In the recent Court of Appeal case of Hindustan Oil Exploration Company Limited v Hardy Exploration & Production (India) Inc (“HOEC v HEP“), the tribunal’s finding on the issue of limitation was brought up as a ground to set aside the arbitral award. Two key questions arose from this.
First, is the tribunal’s finding on the issue of limitation reviewable by the Court hearing a setting aside application?
Second, if yes, what is the applicable law on the issue of limitation? Is it the lex arbitri (law of the seat of arbitration) or the lex contractus (substantive law governing the contract between parties)?
This article will focus on the first issue of reviewability, where the author will dissect the Malaysian and Singaporean differing approach on this issue, through the Malaysian Court of Appeal case of HOEC v HEP and the Singaporean Court of Appeal case of BBA v BAZ  SGCA 53.
On the second issue of applicable law, this article will only cover the reasonings by the Malaysian Court of Appeal in HOEC v HEP as the Singaporean case of BBA v BAZ did not quite cover this issue.
B. First Issue of Reviewability
The Malaysian and Singaporean Courts take different views on the issue of reviewability.
In HOEC v HEP, the Malaysian Court of Appeal held that limitation is strictly a procedural issue and not a substantive issue. Given its procedural nature, the tribunal’s finding on limitation is reviewable by the Courts as if the tribunal errs on this issue, the award would be “procedurally impaired”. The Court of Appeal held that “such procedural impairment would fall within the meaning of ‘decision making process’ under section 37” of the Arbitration Act 2005 (“AA 2005“).
The issue of reviewability is not as straightforward in Singapore. In BBA v BAZ, the Singapore Court of Appeal held that in determining whether the tribunal’s finding on limitation is reviewable or not, the Court has to assess whether it is an issue of jurisdiction or admissibility. Jurisdiction refers to the power of the tribunal to hear a case, while admissibility refers to whether it is appropriate for the tribunal to hear it.
In determining whether it is a matter of jurisdiction or admissibility, the Singapore Court of Appeal applied the “tribunal versus claim” test. The question to be asked is whether the objection is targeted at the tribunal (where the claim should not be arbitrated due to a defect or omission to consent in arbitration) or at the claim (where the claim itself is defective and should not be raised at all).
In the case of BBA v BAZ, the Singapore Court of Appeal held that a plea of statutory time bar goes towards admissibility and not jurisdiction, thus not reviewable by the Courts. This is because when raising a plea of statutory time bar, the complaint is essentially that the claim is stale and defective, and not that the claim falls outside the scope of consent to arbitration.
Interestingly, the High Court in HOCP v HEP adopted the test laid down by the Singapore Court of Appeal in BBA v BAZ. The High Court held that limitation is a matter of admissibility and not jurisdiction, and the issue of the applicable law on limitation is a matter for the tribunal to rule on. As such, there is no ground for setting aside under section 37 of the Arbitration Act 2005 (“AA 2005“) and the appellant is seen as re-litigating the issue already decided by the tribunal.
The Court of Appeal departed from the High Court’s ratio decidendi on the issue of reviewability. It held that the issue of limitation falls within the scope of section 37 of the AA 2005 as the tribunal’s interpretation on the issue of procedural law on limitation affects the decision making process of the tribunal. If indeed the tribunal erred on this issue, the arbitral award would have been procedurally impaired, making it possible for the award to be set aside for excess of jurisdiction under section 37.
The author is of the view that the Court of Appeal had, by way of “reverse engineering” arrived at this conclusion. At paragraph 67 of its judgment, the Court of Appeal held that “if the learned JC has found that time limitation is a procedural issue, then the learned JC must also remain consistent as to find that time limitation (as a procedure) is also an integral part of the decision-making process (which can fall within the ambit of section 37)”. It appears that the Court of Appeal’s ruling on the issue of reviewability is a natural consequence of its finding that the issue of limitation is purely procedural, where procedural law applies (and not substantive law).
C. Second Issue of Applicable Law on Limitation
The second issue of applicable law on limitation arose in this context, and only in the Malaysian Court of Appeal case of HOEC v HEP.
In this case, the arbitration agreement between parties provides that the lex arbitri is Malaysian law and the lex contractus is Indian law.
One of the key issues in dispute before the arbitral tribunal (which is also the crux of this appeal) is whether the respondent’s claim was time barred as the claim was for expenses incurred more than 3 years before the commencement of arbitration.
In determining this issue, the tribunal had to assess whether limitation is a procedural or substantive issue, and which law applies. In this regard, the tribunal held that limitation is a procedural issue and the lex arbitri i.e Malaysian law applies. As such, the respondent’s claim was not time barred. If the tribunal had held that the limitation is a substantive issue and governed by the lex contractus, then the respondent’s claim would have been time barred under the Indian Limitation Act.
The appellant, aggrieved with the tribunal’s decision, applied to set aside the arbitral award on the ground that the tribunal had acted in excess of jurisdiction by applying Malaysian limitation laws.
The High Court dismissed the appellant’s setting aside, primarily on the ground that the issue of limitation is not reviewable (as explained above).
Given that the Court of Appeal held that the issue of limitation is reviewable, the Court of Appeal further analysed the issue of applicable law. It held that limitation is purely procedural as it is “entirely blind to whether or not a party can prove any measure of liability against another“.
Although the issue of applicable law was never an issue in question in the Singapore Court of Appeal in BBA v BAZ, the author finds it interesting that the Singapore Court of Appeal pointed out that traditionally, Singapore construed statues of limitation as either substantive or procedural time bars. A substantive time bar is said to be one that extinguishes a claim (with the words of the statute saying that a right is “extinguished” if a claim is not brought within a specific period), while a procedural time bar only bars a remedy by limiting the time for bringing an action (with the words of the statute saying that an action “shall not be brought” after a specific period).
However, the Singapore Court of Appeal subsequently observed that regardless of whether it is a procedural or a substantive time bar, it does not impact the issue of reviewability, as both types of time bar go into admissibility and are not reviewable by the Courts.
The author opines that the Singaporean approach should prevail, as the issue of reviewability should be determined first, before the Court decides on whether the issue of limitation is a procedural or substantive one (if they are minded to do so). The application of the “tribunal versus claim” test is consistent with the purpose of the repeal of section 42 of the AA 2005, where an arbitral award cannot be referred to the Courts for substantive questions of law.
If the tribunal’s findings on limitation is reviewable (and where it can possibly be one of the grounds to set aside an arbitral award for “excess of jurisdiction”), it can easily be abused as a ground to appeal against an award under the disguise of procedural impropriety.
The author was made aware that there will be an application for leave to appeal to the Federal Court for this matter.
Leave a Reply