Source: http://www.internationalarbitrationasia.com/Remission-After-Setting-Aside
Timestamp: 2019-04-21 18:19:21+00:00

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In the decision of AKN v ALC  SGCA 63, the Singapore Court of Appeal had to consider, among other things, the scope of the remission power under Art 34(4) of the Model Law. The Court of Appeal clarified that “remission is a carefully defined concept in the IAA (and Model Law) and it operates as an alternative to [the] setting aside” of an arbitral award. Accordingly, Art 34(4) of the Model Law does not empower the court to remit any matter after setting aside an award. IAA’s Lead Editor for Singapore Ong Kuan Chung reports.
This case arose from the liquidation of a company in the country of Moria (“the Corporation”). As part of the process of liquidation, the liquidator and the Corporation’s secured creditors entered into an agreement with the appellant-purchasers to sell them some of the Corporation’s assets (“the APA”). The APA contained an arbitration clause.
Disputes arose in relation to the sale, and the appellants eventually filed a notice of arbitration on 10 October 2008. The primary dispute related to the obligation of the liquidators and the secured creditors to deliver clean title. The appellants contended that clean title was not delivered because the Corporation’s assets were subject to statutory liens in favour of the municipal authorities as a result of unpaid taxes.
The tribunal generally found in favour of the appellants. The liquidator, 11 of the secured creditors and the funds applied to the High Court to set aside the whole of the award primarily on the grounds of breaches of natural justice and excess of jurisdiction.
The High Court found that the tribunal had, among other things, failed to consider the liquidator’s arguments, evidence and submissions on whether the obligation in the APA to deliver title was qualified. The High Court held that the entire award should be set aside on this basis alone. Nevertheless, the judge went on to answer the remaining issues, which involved both breach of natural justice and excess of jurisdiction arguments.
The appellants appealed to the Court of Appeal arguing essentially that the High Court judge overstepped his bounds by scrutinising the merits of the award too closely, and further, that he should not have set aside the award.
On appeal, the Court of Appeal in AKN v ALC  3 SLR 488 (“the Main Judgment”) allowed the appeal in part against the High Court’s decision to set aside the arbitral award in its entirety, and held that only some parts of the award should be set aside.
Following the delivery of the Main Judgment, the Court of Appeal invited parties to file written submissions on costs and on any consequential orders parties wished to seek. The parties raised various matters, some of which were subsequently resolved. Accordingly, AKN v ALC  SGCA 63 focuses on those matters that remained outstanding.
The parties took opposed positions in respect of, among other things, the question of remission to the tribunal.
The Purchasers contended that the court could and should remit matters to the Tribunal, even after having set aside portions of the award. The Liquidator and Secured Creditors, on the other hand, argued that the court has no power to do so, and even if it did, this was not an appropriate case for remission.
Accordingly, the Court of Appeal had to consider if the court could remit any matter, which is the subject of an award that has been set aside (in whole or in part), to the same tribunal that made the award.
In coming to its decision, the Court of Appeal found that Art 34(4) of the Model Law is the only express provision in the Model Law or the IAA that permits the court to remit an award to the same tribunal which made that award.
More importantly, the Court of Appeal held that, Art 34(4), on its face, confers a limited power. In particular, “Art 34(4) on its terms does not empower the court to remit any matter after setting aside an award”. It rejected the notion that Art 34(4) “is an enabling provision rather than a limiting provision” with no legal limits to the court’s power to remit, even after an award has been set aside.
In this regard, the Court of Appeal held that in order to avail itself of Art 34(4), the court must be satisfied that it is appropriate to suspend the setting aside proceedings in order to give the tribunal an opportunity to take such steps as may be required to eliminate the grounds for setting aside. Accordingly, notwithstanding that Art 34(4) is discretionary, there is no basis for concluding that “just from the use of the word ‘may’ that there are no limits to the power to remit that is conferred by the provision”.
Separately, the Court of Appeal also considered the argument that an expansive reading of Art 34(4) is cognisant with the policy of minimal curial intervention to be “misplaced” and “internally inconsistent”. This is because an expansive reading of Art 34(4) would mean more intervention for the simple reason that the court would be able to confer further jurisdiction on tribunals in more cases. In any event, an expansive interpretation would be contrary to the history and explicit intent of Art 34(4) that remission should be conceived as an alternative to setting aside.
Accordingly, the Court of Appeal held that the question of remission did not and cannot arise in this case.
The Court of Appeal’s decision of AKN v ALC  SGCA 63 conclusively provides that there can be no remission of an arbitral award after it has been set aside. Rather, remission is a curative option that is available to the court in certain circumstances where it considers that it may be possible to avoid setting aside the award.
In addition, the Court of Appeal further clarified that the High Court decisions of Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd  SGHC 80 and Kempinski Hotels SA v PT Prima International Development  4 SLR 633 do not stand for the proposition that the court has power to remit an award after it has been set aside.
The Court of Appeal distinguished Front Row as a matter concerning a consequential order to the parties to commence fresh arbitration, rather than a matter of remission. Moreover, the matter was not referred back to the same tribunal, and hence was not an issue of remitting the award at all.
Similarly, the Court of Appeal distinguished Kempinski Hotels as one where parties were in agreement that the arbitration was not functus officio. However, for the sake of clarity, the Court of Appeal held that if the judgment in Kempinski Hotels is understood as standing for the proposition that remission may be ordered after setting aside, then it is “incorrect and should be regarded as overruled at this point”.
As such, the Court of Appeal’s judgment leaves no room for any argument that the remission power under Art 34(4) may be invoked after an arbitral award has been set aside. It is made abundantly clear that remission is only an alternative to setting aside. Accordingly, a party’s only option after an arbitral award has been set aside is to commence fresh arbitration proceedings.
This article may be cited as follows: Ong Kuan Chung, “Singapore Case Update: Remission After Setting Aside? (AKN v ALC  SGCA 63) International Arbitration Asia (15 December 2015) <http://www.internationalarbitrationasia.com/Remission-After-Setting-Aside>.

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