PT Asuransi Jasa Indonesia v Dexia Bank: Setting Aside Arbitral Award & Public Policy

PT Asuransi Jasa Indonesia (Persero) appealed to the Court of Appeal of Singapore against the decision of the trial judge dismissing their application to set aside an arbitral award in favor of Dexia Bank SA. The arbitral award concerned a dispute over BI Notes. The Court of Appeal, delivered by Chan Sek Keong CJ, dismissed the appeal, holding that the arbitral tribunal's negative ruling on jurisdiction did not constitute an 'award' under the International Arbitration Act and therefore could not be set aside.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal to set aside an arbitral award. The court dismissed the appeal, holding that a negative ruling on jurisdiction is not an award.

1.7 Decision Date

30 November 2006

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
PT Asuransi Jasa Indonesia (Persero)	Appellant	Corporation	Appeal Dismissed	Lost	Prakash Mulani of M & A Law Corporation Alvin Chang of M & A Law Corporation Bhaskaran Sivasamy of M & A Law Corporation Aftab Ahmad Khan of M & A Law Corporation
Dexia Bank SA	Respondent	Corporation	Appeal Dismissed	Won	Shankar Ray Shi-Wan of Tan Kok Quan Partnership Karam Singh Parmar of Tan Kok Quan Partnership Claudia Poon Ho Yan of Tan Kok Quan Partnership

3. Judges

Judge Name	Title	Delivered Judgment
Belinda Ang Saw Ean	Judge	No
Chan Sek Keong	Chief Justice	Yes
Andrew Phang Boon Leong	Justice of the Court of Appeal	No

4. Counsels

Counsel Name	Organization
Prakash Mulani	M & A Law Corporation
Alvin Chang	M & A Law Corporation
Bhaskaran Sivasamy	M & A Law Corporation
Aftab Ahmad Khan	M & A Law Corporation
Shankar Ray Shi-Wan	Tan Kok Quan Partnership
Karam Singh Parmar	Tan Kok Quan Partnership
Claudia Poon Ho Yan	Tan Kok Quan Partnership

4. Facts

The appellant guaranteed a series of BI Notes issued by Rekasaran BI Ltd.
The respondent held certain BI Notes that remained unpaid since their maturity date in 1999.
The appellant initiated a Restructuring Scheme to release its payment obligations.
The respondent opposed the Restructuring Scheme.
A BI Noteholders’ meeting purportedly approved the Restructuring Scheme on 29 February 2000.
Some BI Noteholders obtained an injunction restraining the appellant from implementing the Restructuring Scheme.
The respondent commenced the First Arbitration against the Issuer and the appellant.
The Issuer and the appellant did not appear and were unrepresented at the First Arbitration.
A meeting was held on 4 June 2001 to ratify the resolutions passed at the February 2000 meeting.
The First Tribunal issued the First Award on 18 October 2001, granting the respondent’s claim.
The appellant commenced the Second Arbitration on 10 January 2002 against the respondent.
The Second Tribunal issued the Second Award on 5 December 2003, dismissing the appellant’s action based on issue estoppel.

5. Formal Citations

PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA, CA 127/2005, [2006] SGCA 41

6. Timeline

Date	Event
1999-01-01	BI Notes maturity date
2000-02-29	BI Noteholders’ meeting
2000-09-15	Injunction obtained restraining the appellant and the Issuer from implementing the Restructuring Scheme
2001-03-22	First Arbitration commenced
2001-04-19	Issuer gave notice to the BI Noteholders for a meeting
2001-05-18	BI Noteholders meeting adjourned due to insufficient quorum
2001-06-04	June 2001 meeting held
2001-06-07	First Tribunal heard the matter
2001-07-25	Appellant applied to the High Court to discharge the injunction
2001-10-18	First Award issued
2002-01-10	Second Arbitration commenced
2002-11-12	Preliminary meeting held by the Second Tribunal
2003-02-11	Scheduled oral hearing did not take place
2003-07-30	Respondent sent the Second Tribunal written submissions raising a third preliminary jurisdictional issue
2003-10-23	Respondent filed their submissions on the preliminary objections
2003-11-17	Appellant filed their submissions on the preliminary objections
2003-12-05	Second Award issued
2005-01-01	Appellant applied to the High Court to set aside the Second Award
2006-12-01	Judgment reserved

7. Legal Issues

Setting Aside Arbitral Award
- Outcome: The court held that the arbitral tribunal's negative ruling on jurisdiction did not constitute an 'award' under the International Arbitration Act and therefore could not be set aside.
- Category: Procedural
- Sub-Issues:
  - Conflict with public policy
  - Issues beyond scope of submission to arbitration
  - Breach of natural justice
Jurisdiction of Arbitral Tribunal
- Outcome: The court found that the Second Tribunal's decision that it lacked jurisdiction was a final and binding decision on that issue.
- Category: Jurisdictional
- Sub-Issues:
  - Issue estoppel
  - Scope of submission to arbitration
Public Policy
- Outcome: The court held that errors of law or fact, per se, do not engage the public policy of Singapore under Art 34(2)(b)(ii) of the Model Law when they cannot be set aside under Art 34(2)(a)(iii) of the Model Law.
- Category: Substantive
- Sub-Issues:
  - Finality in litigation
  - Conflicting arbitral decisions

8. Remedies Sought

Order to set aside the Second Award
Dismissal of preliminary issues/objections raised by the respondent
Remittal of the arbitration back to the Second Tribunal for hearing

9. Cause of Actions

Breach of Contract
Declaration

10. Practice Areas

Arbitration
Commercial Litigation

11. Industries

Finance
Insurance

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Henderson v Henderson	High Court	Yes	[1843] 3 Hare 100	England and Wales	Cited for the principle of issue estoppel, preventing a party from raising issues that could have been raised in prior proceedings.
London and North Western and Great Western Joint Railway Companies v J H Billington, Limited	House of Lords	Yes	[1899] AC 79	United Kingdom	Cited for the principle that a new difference cannot be introduced after an order of arbitration was made.
Rederij Lalemant v Transportes Generales Navigacion SA (The Maria Lemos)	Commercial Court	Yes	[1986] 1 Lloyds’ Rep 45	England and Wales	Cited for the principle that the jurisdiction of an arbitral tribunal is bestowed by the parties and depends on the terms in which they have defined it.
Smith v Linskills	Court of Appeal	Yes	[1996] 1 WLR 763	England and Wales	Cited regarding the importance of finality in litigation and the avoidance of inconsistent decisions, but ultimately distinguished.
Oil & Natural Gas Corporation Ltd v SAW Pipes Ltd	Supreme Court	Yes	AIR 2003 SC 2629	India	Cited for the proposition that an arbitral award inconsistent with the law is against public policy, but the court declined to follow this reasoning.
Downer-Hill Joint Venture v Government of Fiji	High Court	Yes	[2005] 1 NZLR 554	New Zealand	Cited to support the narrow interpretation of 'public policy' in the context of setting aside arbitral awards.
Deutsche Schachbau v Shell International Petroleum Co Ltd	Court of Appeal	Yes	[1987] 2 Lloyds’ Rep 246	England and Wales	Cited for the definition of public policy in the context of arbitration, referring to instances that shock the conscience or are injurious to the public good.
Parsons & Whittemore Overseas Co Inc v Societe Generale de L’Industrie du Papier (RAKTA)	United States Court of Appeals for the Second Circuit	Yes	508 F 2d, 969 (2nd Cir, 1974)	United States	Cited for the definition of public policy in the context of arbitration, referring to violations of the forum’s most basic notions of morality and justice.
Tang Boon Jek Jeffrey v Tan Poh Leng Stanley	Court of Appeal	Yes	[2001] 3 SLR 237	Singapore	Cited as the reason for the legislative response in s 19A of the Act, clarifying the power of a tribunal to make awards at different times in the course of arbitration.
Re Arbitration Between Mohamed Ibrahim and Koshi Mohamed	Unknown	Yes	[1963] MLJ 32	Malaysia	Cited for the principle that it is the substance and not the form that determines the true nature of the ruling of the tribunal.
PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA	High Court	Yes	[2006] 1 SLR 197	Singapore	The judgment under appeal.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
International Arbitration Act (Cap 143A, 2002 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Arbitral award
Setting aside
Jurisdiction
Issue estoppel
Public policy
International Arbitration Act
UNCITRAL Model Law
BI Notes
Restructuring Scheme
Sovereign immunity

15.2 Keywords

Arbitration
Award
Setting aside
Jurisdiction
Public policy
Singapore
International Arbitration Act
Dexia Bank
PT Asuransi Jasa Indonesia

17. Areas of Law

Area Name	Relevance Score
Arbitration	90
UNCITRAL Model Law	80
International Arbitration Act	70
Recognition and Enforcement of Foreign Arbitral Awards	60
Jurisdiction	50
Estoppel	40
Contract Law	30

16. Subjects

Arbitration
International Arbitration
Civil Procedure