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Failure To Challenge A Preliminary Jurisdiction Ruling Does Not Prevent The Non-Participating Respondent From Setting Aside The Award

In Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services [2019] SGCA 33, the Court of Appeal repealed the decision of the High Court, which ruled that non-participation in an arbitration will preclude a subsequent challenge to the jurisdiction of an arbitral Tribunal under Article 34 of the Model Law if a jurisdictional challenge had not been brought earlier.  

The parties entered into various agreements relating to maritime security-related projects. The claimant, AGMS, commenced arbitration when a dispute surfaced. Even though the respondent, RALL, had requested for several extensions of time and copies of communications and documents, it did not participate in the arbitral proceedings. When the Tribunal issued a final award in favour of AGMS, RALL then applied to the High Court to set aside the award on the basis that the dispute did not fall within the tribunal’s jurisdiction.  

The High Court held that where a Tribunal decides jurisdiction as a preliminary issue, parties are expected to bring a challenge within 30 days to promptly resolve any jurisdictional challenges. Therefore, if a party does not raise a challenge, it would be found to have waived its right to set aside a subsequent award on this ground.  

The Court of Appeal, however, held that a non-participation in an arbitration will not preclude a subsequent challenge to the jurisdiction of the Tribunal in a setting aside application under Article 34 Model Law. The Court enunciated that while a claimant is obliged to arbitrate, a respondent who believes that an Arbitral Tribunal has no jurisdiction can choose not to participate. Such a party has not contributed to wastage of costs or incurring additional costs that could have been avoided by a timely application to challenge the Arbitral Tribunal’s jurisdiction.  

The corollary of this ruling is that a respondent can choose not to participate in an arbitration and thereafter challenge the jurisdiction of the Tribunal if a potential award is made against it. Nevertheless, this posed a risk in the event that if the respondent's grounds are rejected, then such party would have lost its opportunity to present its case.

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