Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services: Setting Aside Arbitration Award for Lack of Jurisdiction

Rakna Arakshaka Lanka Ltd (RALL) appealed against a High Court decision dismissing its application to set aside an arbitration award in favor of Avant Garde Maritime Services (AGMS). The Court of Appeal of Singapore allowed the appeal, holding that the arbitral tribunal lacked jurisdiction after RALL and AGMS entered into a memorandum of understanding (MOU) settling their dispute. The court found that the MOU effectively terminated the tribunal's mandate, rendering the subsequent award beyond the scope of the submission to arbitration. The claim was for breach of contract.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal to set aside an arbitration award. The court held that the tribunal lacked jurisdiction after the parties entered into a settlement agreement.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Rakna Arakshaka Lanka LtdAppellantCorporationAppeal AllowedWon
Avant Garde Maritime Services (Private) LimitedRespondentCorporationAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Judith PrakashJustice of the Court of AppealYes
Steven ChongJudge of AppealNo

4. Counsels

Counsel NameOrganization
Arul Andre Ravindran SaravanapavanArul Chew & Partners
Renaro Daniel Ezra BunyaminArul Chew & Partners
Sarbjit Singh ChopraSelvam LLC
Ho May KimSelvam LLC

4. Facts

  1. RALL and AGMS entered into six agreements between March 2011 and October 2013.
  2. The six agreements were incorporated into a Master Agreement dated 27 January 2014.
  3. The Master Agreement included a clause providing for arbitration in Singapore.
  4. AGMS commenced arbitration proceedings against RALL, claiming US$20 million in liquidated damages.
  5. RALL initially sought extensions of time to respond to the arbitration.
  6. RALL and AGMS entered into a Memorandum of Understanding (MOU) on 20 October 2015.
  7. AGMS subsequently stated it was not in a position to withdraw the arbitration.

5. Formal Citations

  1. Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd, , [2019] SGCA 33
  2. Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd, Civil Appeal No 240 of 2017, Civil Appeal No 240 of 2017
  3. Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Private) Limited, , [2018] SGHC 78

6. Timeline

DateEvent
Parties agreed to form a private-public partnership.
Parties entered into six separate agreements.
Master Agreement signed.
Sri Lankan presidential elections held.
Vessel "MV Mahanuwara" detained by Sri Lankan Police Navy.
AGMS requested RALL to obtain a "Letter of Clearance".
AGMS commenced arbitration proceedings against RALL.
Notice of Arbitration sent to RALL.
SIAC acknowledged receipt of the NOA.
AGMS forwarded correspondence to RALL.
RALL sought a three-month extension of time to respond to the NOA.
SIAC granted RALL an extension of time to respond to the NOA.
SIAC informed parties of its decision to proceed with the appointment of a co-arbitrator.
SIAC requested payment from RALL of its share of the first tranche of the costs of arbitration.
A co-arbitrator was appointed by the Vice President of the Court of Arbitration.
AGMS sent its Statement of Claim to the SIAC and RALL.
RALL requested a further extension of three months.
SIAC sent the parties copies of the letters of appointment of the two arbitrators.
RALL’s attorney sent a letter to the SIAC stating the dispute was beyond the scope of submission to arbitration.
RALL’s attorney sent a letter of demand on behalf of RALL to AGMS claiming compensation.
RALL’s attorney sent another letter to AGMS inviting AGMS to discuss the dispute.
SIAC confirmed the constitution of the arbitral tribunal.
Vessel named MV Avant Garde was detained outside the port limits of Galle Harbour by the Sri Lankan Navy.
Tribunal informed the parties that a preliminary meeting would be held on 16 November 2015.
Tribunal sent parties a draft procedural order.
Memorandum of Understanding (MOU) signed by the parties.
RALL’s attorney wrote to the SIAC stating that AGMS had “already agreed to withdraw the … matter”.
AGMS sent a letter to the Tribunal, stating that it was “not in a position to withdraw” the arbitration.
Tribunal conducted the Preliminary Meeting.
Tribunal issued an Interim Order.
RALL made enquiries of the SIAC regarding the progress of the arbitration.
AGMS sent its witness statement to the Tribunal, copying RALL.
RALL made enquiries of the SIAC regarding the progress of the arbitration.
Tribunal sent further directions on the dates of the substantive hearing to both parties.
Substantive hearing took place.
AGMS sent its post-hearing written submissions to the Tribunal and RALL.
Tribunal issued the Final Award dated 24 November 2016.
RALL commenced proceedings in the High Court of Singapore to set aside the Award.
Judgment reserved.

7. Legal Issues

  1. Jurisdiction of Arbitral Tribunal
    • Outcome: The court held that the arbitral tribunal lacked jurisdiction after the parties entered into a memorandum of understanding (MOU) settling their dispute.
    • Category: Jurisdictional
    • Sub-Issues:
      • Effect of settlement agreement on tribunal's mandate
      • Failure to utilize court supervisory mechanism
  2. Public Policy
    • Outcome: The court rejected the public policy challenge, finding that the alleged bribery related to the underlying contract, not the award itself, and that the tribunal's finding of no illegality was binding.
    • Category: Substantive
    • Sub-Issues:
      • Bribery and corruption
      • Illegality of contract

8. Remedies Sought

  1. Setting Aside of Arbitration Award

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Arbitration
  • Commercial Litigation

11. Industries

  • Maritime Security

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Tan Poh Leng Stanley v Tang Boon Jek JeffreyHigh CourtYes[2000] 3 SLR(R) 847SingaporeCited for the observation that the right to request the High Court for a decision on jurisdiction after the tribunal has ruled on jurisdiction as a preliminary issue is only a request that does not bar a challenge by an applicant to set aside the award on the ground of lack of jurisdiction.
PT First Media TBK (formerly known as PT Broadband Multimedia TBK) v Astro Nusantara International BV and others and another appealCourt of AppealYes[2014] 1 SLR 372SingaporeCited for the Court of Appeal’s dicta that Article 16(3) may have a preclusive effect in respect of a setting aside application.
Aloe Vera of America, Inc v Asianic Food (S) Pte Ltd and anotherHigh CourtYes[2006] 3 SLR(R) 174SingaporeCited for the reasoning that no relief was available to the applicant because he took part in the arbitration to the extent that he objected to the jurisdiction and thereafter took a calculated decision not to participate further in the proceedings and not to seek recourse in the supervisory court.
AJU v AJTHigh CourtYes[2011] 4 SLR 739SingaporeCited for the principle that the court is bound by the Tribunal’s finding of fact that the Master Agreement showed no sign of illegality.
Chimimport plc v G D’Alesio SASN/AYes[1994] CLC 459N/ACited in support of the argument that the agreement to arbitrate the dispute must have been mutually withdrawn by the entry into the MOU.
Turf Club Auto Emporium Pte Ltd and others v Yeo Boong Hua and othersN/AYes[2017] 2 SLR 12SingaporeCited for the principle that a settlement agreement which has been entered into for good consideration has three effects.
Astro Nusantara International BV and others v PT Ayunda Prima Mitra and othersHigh CourtYes[2013] 1 SLR 636SingaporeCited for expressing a different opinion on the effect of Art 16(3).

13. Applicable Rules

Rule Name
Arbitration Rules of the Singapore International Arbitration Centre (5th Ed, 2013)

14. Applicable Statutes

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

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration
  • Setting Aside
  • Jurisdiction
  • Public Policy
  • Memorandum of Understanding
  • Settlement Agreement
  • Kompetenz-Kompetenz
  • UNCITRAL Model Law
  • Singapore International Arbitration Centre

15.2 Keywords

  • arbitration
  • setting aside
  • jurisdiction
  • settlement agreement
  • maritime security

17. Areas of Law

Area NameRelevance Score
Arbitration95
Recourse against award90
Setting aside90
Jurisdiction80
International Commercial Arbitration70
Contract Law60
Illegality and public policy40
Property Law10

16. Subjects

  • Arbitration
  • Contract Law
  • Civil Procedure