BRQ v BRS: Setting Aside Arbitral Award for Cost Overrun & BPTA Charges
In 2019, the High Court of Singapore heard two applications, Originating Summons No 512 of 2018 and Originating Summons No 770 of 2018, to set aside an arbitral award. The first application was brought by BRQ and BRR, the claimants in the arbitration, seeking to set aside the part of the award in favor of BRS and BRT, the respondents. The second application was brought by BRS, seeking to set aside the parts of the award in favor of BRQ and BRR. The dispute arose from a Securities Purchase Agreement related to a hydroelectric power plant project. The court, presided over by Justice Vinodh Coomaraswamy, dismissed both applications, upholding the original arbitral award. The claims involved cost overruns and Bulk Power Transmission Agreement charges.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Both applications dismissed, thereby leaving the award intact.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court dismisses applications to set aside an arbitral award concerning cost overruns and BPTA charges in a power plant project.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| BRQ | Plaintiff, Respondent | Corporation | Application Dismissed | Lost | Dhillon Dinesh Singh, Toh Jia Yi, Elyssa Lee |
| BRR | Plaintiff, Respondent | Corporation | Application Dismissed | Lost | Dhillon Dinesh Singh, Toh Jia Yi, Elyssa Lee |
| BRS | Defendant, Plaintiff, Appellant | Corporation | Application Dismissed | Lost | Nakul Dewan, Wendy Lin, Goh Wei Wei, Stephanie Teh |
| BRT | Defendant | Corporation | Neutral | Neutral |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Vinodh Coomaraswamy | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Dhillon Dinesh Singh | Allen & Gledhill LLP |
| Toh Jia Yi | Allen & Gledhill LLP |
| Elyssa Lee | Allen & Gledhill LLP |
| Nakul Dewan | WongPartnership LLP |
| Wendy Lin | WongPartnership LLP |
| Goh Wei Wei | WongPartnership LLP |
| Stephanie Teh | WongPartnership LLP |
4. Facts
- BRQ and BRR initiated arbitration against BRS and BRT under Clause 14 of the SPA.
- The dispute arose from a Securities Purchase Agreement (SPA) entered into in 2012.
- The SPA involved the purchase of the entire share capital of BRR by BRQ from BRS and BRT.
- The SPA anticipated the completion and commissioning of a hydroelectric power plant project.
- The project failed to achieve wet commissioning by the agreed date of 31 March 2013.
- BRQ sought to recover cost overruns and transmission charges from BRS.
- BRS denied liability, arguing force majeure and BRQ's early control of the project.
- The tribunal found BRS liable for cost overruns and transmission charges up to 30 June 2014.
- Both BRQ and BRS filed applications to set aside parts of the arbitral award.
5. Formal Citations
- BRQ and another v BRS and another and another matter, , [2019] SGHC 260
6. Timeline
| Date | Event |
|---|---|
| Work on the Project commenced. | |
| Bulk Power Transmission Agreement executed. | |
| First claimant acquired the entire share capital of the second claimant. | |
| Securities Purchase Agreement entered into. | |
| First failure of the Y-piece under hydrostatic testing. | |
| Project failed to achieve wet commissioning as contemplated in the SPA. | |
| First claimant had the right to call on Security Bond I if WCD was after this date. | |
| Security Bond I was valid until this date. | |
| Second failure of the Y-piece under hydrostatic testing. | |
| Y-piece passed hydrostatic testing. | |
| Cracks developed in other sections of the penstock during hydrostatic testing. | |
| First claimant began to oversee the Project more closely. | |
| Internal report by the first claimant's Vice-President considered methods for repairing the penstock. | |
| First claimant exercised its right to take control of the Project and issued a takeover notice. | |
| Claimants sent legal notice of the Cost Overrun claim and the BPTA Charges claim to the respondent. | |
| Claimants initiated arbitration. | |
| Transmission line works completed. | |
| A discrete part of the Project was eventually wet commissioned. | |
| Tribunal issued its final award. | |
| Parties received the award. | |
| Respondent applied to the tribunal under Art 33 of the Model Law to correct the award. | |
| Tribunal dismissed the respondent's application. | |
| Claimants applied to set aside parts of the award. | |
| Respondent applied to set aside other parts of the award. | |
| Hearing commenced. | |
| Hearing continued. | |
| Hearing continued. | |
| Hearing continued. | |
| Judgment issued. |
7. Legal Issues
- Setting Aside Arbitral Award
- Outcome: Applications to set aside the arbitral award were dismissed.
- Category: Procedural
- Sub-Issues:
- Breach of natural justice
- Excess of jurisdiction
- Failure to consider evidence
- Failure to provide reasonable opportunity to be heard
- Related Cases:
- [2007] 3 SLR(R) 86
- [2015] 3 SLR 488
- [2014] 3 SLR 481
- Time Limit for Setting Aside Application
- Outcome: The court held that the three-month time limit commenced when the tribunal disposed of the request for correction.
- Category: Procedural
- Sub-Issues:
- Extension of time limit
- Request for correction under Art 33
- Materiality of request
- Related Cases:
- [2003] SLR 546
- [2012] 4 SLR 1157
- [2019] SGHC(I) 10
- (2007) 10 SCC 742
- [2015] 2 NZLR 180
- [2018] EWHC 538 (Comm)
- Liability for Cost Overrun
- Outcome: The court upheld the tribunal's finding that the respondent was liable for the cost overrun based on the indemnity clauses in the SPA, regardless of breach.
- Category: Substantive
- Sub-Issues:
- Breach of SPA as condition precedent
- Interpretation of indemnity clauses
- Prudent and cost-effective completion
- Quantification of Cost Overrun
- Outcome: The court upheld the tribunal's quantification of the cost overrun, including its decision on time-dependent components and the rejection of set-off against the SSL.
- Category: Substantive
- Sub-Issues:
- Time-dependent components
- Transmission line costs
- Set-off against Seller's Subordinated Loan
- Liability for BPTA Charges
- Outcome: The court upheld the tribunal's finding that the respondent was liable for BPTA charges, finding that the tribunal had considered the evidence presented.
- Category: Substantive
- Sub-Issues:
- Sufficiency of evidence
- Proof of payment
- Pre-Award Interest
- Outcome: The court upheld the tribunal's award of pre-award interest, finding that the tribunal had discretion to determine the commencement date.
- Category: Substantive
- Sub-Issues:
- Discretion of tribunal
- Commencement date
8. Remedies Sought
- Setting Aside Arbitral Award
- Monetary Damages
- Declaration
9. Cause of Actions
- Breach of Contract
- Indemnity
10. Practice Areas
- Commercial Litigation
- Arbitration
- Construction Law
11. Industries
- Energy
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| ABC Co v XYZ Co Ltd | High Court | Yes | [2003] SLR 546 | Singapore | Cited for the principle that the three-month time limit under Art 34(3) of the Model Law is strict and cannot be extended. |
| PT Pukafu Indah and others v Newmont Indonesia Ltd and another | Court of Appeal | Yes | [2012] 4 SLR 1157 | Singapore | Cited for the principle that the three-month time limit under Art 34(3) of the Model Law is strict and cannot be extended. |
| BXS v BXT | High Court | Yes | [2019] SGHC(I) 10 | Singapore | Cited for the principle that the three-month time limit cannot be extended under the court’s general power to extend time. |
| State of Arunachal Pradesh v Damani Construction Co | Supreme Court | No | (2007) 10 SCC 742 | India | Cited regarding the interpretation of provisions in the Indian arbitration legislation which are in pari materia with Arts 33 and 34 of the Model Law. |
| Todd Petroleum Mining Co Ltd v Shell (Petroleum Mining) Co Ltd | Court of Appeal | Yes | [2015] 2 NZLR 180 | New Zealand | Cited regarding the interpretation of provisions in the New Zealand arbitration legislation which are in pari materia with Arts 33 and 34 of the Model Law. |
| Daewoo Shipbuilding & Marine Company Ltd v Songa Offshore Equinox Ltd and anor | High Court | No | [2018] EWHC 538 (Comm) | England and Wales | Cited regarding the interpretation of provisions of the English Arbitration Act 1996 which set out the applicable time limits for bringing a challenge to an award or for filing an appeal on a question of law arising from an award. |
| BLB and anor v BLC and ors | High Court | Yes | [2013] 4 SLR 1169 | Singapore | Cited for the principle that parties to an arbitration should first seek redress from the tribunal before turning to the courts. |
| Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd | Court of Appeal | Yes | [2007] 3 SLR(R) 86 | Singapore | Cited for the four requirements to challenge an arbitral award for breach of natural justice. |
| AKN and anor v ALC and anor and other appeals | Court of Appeal | Yes | [2015] 3 SLR 488 | Singapore | Cited for the principle that failing to consider an important issue pleaded in arbitration is a breach of natural justice. |
| ADG and anor v ADI and another matter | High Court | Yes | [2014] 3 SLR 481 | Singapore | Cited for the principle that giving a party a reasonable opportunity to present its case means giving that party the opportunity to present the evidence and to advance propositions of law necessary to respond to the case made against it. |
| JVL Agro Industries Ltd v Agritrade International Pte Ltd | High Court | Yes | [2016] 4 SLR 768 | Singapore | Cited for the principle that giving a party a reasonable opportunity to present its case means not only giving that party the opportunity to present the evidence and to advance propositions of law on which it positively relies to establish its case, but also giving the party a reasonable opportunity to present the evidence and to advance propositions of law necessary to respond to the case made against it. |
| TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd | High Court | Yes | [2013] 4 SLR 972 | Singapore | Cited for the scope of a tribunal’s duty to deal with arguments advanced by the parties. |
| ASG v ASH | High Court | Yes | [2016] 5 SLR 54 | Singapore | Cited for the principle that a failure to consider an issue entirely or to a deliberate avoidance of the issue, both of which would be grounds for a successful challenge to the award. |
| AUF v AUG and other matters | High Court | Yes | [2016] 1 SLR 859 | Singapore | Cited for the principle that a tribunal should not come to decisions which surprise the parties. |
| Carillion Construction Limited v Devonport Royal Dockyard Limited | England and Wales Court of Appeal (Civil Division) | Yes | [2005] EWCA Civ 1358 | England and Wales | Cited for the principle that it is often not practicable for an adjudicator to put to the parties his provisional conclusions for comment. |
| PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA | Court of Appeal | Yes | [2007] 1 SLR(R) 597 | Singapore | Cited for the two-step inquiry to set aside an award under Art 34(2)(a)(iii) of the Model Law. |
| PT Prima International Development v Kempinski Hotels SA and other appeals | Court of Appeal | Yes | [2012] 4 SLR 98 | Singapore | Cited for the principle that the pleadings filed in the arbitration provide a convenient way to define the jurisdiction of the tribunal. |
| Sui Southern Gas Co Ltd v Habibullah Coastal Power Co (Pte) Ltd | High Court | Yes | [2010] 3 SLR 1 | Singapore | Cited for the principle that if an issue was within the scope of a submission to arbitration, it would not fall outside the tribunal’s jurisdiction simply because the arbitral tribunal comes to a wrong, even manifestly wrong, conclusion on it. |
| L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd | High Court | Yes | [2013] 1 SLR 125 | Singapore | Cited for the principle that the breach must have deprived the tribunal of arguments or evidence that had a real as opposed to a fanciful chance of making a difference to the final outcome of the arbitral proceedings in some meaningful way. |
13. Applicable Rules
| Rule Name |
|---|
| UNCITRAL Model Law on International Commercial Arbitration |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| International Arbitration Act (Cap 143A, 2002 Rev Ed) | Singapore |
| Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Securities Purchase Agreement
- Wet Commissioning Date
- Cost Overrun
- Bulk Power Transmission Agreement
- Seller’s Subordinated Loan
- Security Bond
- Penstock
- Transmission Charges
- Indemnity
- Arbitral Award
- Natural Justice
- Excess of Jurisdiction
15.2 Keywords
- arbitration
- setting aside
- cost overrun
- BPTA charges
- natural justice
- jurisdiction
- SPA
- construction
- power plant
16. Subjects
- Arbitration
- Contract Law
- Construction Dispute
- Energy Law
17. Areas of Law
- Arbitration Law
- Contract Law
- Construction Law
- International Commercial Arbitration
- Civil Procedure