VV v VW: Setting Aside Costs Award in International Arbitration for Disproportionality
In VV and Another v VW, the Singapore High Court addressed an application by VV and Another to set aside a costs award in an international arbitration governed by the International Arbitration Act. The dispute arose from a contract for an infrastructure project. The plaintiffs, VV and Another, challenged the arbitrator's award of $2,805,498.52 to the defendant, VW, arguing it was disproportionate, exceeded the arbitrator's jurisdiction, and breached natural justice. Judith Prakash J dismissed the application, finding no conflict with public policy or breach of natural justice, and upholding the arbitrator's decision.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court dismisses application to set aside costs award in international arbitration, finding no breach of public policy or natural justice.
1.7 Decision Date
2. Parties and Outcomes
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | Judge | Yes |
4. Counsels
4. Facts
- Plaintiffs are an unincorporated joint venture, the defendant is an Asian government.
- Dispute arose from a contract made in December 1996 for an infrastructure project.
- Contract provided for disputes to be referred to arbitration.
- Plaintiffs issued a notice of arbitration on 10 March 2005 claiming approximately $927,000.
- Defendant raised counterclaims amounting to the equivalent of $20m.
- Arbitrator ruled he had no jurisdiction over the counterclaims as independent claims.
- Arbitrator awarded the defendant $2,805,498.52 as legal costs and expenses.
5. Formal Citations
- VV and Another v VW, OS 2160/2006, [2008] SGHC 11
6. Timeline
| Date | Event |
|---|---|
| Contract made between the parties. | |
| Plaintiffs claimed a sum since July 1999. | |
| Plaintiffs issued a notice of arbitration to the defendant. | |
| Mr Alan J Thambiayah appointed as the sole arbitrator in the arbitration by the Deputy Chairman of the SIAC. | |
| Defendant appointed M/s Drew & Napier to represent it in the arbitration. | |
| First preliminary meeting before the Arbitrator. | |
| Plaintiffs filed their statement of case. | |
| Defendant filed its defence and counterclaim. | |
| Another preliminary meeting was held. | |
| Plaintiffs filed a “Jurisdictional Objections Application”. | |
| Hearing of the Jurisdictional Objections Application. | |
| Arbitrator decided that he was not in a position to decide whether he had or lacked jurisdiction over the cross-claims. | |
| Witness statements to be exchanged. | |
| Hearing commenced. | |
| Plaintiffs requested that costs be determined at a subsequent hearing. | |
| The Main Award was made. | |
| The award on costs was made. | |
| Corrective award made. | |
| Oral hearing on costs. | |
| Judgment reserved. |
7. Legal Issues
- Breach of Natural Justice
- Outcome: The court held that there was no breach of natural justice in relation to the assessment of costs.
- Category: Procedural
- Sub-Issues:
- Failure to provide opportunity to address arguments or matters not advanced by either party
- Jurisdiction of Arbitrator
- Outcome: The court held that the arbitrator had jurisdiction over the whole of the claim and the whole of the defence, including the set-off claims.
- Category: Jurisdictional
- Sub-Issues:
- Authority to award costs for counterclaims over which jurisdiction was declined
- Proportionality of Costs
- Outcome: The court held that it is not part of the public policy of Singapore to ensure that the costs incurred by parties to private litigation outside the court system are assessed on the basis of any particular principle including the proportionality principle.
- Category: Substantive
- Sub-Issues:
- Whether costs awarded were disproportionate to the amount at stake
8. Remedies Sought
- Setting aside of costs award
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Arbitration
- Commercial Litigation
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA | Court of Appeal | Yes | [2007] 1 SLR 597 | Singapore | Cited for the principle that public policy under the International Arbitration Act encompasses a narrow scope and should only operate in instances where upholding an arbitral award would shock the conscience. |
| John Holland Pty Ltd v Toyo Engineering Corp (Japan) | High Court | Yes | [2001] 2 SLR 262 | Singapore | Cited for the principle that a party seeking to challenge an award on public policy grounds must identify the specific public policy breached and demonstrate the conflict. |
| Re Econ Corp Ltd (In provisional liquidation) | Unknown | No | [2004] 2 SLR 264 | Singapore | Cited regarding judicial control over fees and the requirement of fairness and reasonableness, though its relevance is marginal. |
| Home Office v Lownds | Unknown | Yes | [2002] 1 WLR 2450 | England and Wales | Cited for the principle of proportionality in the assessment of costs under the Civil Procedure Rules. |
| Seven Network Limited v News Limited | Federal Court of Australia | No | [2007] FCA 1062 | Australia | Cited for the principle that the cost of dispute resolution must be proportionate to what is in dispute. |
| Gbangbola v Smith & Sheriff Ltd | Unknown | Yes | [1998] 3 All ER 730 | England | Cited for the principle that an arbitrator breaches natural justice by referring to matters not advanced by either party. |
| Annie Fox v PG Wellfair Limited | Unknown | Yes | (1981) 2 Lloyd’s Reports 514 | England | Cited for the principle that an arbitrator should not provide evidence on behalf of a defaulting party or use special knowledge to derogate from the evidence of the other party without giving them a chance to respond. |
| Soh Beng Tee & Co v Fairmount Development Pte Ltd | Court of Appeal | Yes | [2007] 3 SLR 86 | Singapore | Cited for the principle that the rules of natural justice cannot be applied mechanically and that arbitrators are expected to use their expertise. |
| Higgs v Camden & Islington Health Authority | Unknown | Yes | [2003] EWHC 15 | England | Cited for the principle that a judge's own knowledge and experience will inform his assessment of whether it is reasonable to employ a particular status of counsel and to determine what he considers to be a reasonable figure in respect of counsel's fees. |
| Johnson v Reed Corrugated Cases Limited | Unknown | Yes | [1992] 1 All ER 169 | England | Cited for the principle that a costs judge's judicial assessment of the proper figure, based upon his general knowledge and experience, is what the rules require. |
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
- International Arbitration
- Costs Award
- Proportionality
- Jurisdiction
- Natural Justice
- Equitable Set-Off
- Counterclaims
- Public Policy
- Arbitration Act
- Disruption Charge
15.2 Keywords
- arbitration
- costs
- Singapore
- legal
- judgment
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Costs | 95 |
| Arbitration | 90 |
| Jurisdiction | 80 |
| Natural justice | 70 |
| Civil Procedure | 50 |
| International Commercial Law | 40 |
| Estoppel | 30 |
| Commercial Law | 30 |
| Contract Law | 20 |
| Constitutional Law | 20 |
| Duty of Candour | 10 |
16. Subjects
- Arbitration
- Contract Law
- Civil Procedure