VOLTAS LIMITED Other Author
In its grounds released on
Further, the Court held that it was not possible for an arbitrator to impliedly reserve his/her jurisdiction to revisit an otherwise final award.
Key Takeaways
-
A conditional award can be regarded as a final award that disposes of all remaining claims in the arbitration, so long as the conditions in the award do not make it necessary for the tribunal to reopen or reconsider the matter, and an enforcement court would be able to assess whether the conditions in the award have been satisfied.
- A reservation of jurisdiction in an otherwise final award must be made expressly. It is not possible for such a reservation to be made impliedly.
- While this case was decided under the provisions of the Arbitration Act 2001 (2020Rev Ed) (the "AA"), it is useful to illustrate how similar cases under the equivalent provisions of the International Arbitration Act 1994 (2020
Rev Ed ) may be decided.
Background
In 2008, the appellant,
The Chillers were purchased by Voltas to fulfil its obligations under a contract with
In 2011, disputes arose between Voltas and York over alleged defects in the Chillers. The parties agreed to submit their disputes to ad hoc arbitration before a sole arbitrator in
Specifically, in the 2014 Award, the arbitrator allowed Voltas' claims for the "Nitrogen Claim" and the "Removal Claim", which represented sums that Voltas was liable to pay the Project Owners as a result of the defective Chillers.
However, as Voltas had not yet paid the Project Owners these sums, the arbitrator noted that Voltas would potentially obtain a windfall if York were made to pay Voltas immediately. Accordingly, the arbitrator ordered that York was liable to pay Voltas (a) only upon Voltas making payment to the Project Owners; and (b) "up to a maximum of" a certain fixed amount in respect of the Nitrogen and Removal Claims.
In
In
InAugust 2021, the arbitrator issued a jurisdictional ruling (the 2021 Ruling) finding that he retained jurisdiction to make a further award. York then applied to the
Further, Voltas contended that the arbitrator did not need to reserve his jurisdiction to decide on undetermined issues - and that in any event, a reservation of jurisdiction could be impliedly rather than expressly made.
The Court of Appeal dismissed the appeal and upheld the decision to set aside the 2021 Ruling.
The 2014 Award was a final award
First, the
On the facts of the case, the Court found that the 2014 Award decided all substantive issues between the parties.2The arbitrator himself did not contemplate that there were any issues left to be decided following the 2014 Award, as indicated by the fact that he decided on costs of the arbitration in the 2014 Award.3
Further, in the 2014 Award, the arbitrator expressly chose to make a conditional order on the Nitrogen and Removal Claims, rather than adjourn the matter until Voltas paid the relevant sums to the Project Owners.4This suggested that the arbitrator did not intend to keep the question of York's liability open.
The 2014 Award was therefore a final award, in the sense that there was no substantive matter left undecided.5
Implied reservation of jurisdiction
Next, the
The Court observed that the starting point was that a tribunal is functus officio once it renders an award.6Termination of a tribunal's mandate is immediate and absolute, and a tribunal would only be permitted to revisit its award pursuant to the statutorily prescribed grounds in s43 of the AA.7
Accordingly, where a tribunal issued a final award disposing of all remaining issues in the arbitration - and absent any express reservation of jurisdiction - the tribunal was functus officio with no room to imply any such reservation.8
In addition, the Court noted that the notion of implying a reservation of jurisdiction was inconsistent with s43(4) of the AA, which sets out a limited statutory exception to the termination of the tribunal's mandate - namely, that the parties may within 30 days of receipt of the award request the tribunal to make an additional award on claims presented in the arbitration but omitted from the award.9
A tribunal therefore could not reserve its jurisdiction to revisit an otherwise final award, other than expressly.10
Given that it was undisputed between the parties that the arbitrator did not expressly reserve jurisdiction in the 2014 Award, it followed that the arbitrator did not have jurisdiction to issue a further award.11
The Court of Appeal concluded by observing that issues pertaining to whether the conditions in the 2014 Award had been met (and consequently, whether York's liability to Voltas had accrued) could be answered by the enforcement court.
While there might be difficulties ascertaining from the settlement agreement what sums were paid by Voltas in relation to the Nitrogen and Removal Claims, this was a matter of evidence and did not justify resuscitating the arbitrator's jurisdiction after he had been rendered functus officio.12
Footnotes
1 At [42].
2 At [45]-[46].
3 At [47].
4 At [48].
5 At [49].
6 At [51].
7 At [58].
8 At [59].
9 At [60].
10 At [61].
11 At [50].
12 At [63]-[64].
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