks jurisdiction because jurisdiction is conferred by the parties. The Court of Appeal agreed with the description in Rustall Trading Ltd v Gill & Duffus SA [2000] 1 Lloyd s Rep 14, which held that: 26) Malaysia acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards New York 1958 on 5 November 1985 (New York Convention). The grounds set out in s39 of the Arbitration Act 2005 reflect Article V of the New York Convention. Further, Malaysia's Arbitration Act 2005 ("Act") adopts with some modifications, the provisions of the Model Law, applying them to both domestic and international law. 27) Food Ingredients LLC v Pacific Inter-Link Sdn Bhd and another application [2012] 8 MLJ at [62]. a party to an arbitration must act promptly if he considered that there were grounds on which he could challenge the effectiveness of the proceedings; if he failed to do so and continued to take part in the proceedings, he would be precluded from making a challenge at a later date. Moreover, it is clear from the language of sub-s(1) itself that it is unnecessary for an applicant to have had actual knowledge of the grounds of objection in order for him to lose his right to challenge the award. If the respondent can show that the applicant took part or continued to take part in the proceedings without objection after the grounds of objection had arisen, the burden passes to the applicant to show that he did not know, and could not have with reasonable diligence have discovered, those grounds at the time. It may often be necessary, therefore, to consider the applicant s conduct of the proceedings against the background of his developing state of knowledge. The matter is pending leave to appeal to the Federal Court, the highest court in Malaysia. It remains to be seen how the Federal Court will deal with this matter. In any event, there are other national courts that apply the doctrine of estoppel, in the circumstances where a party participates in arbitration proceeding without raising any jurisdictional objections until a final award is rendered. 28) In this regard, Nacimiento s comments are worth nothing:..a party participating in an arbitration procedure may not be acting in good faith if it does not object to the jurisdiction of the arbitral tribunal until after it has lost the proceeding and is faced with the enforcement of the rendered awards (prohibition of venire contra factum proprium). 29) 28) China Nanhai Oil Joint Service Corporation Shenzhen Branch v. Gee Tai Holdings Co. Ltd [1995] 2 HKLR the court declined the defendant's application to refuse enforcement of the award on the ground that the tribunal was not constituted in accordance with the agreement of the parties. The court held that the defendant had waived its right to object to a tribunal or procedure by participating in the arbitration without raising the jurisdictional challenge. 29) Patricia Nacimiento, Article V(1)(a) in Herbert Kronke, Patricia Nacimiento, et al. (eds), Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention, (Kluwer International 2010) pp ARTICLES Korean Arbitration Review 9

9 V. Practical Tips - How to Preserve The Right to Challenge a Tribunal s Jurisdiction When a party has a strong objection against a tribunal s jurisdiction, it is important to determine at the outset what remedies are available to him if he fails in his jurisdictional challenge before the tribunal. The CA s landmark decision makes it clear that parties to international arbitrations seated in Singapore will have the option to choose whether to make an active challenge to the tribunal s decision on its jurisdiction or wait until the award is sought to be enforced in Singapore. However, since the positions taken in different jurisdictions vary, it is important for an aggrieved party to understand how one can preserve its right to challenge the tribunal s jurisdiction in the relevant jurisdiction. Some practical tips to note are the following: (a) If a party strongly believes that the tribunal lacks jurisdiction to resolve the disputes, he should raise his objection or at least reserve his right to challenge the jurisdiction before he decides to fully participate in the arbitral proceedings. The party may be estopped from raising the jurisdictional challenge at the setting-aside stage or enforcement stage if he fully participates in the proceedings without raising or reserving his right to challenge the tribunal s jurisdiction. (b) If a party challenges the jurisdiction before an arbitral tribunal and receives an unfavourable decision, he should check whether the potential enforcing court recognises the system of choice of remedies. If the enforcing court does not recognise the choice of active or passive remedies, a party who fails to actively attack the tribunal s jurisdictional ruling is likely to lose his right to challenge the tribunal s jurisdiction again at the setting-aside stage or the enforcement stage. If a party is unsure as to the approach taken by the potential enforcing court, it is prudent to apply for active remedies such as appealing the tribunal s jurisdictional ruling under Article 16(3) or setting aside Article 34 of the Model Law. (c) For enforcement of international awards in Singapore for arbitrations seated in Singapore, Singapore courts recognise that the losing party has a choice of remedies. This means that if a party fails on his jurisdictional challenge before a tribunal, he may actively apply to court to rehear the question finding on jurisdiction, apply to set aside any award on the grounds that the tribunal has no jurisdiction or wait until the enforcement stage to resist enforcement of the award by the Singapore court on the grounds of the tribunal s lack of jurisdiction. Leng Sun heads the Dispute Resolution practice in Baker & McKenzie,Wong & Leow. He is qualified in Malaysia, Singapore and England. Leng Sun was appointed Senior Counsel, Singapore's equivalent to the Queen's Counsel, in January In addition to years of experience in maritime-related work, he has a broad commercial practice that covers international trade, insurance and company law. Chan Leng Sun Apart from being counsel, Leng Sun is an arbitrator and adjudicator on the panel of leading arbitral institutions. He is President of the Singapore Institute of Arbitrators (SIArb) and Chairman of the Singapore Law Society ADR Committee. He serves on statutory tribunals such as the Income Tax Review Board and the Maintenance of Parents Tribunal. He is on the Advisory Panel of the Singapore Maritime Foundation. Leng Sun was a legal officer of the United Nations Compensation Commission in Geneva and a SIAC-CIAC Observer to the UNCITRAL Working Group on Arbitration. He has published widely in international journals and is the author of the book Singapore Law on Arbitral Awards, which has been cited with approval by Courts in Singapore and Australia. 10 The Korean Commercial Arbitration Board