On 31 January 2024, a three-judge panel of the Singapore International Commercial Court (Philip Jeyaretnam J, Sir Vivien Ramsey IJ, Anselmo Reyes IJ) handed down judgment in Reliance Infrastructure Ltd v Shanghai Electric Group [2024] SGHC(I) 3, dismissing the applicant’s widely reported challenge to a US$146 million SIAC arbitration award.
The respondent (“SEC”) was represented by Cavinder Bull SC of Drew & Napier LLP in relation Singaporean law, Nico Leslie as co-counsel in relation to English law, and Ketan Gaur of Trilegal as co-counsel in relation to Indian law. The applicant was represented by Abraham Vergis SC of Providence Law Asia in relation to Singaporean law, and Harish Salve KC/SA, the former Attorney General of India, in relation to English and Indian law.
In December 2022 an SIAC Tribunal had passed a unanimous arbitral award in favour of SEC and against Reliance, requiring the Indian company to pay US$147 million plus interest pursuant to a guarantee contract that was executed in June 2006. The arbitration had arisen out of a dispute between in relation to non-payment against certain equipment and services provided by SEC for the Sasan Ultra Mega Power Project at Sasan, Madhya Pradesh, in northern India. Reliance had raised numerous objections to liability under the guarantee.
In March 2023 Reliance launched the SICC challenge, arguing that the tribunal lacked jurisdiction due to (i) forgery of the guarantee contract containing the arbitration agreement, such that the award should be set aside for invalidity of the arbitration agreement and/or on public policy grounds, or in the alternative (ii) a lack of actual or apparent authority on behalf of the employee who executed the relevant contract, on the basis that the contract was signed by a junior employee and was not known to or approved by Reliance’s board, yet exposed Reliance to liabilities potentially in excess of US$1 billion. It was ultimately not disputed that the critical commercial contract, and the arbitration agreement within that contract, were governed by English law.
In relation to the forgery ground, Reliance said that its former employee, a Mr Rajesh Agrawal, lacked authority to sign the guarantee letter and he testified that he had not signed the document. Reliance also presented analysis from a handwriting expert who argued the signature was forged. SEC argued that Reliance had waived its rights to pursue the challenge because a potential dispute related to the allegations of forgery had arisen after the final hearing in the arbitration but prior to the date of the Tribunal’s award.
The SICC held that Reliance had sufficient knowledge of the facts relating to their forgery allegation to mean that they had waived that objection further to Art.16(2) of the Model Law (as incorporated into Singapore domestic law) by failing to press it during the arbitration proceedings, even if the final hearing had concluded. In any event, it also held, after hearing the cross-examination of three factual witnesses and two handwriting experts, that none of Reliance’s allegations of forgery were made out.
As to the lack of authority ground, SEC argued that Reliance had misunderstood the doctrine of the separability of an arbitration agreement under English law. Specifically, it had failed to establish a case that the employee lacked authority to execute the arbitration agreement, as opposed to the guarantee contract. Under English law, the employee in question had apparent authority to conclude arbitration agreements on behalf of Reliance because (i) he had previously executed or proposed arbitration agreements in relation to different contracts, even if the underlying commercial contracts were different in nature and scale, and (ii) the totality of the circumstances supported the implied representation of authority.
The parties agreed to the decision being published without redactions after the court said the seriousness of the allegations made in the context of a major infrastructure project “should be known” to the international business community.
The full judgment can be found here.
