Case Details
- Citation: [2017] SGHC 269
- Title: BNP and another v BNR
- Court: High Court of the Republic of Singapore
- Date of Decision: 31 October 2017
- Case Number: Originating Summons No 359 of 2017
- Coram: Belinda Ang Saw Ean J
- Judgment Reserved: Yes
- Judge: Belinda Ang Saw Ean J
- Plaintiffs/Applicants: BNP and another
- Defendant/Respondent: BNR
- Parties (as named in judgment): BNP — BNQ — BNR
- Counsel for Plaintiffs: Andre Yeap S.C., Yap Wern-Jhien and Zhuang WenXiong (Rajah & Tann Singapore LLP)
- Counsel for Defendant: Thio Shen Yi S.C., Evans Ng and Niklas Wong (TSMP Law Corporation) (Instructed) and Boey Swee Siang and Jonathan Choo (Bird & Bird ATMD LLP)
- Legal Areas: Arbitration — Agreement; Arbitration — Interpretation; Arbitration — Arbitral tribunal — Jurisdiction
- Statutes Referenced: International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”); Arbitration Act (Cap 10, 2002 Rev Ed); Arbitration Act (UK) 1996 (referred to as “English Arbitration Act 1996”); Hong Kong Arbitration Ordinance (Cap 609) (referred to as “HK Arbitration Ordinance”); ICC Rules of Arbitration (incorporated by reference)
- Key Provision Invoked: s 10(3) of the IAA
- Arbitration Rules: ICC Rules of Arbitration (“ICC Rules”)
- Arbitration Agreement: Shareholders’ Agreement dated 7 August 2008
- Relevant Clause: Clause 24.2 and 24.3 (arbitration clause)
- Tribunal Composition Dispute: Whether the third member was validly appointed as “umpire” and/or “president”
- Procedural Posture: Challenge to tribunal jurisdiction following a partial award confirming the third member’s role
- Leave to Appeal: Application for leave to appeal dismissed on 26 February 2018
- Judgment Length: 6 pages; 3,403 words (as stated in metadata)
Summary
BNP and another v BNR [2017] SGHC 269 is a Singapore High Court decision addressing a narrow but practically significant arbitration issue: how an arbitral tribunal is to be constituted where the parties’ arbitration agreement incorporates the ICC Rules but also contains bespoke language about the “third arbitrator” acting as an “umpire”. The plaintiffs sought a determination under s 10(3) of the International Arbitration Act (Cap 143A) that the tribunal lacked jurisdiction, arguing that the third member had been appointed as “president” rather than as an “umpire” in accordance with the shareholders’ agreement.
The court rejected the challenge. Applying principles of party autonomy and contractual interpretation, Belinda Ang Saw Ean J held that the parties intended a three-member arbitral tribunal constituted consistently with the ICC Rules’ framework. Although the shareholders’ agreement used the term “umpire”, the clause did not clearly define the umpire’s role and function during the arbitration. In the absence of a clear agreed procedure for an “umpire” system, and given the express incorporation of the ICC Rules (which contemplate a three-member tribunal with a president), the court concluded that the third member was validly confirmed as president and that the tribunal therefore had jurisdiction.
What Were the Facts of This Case?
The dispute arose out of a shareholders’ agreement entered into on 7 August 2008 between the plaintiffs (BNP and another) and the defendant (BNR). The agreement contained an arbitration clause in Clause 24.2 and 24.3. Clause 24.2 provided that disputes would be referred to and finally resolved by arbitration under the ICC Rules, which were expressly incorporated by reference. Clause 24.3 addressed the number of arbitrators and the appointment mechanism where the parties could not agree on a sole arbitrator within a specified time.
Under Clause 24.3, if the parties were unable to agree on a sole arbitrator within 30 days of initiating arbitration, the number of arbitrators would be three. In that event, one arbitrator would be nominated by the defendant and one by the plaintiff. The clause further provided that the third arbitrator—described as the “umpire”—would be nominated by the two party-appointed arbitrators. If those two arbitrators could not agree on the nomination of the “Umpire” within 20 days of their appointment, the “Umpire” would be appointed in accordance with the ICC Rules.
In the arbitration that followed, the two arbitrators appointed by the parties jointly nominated a third member to serve as the third arbitrator and also as president of the tribunal. This nomination was confirmed by the ICC Court. The plaintiffs then filed a preliminary objection challenging the role of the third member, contending that the third member should have been appointed as an “umpire” rather than as president, and that the tribunal was therefore improperly constituted.
The tribunal, including the third member, issued a partial award (“the Partial Award”) finding that the third member was validly confirmed as president. The plaintiffs then brought the present application under s 10(3) of the IAA, asking the High Court to determine that the tribunal lacked jurisdiction on the basis that the tribunal was not properly composed according to the parties’ arbitration agreement.
What Were the Key Legal Issues?
The central legal issue was whether the tribunal was properly constituted under the parties’ arbitration agreement and the incorporated ICC Rules. More specifically, the court had to decide whether the term “umpire” in Clause 24.3 should be construed as referring to the ICC concept of the “president” of a three-member tribunal, or whether it required a different structural role that would exclude the third member from being treated as a president.
A related issue concerned the interaction between (i) the parties’ bespoke appointment clause (Clause 24.3) and (ii) the ICC Rules’ default provisions on tribunal composition—particularly Article 12(5), which provides that where there are to be three arbitrators, the third arbitrator “will act as president of the arbitral tribunal”. The court needed to determine whether Clause 24.3 displaced Article 12(5) through express agreement, or whether the clauses could be harmonised so that both the parties’ intention and the ICC Rules’ framework were respected.
Finally, the court had to consider the relevance of Singapore’s arbitration legislative scheme to the “umpire” concept. The plaintiffs’ submissions relied on concepts of an “umpire” drawn from English arbitration law, but the court needed to assess whether those concepts were applicable given the IAA’s structure and the absence of a statutory default “umpire” regime under the IAA.
How Did the Court Analyse the Issues?
Belinda Ang Saw Ean J began by setting out general principles relevant to the application. First, the court emphasised party autonomy: parties are entitled to decide how the arbitral tribunal is constituted and how the arbitration is conducted. Second, where clauses are incorporated by reference into a written agreement, and those incorporated clauses conflict with the express terms of the written agreement, the express terms ordinarily prevail. However, the court also noted that it will endeavour to give effect to both sets of provisions if it is reasonably and sensibly possible to construe them harmoniously.
Third, the court stressed that because the parties had expressly incorporated the ICC Rules, effect must be given to those rules in a manner consistent with the incorporation. The court observed that where necessary, case law permits some degree of verbal modification or adjustment to fit the incorporated ICC Rules into the wording of the parties’ clause. Fourth, the court reiterated that a clause completely inconsistent with the parties’ objectively ascertained intention will not be enforced.
Applying these principles, the court held that Clause 24.2 clearly and expressly incorporated the ICC Rules. Clause 24.2 required disputes to be referred to and finally resolved by arbitration under the ICC Rules, and there was no dispute that the ICC Court is the only body authorised to administer arbitrations under the ICC Rules. The court then turned to Clause 24.3 and the ICC Rules’ provisions on tribunal composition.
The plaintiffs’ argument was that Clause 24.3 overrode the standard ICC rule for the appointment of a president. They relied on Article 12(5) of the ICC Rules, which applies unless the parties have agreed upon another procedure for the appointment of the third arbitrator. They also invoked Article 11(6) of the ICC Rules, arguing that Articles 12 and 13 did not apply because the parties had “provided otherwise” in Clause 24.3. On the plaintiffs’ construction, the parties had agreed that the third arbitrator would act as an “umpire”, and therefore the court should not read “umpire” as “president” as Article 12(5) would suggest.
The defendant’s position was that the plaintiffs’ reading ignored the express stipulation that the number of arbitrators “shall be 3 (Three)”. The defendant emphasised the mandatory nature of the word “shall” and argued that the parties intended a three-member tribunal constituted in accordance with the ICC Rules. The court accepted that the “umpire” question was the knotty issue: what did “umpire” mean in Clause 24.3, both during the arbitral proceedings and in the decision-making process?
In addressing the “umpire” concept, the court examined the plaintiffs’ submissions about the umpire’s role. The plaintiffs had described an “umpire” system based on the English Arbitration Act 1996, where the umpire remains passive until the two party-appointed arbitrators disagree, at which point the umpire becomes the sole decision-maker. However, the court found that this approach was not helpful in the Singapore context. Clause 24.3 was silent as to the role and function of the “umpire”. The court treated this silence as a significant feature, creating a “gap” in the parties’ agreement.
The court then considered whether default statutory provisions could fill that gap. It noted that in England and Hong Kong, statutory provisions exist to define the umpire’s role and function when the parties have not agreed otherwise—namely s 21 of the English Arbitration Act 1996 and s 31 of the Hong Kong Arbitration Ordinance (Cap 609). By contrast, the IAA had no similar default provision covering the role and function of an umpire. The court also observed that Singapore law has moved away from an umpire system, pointing to the transitional provision in s 65(3) of the Arbitration Act (Cap 10) as evidence that the current legislative scheme does not provide a general umpire framework.
In addition, the court relied on the Court of Appeal’s observation in International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and another [2014] 1 SLR 130 that Singapore’s legislative scheme obliges courts to put English authorities aside. This reinforced the court’s reluctance to import English “umpire” mechanics into the interpretation of Clause 24.3 where the IAA does not supply a comparable default.
Against that background, the court concluded that the parties intended a three-member arbitral tribunal. The court reasoned that Clause 24.3 expressly stipulated three arbitrators, and the ICC Rules incorporated by reference contemplate either one or three arbitrators, with the third arbitrator acting as president. The plaintiffs’ construction—that the third arbitrator was an “umpire” not a member of the panel—was undermined by the lack of clear agreement on the umpire’s role and function during the arbitration. In the court’s view, if the parties had intended an umpire system in the sense described by the plaintiffs, the agreement would have needed to define how the umpire would operate in practice, particularly given the silence of Clause 24.3.
Accordingly, the court harmonised the parties’ clause with the ICC Rules by treating the third arbitrator as the president of the three-member tribunal. This approach respected party autonomy and the express incorporation of the ICC Rules, while avoiding an interpretation that would render the tribunal’s constitution inconsistent with the objectively ascertained intention of the parties.
What Was the Outcome?
The High Court dismissed the plaintiffs’ application. It held that the arbitral tribunal was properly constituted and that it had jurisdiction notwithstanding the plaintiffs’ contention that the third member should have been appointed solely as an “umpire” rather than as president.
Practically, the decision upheld the Partial Award confirming the third member’s role and allowed the arbitration to proceed on the basis of a three-member tribunal under the ICC Rules’ structure.
Why Does This Case Matter?
BNP v BNR is a useful authority for lawyers dealing with arbitration agreements that incorporate institutional rules (such as the ICC Rules) but also contain bespoke drafting about tribunal composition. The case illustrates that courts will strive to harmonise the parties’ express terms with the incorporated rules, especially where the incorporated rules provide a coherent and widely understood framework for tribunal constitution.
The decision also highlights the importance of drafting clarity. Where parties use terms such as “umpire” but do not define the umpire’s role and function, the court may be reluctant to import a foreign statutory model—particularly where the governing arbitration legislation does not provide a default umpire mechanism. This is a cautionary lesson for practitioners: if parties intend a non-standard decision-making structure (for example, a passive umpire who becomes decisive only upon disagreement), the arbitration agreement should specify the mechanics with precision.
Finally, the case reinforces the Singapore courts’ approach to party autonomy and statutory context. Even where parties attempt to depart from default institutional arrangements, the court will examine the objectively ascertained intention and the legislative scheme governing arbitration. For practitioners, the case supports a litigation strategy that focuses on (i) the incorporated rules’ structure, (ii) the presence or absence of defined roles in the contract, and (iii) the governing arbitration legislation’s treatment of tribunal composition.
Legislation Referenced
- International Arbitration Act (Cap 143A, 2002 Rev Ed), in particular s 10(3)
- Arbitration Act (Cap 10, 2002 Rev Ed), in particular s 65(3) (transitional provision)
- English Arbitration Act 1996 (UK), in particular s 21 (referred to)
- Hong Kong Arbitration Ordinance (Cap 609) (HK), in particular s 31 (referred to)
- ICC Rules of Arbitration (incorporated by reference into the shareholders’ agreement), in particular Article 12(5) and Article 11(6) (referred to)
Cases Cited
- [2005] SGHC 91 (Bovis Lend Lease Pte Ltd v Jay-Tech Marine & Projects Pte Ltd and another application) (cited for party autonomy principles)
- [2017] SGHC 269 (BNP and another v BNR) (the present case)
- [2003] 4 SLR(R) 257 (PT Tugu Pratama Indonesia v Magma Nusantara Ltd) (cited for the principle that clauses inconsistent with objectively ascertained intention will not be enforced)
- [2014] 1 SLR 130 (International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and another) (cited for the approach to English authorities in light of Singapore’s legislative scheme)
Source Documents
This article analyses [2017] SGHC 269 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.