Abstract
In the case of Reliance Infrastructure Limited v. Shanghai Electric Group Co., Ltd. [2024] SGHC(I) 3, the Singapore International Commercial Court ("SICC") dismissed Reliance Infrastructure Limited ("Reliance Infra")'s application for revocation of an arbitral award. Reliance Infra had argued, inter alia, that (a) the Singapore International Arbitration Centre ("SIAC") lacked jurisdiction' (b) the award had been procured by fraud; and (c) the award was in any event contrary to the public policy of Singapore. In the challenged award, the tribunal had ordered Reliance Infra to pay Shanghai Electric approximately US$146 million.
The principal question in this case was whether Reliance Infra, by not alleging forgery in the signature of the arbitration agreement during the arbitration proceedings, was deemed to have waived its right to object to the arbitral tribunal's jurisdiction on that ground.
Case Summary
June 24, 2008, Shanghai Electric signed a Supply Contract with Reliance Infra Projects (UK) Limited ("Reliance UK") for a project (the "Sasan project") which required Shanghai Electric to provide the necessary equipment and services.
June 26, 2008, Reliance Infra, on the basis of a Guarantee Letter purportedly signed by Mr. Agrawal of Reliance Infra, (allegedly) assured the performance of Reliance UK's payment obligations to Shanghai Electric under the Supply Contract. Years into the commercial operation of the project, Reliance UK still owed Shanghai Electric various sums for equipment and other related expenses.
December 2019, Shanghai Electric submitted a request for arbitration to the SIAC, claiming at least US$135 million from Reliance Infra based on the Guarantee Letter, among other sums.1
December 2022, the SIAC arbitral tribunal ruled that Reliance Infra must pay Shanghai Electric a total of approximately US$146 million.2
May 2023, Reliance Infra applied to the SICC to set aside the SIAC's arbitral award ("the Award"), arguing that the signature on the crucial evidence, the Guarantee Letter, was forged, thereby rendering the SIAC without jurisdiction, and the award was affected by fraud, which leads to contrary to public policy of Singapore.
January 31, 2024, the SICC, on the basis of Reliance Infra having waived its jurisdictional objections, dismissed Reliance Infra's application for revocation of the arbitral award.
The SICC's Reasoning3
In the SIAC arbitral proceedings, Reliance Infra only challenged the validity of the Guarantee Letter by reference to (a) there being no record of its issuance within the company; and (b) Mr. Agrawal's purported lack of authority to sign the letter on behalf of the company. However, Reliance Infra neither alleged forgery of the Guarantee Letter nor challenged the arbitral tribunal's jurisdiction during the arbitration, which was later brought up in the SICC court proceedings. The SIAC arbitral tribunal had already gone through the arbitral proceedings with a substantive review of the case, and identified the Guarantee Letter to be valid. A final ruling against Reliance Infra in favor of Shanghai Electric had also accordingly been issued.
Reliance Infra's core argument in its application to the SICC to set aside the Award was that the signature on the Guarantee Letter was forged, which led to a lack of genuine consensus on the arbitration agreement between the two disputed parties. Consequently, the SIAC lacked jurisdiction to decide on the validity of the Guarantee Letter, rendering the Award liable to be set aside. The court primarily examined this jurisdiction objection, focusing on whether Reliance Infra had waived its right to object to the arbitral decision on the grounds of forgery.
The SICC (per Jeyaretnam J) noted that Reliance Infra had made no such representation during the arbitration, and had only raised these points after the SIAC Award had been issued. Given that Reliance Infra was aware of the fundamental facts necessary to object to the tribunal's jurisdiction on grounds of forgery and lack of authorization, and had no substantial reason not to raise these objections earlier, it must be taken to have waived its right to raise these objections in the SICC. Consequently, Reliance Infra's application to set aside the award was unwarranted. While that would have sufficed to dispose of the application, the SICC went on to examine the authenticity of the Guarantee Letter and Mr. Agrawal's apparent authority to execute it on behalf of Reliance Infra. The SICC concluded that the evidence showed that Mr. Agrawal had in fact signed the Guarantee Letter and that Reliance Infra had 'held him out' as having the apparent authority to enter into arbitration agreements with Shanghai Electric on its behalf. In conclusion, the SICC clarified that even if Reliance Infra had not constituted a waiver of objection, the Guarantee Letter was in fact valid, and the Award accordingly remained effective and valid.
Analysis
1. Jurisdictional Objections in International Commercial Arbitration
The SICC applied Singapore's International Arbitration Act ("IAA"), which incorporates most of the provisions of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration ("Model Law"), The Model Law is specifically included in the IAA as its First Schedule. Article 3 of the IAA specifies that, aside from content related to Chapter VIII on the recognition and enforcement of arbitral awards, the Model Law is legally effective in Singapore.
According to Article 16 (2) of the Model Law: "a plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defense. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified."
1) Timing Restrictions
The requirement to raise objections to the arbitral tribunal's jurisdiction before the submission of the statement of defense is intended to ensure that parties promptly challenge the tribunal's jurisdiction. Generally, parties should object to the jurisdiction at the early stages of the arbitration proceedings to avoid being deemed to have accepted the tribunal's jurisdiction by default. This applies a fortiori where the party which might have challenged the tribunal's jurisdiction is amply aware of the factual basis on which such a challenge might be mounted.
2) Justified Reasons for Delay
If a party does not raise jurisdictional objections early on but does so later, it will typically need to prove that there was a valid reason for the delay. Otherwise, the arbitral tribunal or reviewing court may consider that the party has waived its right to object. What constitutes a sufficient and reasonable cause usually depends on the discretionary power of the arbitral tribunal or court.
In this case, Reliance Infra consciously opted not to raise the accusation of forgery concerning the Guarantee Letter during the arbitration proceedings. The company's confidence in the success of its other challenges to the Guarantee Letter's validity led to this strategic decision. However, upon its failure before the tribunal, Reliance Infra subsequently alleged forgery and lack of authorization to the court. The SICC unsurprisingly deemed this belated and tactical assertion insufficient to justify the delay.
2. Waiver of Objections in the Context of International Commercial Arbitration
The aforementioned judgment elucidates the principle of "waiver of objections" in international arbitration from a practical perspective. Article 4 of the Model Law explicitly states: "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 time-limit is provided therefor, within such period of time, shall be deemed to have waived his right to object."
Mainstream arbitral institutions in China have similar provisions in their respective rules, notably the "2024 China International Economic and Trade Arbitration Commission Arbitration Rules" and
the "2024 Shanghai International Arbitration Center Arbitration Rules," both of which include provisions on waiver of objection: "A party who knows or should know that any provision of these rules or any condition of the arbitration agreement has not been complied with, but continues to participate in the arbitration or proceeds without promptly and explicitly raising such an objection in writing, is deemed to have waived the right to object."
3. Conclusion
Considering the SICC's verdict along with established norms in international commercial arbitration, it is essential for involved parties to exercise caution, undertake detailed inquiries, and develop well-rounded litigation tactics right from the beginning of a dispute. Diligently considering procedural rights will be crucial to determining whether it is necessary to raise relevant objections (in writing where appropriate) and thereby avoiding the risk of inadvertently waiving those objections. Such careful handling can help maintain the strongest likelihood of a successful outcome in arbitration.
Footnotes
1. The quantum of the dispute was disclosed by Shanghai Electric in an announcement: 《Announcement on the Progress of Major Arbitration by Shanghai Electric Group Corporation on the Sasan Coal-Fired Power Plant Project in India》, 26 May 2023.
2. Ibid.
3. Reliance Infrastructure Ltd v. Shanghai Electric Group Co Ltd [2024] SGHC(I) 3.
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