In arbitration proceedings, disputes occasionally arise as to whether an arbitrator is “functus officio” or still possesses a reserve of jurisdiction to determine issues which one party contends have not yet been disposed of. In the case of York International Pte Ltd v Voltas Ltd  SGHC 153, this question arose for the High Court’s determination, more specifically – is an arbitrator “functus officio” once a conditional final award has been rendered by the arbitrator?
The defendant was engaged by Resorts World at Sentosa Pte Ltd (“RWS”) to design and supply a District Cooling Plant (“DCP”) (the “Main Contract”). The Main Contract was later novated by RWS to DCP (Sentosa) Pte Ltd (“DCP Sentosa”).
The defendant purchased five water-cooled dual centrifugal chillers (the “Chillers”) from the plaintiff (the “Purchase Agreement”), which was duly delivered. However, around one to two years later, seven of the Chiller motors failed during operation.
In 2014, the plaintiff commenced the arbitration against the respondent for, inter alia, outstanding payments owed by the respondent under the Purchase Agreement. The respondent counterclaimed for damages arising out of the claimant’s supply of allegedly defective Chillers, alleging that the failures had resulted in RWS making claims against the respondent for losses and expenses in the sum of SGD 1,099,162.46 (the “Nitrogen Claim”) and a sum of SGD 33,277 (the “Removal Claim”).
The Arbitrator held that the claimant was liable to the respondent for both claims. But as the Arbitrator was concerned of the risk of the respondent enjoying a windfall if the respondent ultimately did not have to compensate RWS, the Arbitrator decided to make his orders conditional upon the respondent making payment to RWS.
Subsequently, the claimant refused to pay such sums when payment was demanded by the respondent; it argued that the respondent had not provided sufficient evidence that it had indeed paid DCP Sentosa for the claims.
The respondent thus applied to the Arbitrator in 2021 for a further award to determine, inter alia, what sums are to be paid by the claimant to the defendant (the “Further Award”). The Arbitrator concluded that he retained jurisdiction to issue the Further Award, and invited parties to tender further submissions.
When the case proceeded to High Court, the judge ruled that that the Arbitrator did not have jurisdiction to issue the Further Award. The 2014 Award dealt with all the issues which formed the subject of the arbitration, such that the arbitrator is “functus officio”, based on the following reasons:
1. The arbitrator chose to make a quantum award rather than adjourn the decision on quantum;
2. It does not contain an express reservation of jurisdiction;
3. It fully resolved the disputes between the parties; and
4. It has the attributes of a final award.
This case is a timely reminder for arbitrators to carefully consider any decision on quantum, or to expressly reserve jurisdiction in the award, if it’s necessary to retain jurisdiction to resolve further issues. Also, parties ought to act within the time period stipulated if they intend to apply for an additional award within the ambit of Section 43(4) Arbitration Act.