Out-Law Analysis 3 min. read
22 Sep 2021, 12:43 am
The Singapore High Court held, that an application to set aside an arbitral award was not time-barred because the timeline was extended by an earlier application to correct the award.
The case, CNA v CNB and another and another matter [2021] SGHC 192, concerns when and how the timeline to set aside an arbitration award may be extended, specifically for arbitrations seated in jurisdictions that adopt the Model Law on International Commercial Arbitration (the Model Law).
Articles 33 and 34(3) of the Model Law states that the usual timeline to set aside an arbitration award, which is three months from the date the relevant party received the award, may be extended when there was an application to “correct” the award under article 33. This is uncontroversial. However, the parties in CNA v CNB disputed the circumstances under which a “correction” will be covered by article 33.
Under article 33(1)(a), a party may request the tribunal to correct “any errors in computation, any clerical or typographical errors or any errors of similar nature” in an arbitral award. In this case, the error in question was an order for account of profits within the award, despite the claim for account of profits being expressly withdrawn. The error was clearly inadvertent, but it does not fall within the express categories of “computation”, “clerical”, or “typographical” errors.
If the error is within the “catch-all” category of “any errors of similar nature” in article 33, parties would still be within the timeline for setting aside. Conversely, if the error is not caught under article 33(1)(a), the party seeking to set aside would be out of time. In this case, the court held that the error in question is indeed covered by article 33.
The takeaway of this decision, for businesses and legal practitioners, is to be alert when they or their counterparty in an arbitration is seeking to correct an arbitral award. It is crucial that the correction is properly covered under article 33. Otherwise, severe consequences may follow. This may include challenges as to the validity of the “corrected” award or being out of time for a setting aside application.
Parties who believe the “correction” sought is out of scope of article 33 should not simply rest on their laurels, as the timeline for setting aside may run out.
In 2017, CNB commenced an arbitration under the Arbitration Rules of the International Chamber of Commerce (ICC) against CND and CNE, alleging that they had breached a software licensing agreement (the SLA). CNC then joined as a co-claimant, and CNA was added as an additional respondent, to the arbitral proceedings. The ICC tribunal ruled that CND and CNE had breached the SLA, and CNA was jointly responsible with CND and CNE in assisting in breaching of the SLA.
The three received the original hard copy of the partial award on 26 June 2020 and, pursuant to article 34(3) of the Model Law, had three months to apply to set aside the Partial Award if they believed that they had any basis to do so.
On 24 July 2020, CNA made an application containing an interpretation of sub-para 598(4) of the partial award; and a correction of sub-para 598(10) of the partial award - CNA sought a correction of the tribunal’s order that it was liable to account for profits. The tribunal dismissed CNA’s application on 25 September 2020.
On 18 December 2020, CNA, CND and CNE applied to set aside two partial awards relying on article 34(3) of the Model Law. CNB and CNC filed the applications to seek orders that both applications be dismissed on the basis that they were filed out of time and time barred.
They differed on whether the three-month period for the plaintiffs’ two setting aside applications started on 26 June 2020 when the three received the hard copy of the partial award or 25 September 2020 when the tribunal dismissed of CNA’s Application.
The High Court ruled that there was no time limit for the plaintiffs' application to set aside the partial award as the CNA's request for correction fell within the scope of article 33(1) of the Model Law and therefore CNA's application extended the timeline for the three plaintiffs to apply for setting aside.
Written by Bae Huey Tan of Pinsent Masons.
