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A rose by any other name: enforcing an arbitral award in favour of a non-existent party

Following a 12-year arbitration and two years of enforcement proceedings, the highest court in Singapore has allowed a non-party to enforce an award made in favour of a company that had dissolved. The Court of Appeal held that, where the party's name was incorrect, the court could allow an award to be enforced by and against a party that was not expressly named in the award.

This recent case is a timely reminder of getting the parties' identities right when starting arbitration and reflects the pro-arbitration stance of the Singapore courts.

 

Background to the dispute

On 27 June 2007, Keppel FELS Ltd (KFELS) commenced arbitration against Hydralift. Unbeknownst to KFELS, Hydralift had ceased to exist. In October 2004, Hydralift had merged with a company now known as NOV Norway and was struck off the Norwegian register of companies.

NOV Norway did not inform KFELS about the merger and Hydralift's dissolution. Instead, it defended the arbitration in Hydralift's name and made counter-claims against KFELS. In September 2019, the arbitral tribunal found in Hydralift's favour, and ordered KFELS to pay S$3.8 million (US$2.8 million) in damages and costs.

NOV Norway sought permission from the Singapore courts to enforce the award against KFELS. KFELS resisted enforcement. It argued that, since the award was made in favour of Hydralift (an entity that ceased to exist in 2004), NOV Norway could not enforce the award.

The Singapore High Court agreed with KFELS.1 It held that the tribunal only intended to make an award in favour of Hydralift. Since enforcement of an award under Section 19 of the Singapore International Arbitration Act was a "mechanical" exercise, only Hydralift was entitled to enforce the award against KFELS.

On 16 March 2022, the Singapore Court of Appeal reversed the decision and allowed NOV Norway to enforce the award against KFELS.2

 

The Court of Appeal's decision

In reaching its conclusion, the Singapore Court of Appeal made four key findings:

First, as a matter of Norwegian company law, Hydralift's legal personality survived the merger in 2004 and "NOV Norway is the same legal person as Hydralift".3

Second, the contract between the parties did not prohibit the transfer of rights from Hydralift to NOV Norway following the merger in 2004. There was therefore a binding arbitration agreement between NOV Norway and KFELS when the arbitration was commenced.

Third, the Singapore courts have the power to enforce an arbitral award in favour of or against a party not expressly named in the award when there is a misnomer situation. To refuse to enforce the award against KFELS would place an "undue emphasis on form even when it is obvious what the substance of the Award entails".4 By granting permission to enforce the award, the court is not interfering with the tribunal's reasoning; it is only accommodating a change of name for a mistakenly named party at a later stage.

Finally, the Court of Appeal rejected KFELS's defence that NOV Norway was estopped from denying that Hydralift was the proper party to the arbitration. Although NOV Norway's decision to conceal the merger was "inexplicable and unsatisfactory",5 KFELS would have continued to pursue the arbitration even if it knew that Hydralift had ceased to exist. KFELS would have simply substituted Hydralift's name with NOV Norway. As a result, KFELS did not suffer any detrimental reliance and could not rely on this defence.

 

Lessons from this decision

This decision is a timely reminder for parties to ensure that arbitral proceedings are commenced by and against the correct parties.

In practice, it would be advisable for a claimant to conduct company searches on potential respondents before starting arbitration.

This decision is also a cautionary tale for parties that adopt questionable procedural tactics in arbitration.

While it is unclear why NOV Norway concealed Hydralift's dissolution, it might have done so to avoid liability if it had lost the arbitration. This plan almost backfired. In the High Court, the judge did not allow NOV Norway to enforce the award made in Hydralift's favour and noted that "the predicament in which [NOV Norway] finds itself now is entirely the result of its own extraordinary decision, sustained over 12 years, to impersonate Hydralift both in the arbitration and in the related litigation".6 But for the Court of Appeal's decision to allow the appeal, NOV Norway could have been unable to enforce an award for US$2.8 million against KFELS.

Finally, this decision illustrates the pro-arbitration and pragmatic stance adopted by the Singapore courts.

In enforcing the award against KFELS, the Court of Appeal emphasised the need to uphold the arbitral process and to facilitate the enforcement of arbitral awards whenever possible. It was also keen to ensure that 12 years of arbitration between the parties was not rendered nugatory.7

The Court of Appeal also took a pragmatic approach in determining that, even though Hydralift was the named respondent in the arbitration, the arbitration was in substance a dispute between KFELS and NOV Norway.

Despite NOV Norway's "errant conduct",8 it would have been unjust for NOV Norway to be unable to enforce the award against KFELS due to the form of the award.

 

1 National Oilwell Varco Norway AS (formerly known as Hydralift AS) v Keppel FELS Ltd (formerly known as Far East Levingston Shipbuilding Ltd) [2021] SGHC 124.
2 National Oilwell Varco Norway AS (formerly known as Hydralift AS) v Keppel FELS Ltd (formerly known as Far East Levingston Shipbuilding Ltd) [2022] SGCA 24.
3 [2022] SGCA 24 at [53].
4 [2022] SGCA 24 at [96].
5 [2022] SGCA 24 at [120].
6 [2021] SGHC 124 at [192].
7 [2022] SGCA 24 at [116].
8 [2022] SGCA 24 at [132].

 

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