Nov 2012

This newsletter is intended to provide general information and may not be reproduced or transmitted in any form or by any means without the prior written approval of Drew & Napier LLC. It is not intended to be a comprehensive study of the subjects covered, nor is it intended to provide legal advice. Specific advice should be sought about your specific circumstances.

INTERNATIONAL ARBITRATION IN INDIA – A MOVE TOWARDS LESS JUDICIAL INTERVENTION?

In this issue

International Arbitration in India – A move towards less judicial intervention? ……. 1 By Cavinder Bull, SC Of Gross Negligence, Mitigation and Astronomical Loss of Profits Claims ….. 2 By Jimmy Yim, SC, Erroll Joseph & Mahesh Rai Respecting the Parties’ Chosen Law ….. 5 By Woo Shu Yan & Colin Liew Appreciating the Importance of Cultural Nuance Before an International Arbitration Panel ……………………………………..…. 7 By Cavinder Bull, SC Case win …………………………………… 9

INTRODUCTION Commonly cited benefits of international arbitration include the ability to resolve disputes in a neutral forum and the ease of enforcing awards. Unfortunately, these and other benefits have at times been lost to some parties engaged in the arbitration of disputes with connections to India. It is well known that the Indian courts have intervened in international arbitration proceedings and awards to a greater degree than other jurisdictions which have been perceived as being more “arbitration-friendly”. A much-anticipated recent decision of the Supreme Court of India (“SCI”) in Bharat Aluminium Co v Kaiser Aluminium Technical Service, Inc and other appeals (released on 6 September 2012), may mark a change in the judicial attitude in India towards international arbitration. However, as this article will explain, this decision is unlikely to result in an immediate change due to the prospective application of the decision. BACKGROUND In 2002, the SCI held in Bhatia International v Bulk Trading SA and another (2002) 4 SCC 105 that the Indian courts had the power to grant interim relief in connection with arbitration proceedings before tribunals seated outside of India (“Foreign Arbitrations”). The SCI reached this decision by holding that Part I of the Indian Arbitration and Conciliation Act 1996 (“Indian Arbitration Act”) applied to Foreign Arbitrations unless the parties expressly or impliedly excluded the provisions of Part I. This was the SCI’s view even though section 2(2) of the Indian Arbitration Act provided that Part I “shall apply where the place of arbitration is in India” [emphasis added].

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In a 2008 decision, the SCI held in Venture Global Engineering v Satyam Computer Services Ltd and another 2008 (1) Scale 214 that it followed from its decision in Bhatia International that the Indian courts had the power to set aside awards issued by arbitral tribunals seated outside of India (“Foreign Awards”). The power to set aside awards is found in section 34 of the Indian Arbitration Act, which is found in Part I of the Act. These decisions were controversial to say the least. They posed obvious obstacles to the conduct of international arbitration proceedings against Indian parties and the enforcement of the resulting awards against assets situated in India. The Bharat Aluminium appeals presented the SCI with an opportunity to reconsider Bhatia International and Venture Global Engineering. THE COURT’S DECISION The SCI unanimously decided that Part I of the Indian Arbitration Act applies only to arbitrations which take place in India. This aspect of the decision has two main implications. First, the Indian courts no longer have the power to grant interim relief in connection with Foreign Arbitrations. In this connection, the SCI also ruled that it is not possible to obtain interim relief for Foreign Arbitrations under the Indian Code of Civil Procedure. Secondly, the Indian courts no longer have the power to set aside a Foreign Arbitration Award. The SCI also unanimously decided that a Foreign Award cannot be set aside by an Indian court solely on the basis that the parties chose Indian law to govern the substance of the dispute. The practical implication of this aspect of the decision is that India now accepts that only the court at the seat of the arbitration can set aside a Foreign Award. COMMENT The full implications of this ground-breaking decision are unlikely to be felt for some time to come because the SCI expressly stated that its decision was to apply prospectively to arbitration agreements executed after the decision was released. The judgment does not contain any analysis for why the decision should only have

prospective effect and why the test for determining the application of the decision is the date of the arbitration agreement. The SCI simply stated that a prospective decision was required “in order to do complete justice”. Nevertheless, the importance of this decision should not be understated. The tone of the 190-page decision suggests a significant shift in the judicial attitude in India towards international arbitration. This was no ordinary decision, as evidenced by the fact that the court sat as a five-judge Constitution Bench, instead of the usual composition of two to three judges. The significance of this decision is also underscored by the fact that the SCI invited arbitral institutions such as the Singapore International Arbitration Centre and the London Court of International Arbitration, India, to intervene and make submissions at the hearing. This decision may well signal the beginning of a new era of less judicial intervention in international arbitration proceedings as well as greater judicial support for the enforcement of awards in India. If you have questions or comments on this article, please contact:

Cavinder Bull, SC Director, Dispute Resolution T: +65 6531 2416 E: cavinder.bull@drewnapier.com __________________________________

OF GROSS NEGLIGENCE, MITIGATION AND ASTRONOMICAL LOSS OF PROFITS CLAIMS

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INTRODUCTION It has become routine for sophisticated contracting parties to limit, in advance, their liability by limitation of liability and exclusion clauses. When disputes arise, the “injured” party often seeks to undermine such clauses by raising allegation of gross negligence. Likewise, it is common for parties to make inflated claims for loss of profits. Respondents who face astronomical claims for loss of profits would do well to scrutinise the evidence supporting such a claim. These issues arose in a recent International Chamber of Commerce (“ICC”) arbitration relating to breach of contract claim between a leading Malaysian manufacturer of industrial boilers and a major Thai palm oil producer. The contract for the supply of an industrial boiler was governed by Thai law and the dispute revolved around breaches of contract, and, in particular, allegations of gross negligence and a lack of good faith which can unravel the limitation of liability under specific provisions of the Thai Civil and Commercial Code. The Claimant was represented by English and Thai solicitors who had instructed an English Queen’s Counsel. The Respondent was represented by Malaysian solicitors who instructed Drew & Napier LLC (Jimmy Yim, SC, Abraham Vergis, Erroll Joseph and Mahesh Rai) to defend the claim. BACKGROUND The contract was for the supply and installation of an industrial boiler in Thailand which would be used to power the Claimant’s palm oil production plant. Parties agreed that the contract price would be payable in tranches upon the completion of certain milestones. The problems began with the delay in the delivery, installation and commissioning of the boiler coupled with delays in shipment. Sometime after the failing of the first commissioning test, the Claimant stopped making payments to the Respondent. Subsequently, the boiler underwent a second commissioning, this time with efficiency tests to

ensure that it met the requisite standards stipulated in the contract. The boiler passed four out of five tests; failing the particulate emissions test (a pollution test). The Respondents, having not received the payments after completion of the milestones in the contract, abandoned the Claimant’s palm oil production site. The Claimant claimed that the contractual milestones had not been achieved, there was inordinate delay, gross negligence and abandonment of work and hence payments were not due. The Thai Claimant commenced arbitration proceedings, claiming for loss of profits amounting to US$21million on the following grounds: (a) The Respondent failed to deliver and install

the boiler on time; (b) The boiler failed to pass its commissioning

test and the particulate emissions test and hence could not be operated at its full capacity; and

(c) The Respondent’s representatives failed to return to site to rectify the defects of the boiler and to carry out a further particulate emissions test (despite requests from the Claimants to do so).

The contract stipulated that the Respondent would be liable for damages of (a) 5% of the contract price for failure of the efficiency tests and (b) 5% of the contract price for delay. The contract also provided that any compensation under the contract should not be more than 20% of the contract value. The Claimant argued that the limitation and exclusion of liability clauses in the contract could not be relied upon because certain aspects of the Respondent’s conduct in the course of the contract amounted to gross negligence and bad faith which, under Thai law, would prevent the Respondent from relying on such clauses. The Claimant also alleged that it suffered severe loss of profits because it had to cap the operation of the boiler to 66% of its capacity to prevent breaching the emissions standard in Thailand. The Claimant calculated that this loss of profits amounted to US$21million as a result of the corresponding fall in palm oil production (making up 99% of the amount claimed from the Respondent).

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The Claimant argued that it was also entitled to the costs of a secondary dust collector which would have lowered the emissions of the boiler to an acceptable level. This was despite the fact that the Claimant had chosen not to install the secondary dust collector in the 3-year period after the Respondent left the site. THE TRIBUNAL’S DECISION The Tribunal found that the initial period of delay could be attributed to both the Claimant and the Respondent. The Tribunal agreed with the Respondent that the Claimant had failed to specify precisely which acts and omissions were internationally reckless and grossly negligent. The general allegations of gross negligence and bad faith made by the Claimant therefore failed. However, the Tribunal did find that the Respondent’s conduct, in refusing to return to site to rectify the boiler’s defects and to fix the boiler’s emissions problem despite being repeatedly invited by the Claimant to do so, amounted to intentional and reckless breaches of the contract and hence constituted gross negligence. The tribunal also found that this conduct was bad faith on the Respondent’s part. Nonetheless, the Tribunal rejected the Claimant’s entire claim for loss of profits because of the questionable evidence that the Claimant adduced. During the course of the arbitration, the Respondent uncovered tampered and fabricated boiler and turbine log sheets which the Claimant was relying on to substantiate its allegation that there was a cap on the production of palm oil. The Respondent also proved that the Claimant failed to supervise the data entry of the boiler log sheets, making these sheets unreliable. Further, by scrutinising the individual records of the boiler’s daily operation over the entirety of the periods where loss of profits were claimed, the Respondent found that there were pockets of unexplained downtime where the boiler was not put to use. The aggregate periods of downtime amounted to at least 24% of the period for which the Claimant was claiming for loss of profits. In light of the questionable log sheets, lack of adherence to protocol in supervising the recording of raw data and the unexplained downtime, the Tribunal found that it was unsafe to conclude that

the Claimant had suffered any loss of profits or loss of production capacity. The Tribunal also determined that the Claimant failed to take reasonable steps to mitigate its losses by not purchasing a secondary dust collector. On the Claimant’s own case, a secondary dust collector, the most expensive of which costs US$500,000, would have solved the emissions issue and allowed the Claimant to operate the boiler at full capacity. Three months after the Respondent abandoned the site, it was apparent to the Claimant that the Respondent would not return. The Claimant should have mitigated its losses by rectifying the emissions problem itself. The Tribunal dismissed 99% of the Claimant’s claim for US$21million and instead awarded the Claimant the sum of US$330,000 (being 5% of the contract price for delay, 5% of the contract price for the failure of the emissions test, US$195,000 for a secondary dust collector, and US$19,000 for rectifying minor problems with the boiler). Each party was to bear its own costs of the arbitration and the arbitrators’ fees were to be borne equally. The conclusion was a victory for the Malaysian Respondent represented by Drew & Napier LLC. COMMENT The Respondent’s scrutiny of the raw data provided by the Claimant was crucial to the success in defending the exorbitant claim for loss of profits in this case. By plotting out what the palm oil production would have been if the boiler had been 100% operation, the Respondent demonstrated that the astronomical claim made by the Claimant was theoretically impossible to achieve. Through such detailed analysis, the Respondent also highlighted numerous periods of time where the Boiler was operating at low levels or was not operating at all to which the Claimant could not provide any satisfactory explanation. The Claimant’s raw data supporting the loss of production and profits claim was dubious and this made the Tribunal uncomfortable in awarding exorbitant damages for loss of profits.

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The Claimant’s failure to mitigate its losses only befuddled the Tribunal further. The Claimant could not satisfactorily explain why it did not spend US$500,000 to rectify the boiler’s emissions issue expeditiously when it was allegedly suffering huge losses of profits every month, collectively far in excess of US$500,000, from the time the Respondent abandoned the site. The outcome of this arbitration, however, makes it clear that the dormancy of the Respondent in not returning to the Claimant’s site when it was contractually obliged to remedy the problems with the Boiler was reprehensible. The dormancy of the Claimant was in not purchasing a secondary dust collector to rectify the boiler’s emissions issue when it was obliged to mitigate any losses stemming from the emissions issue (the loss of profits) was also reprehensible. Had both parties been more cognisant of and acted in accordance with their clear legal obligations, the dispute may have been avoided or minimised. The Claimant’s legal costs, which were disallowed by the Tribunal, far outweighed the amount the Tribunal awarded to them in damages. In reality, the Claimant lost out in bringing this arbitration claim. If you have questions or comments on this article, please contact:

Jimmy Yim, SC Director, Dispute Resolution T: +65 6531 2505 E: jimmy.yim@drewnapier.com

Erroll Ian Joseph Associate Director, Dispute Resolution T: +65 6531 2498 E: erroll.joseph@drewnapier.com Mahesh Rai Senior Associate, Dispute Resolution T: +65 6531 2584 E: mahesh.rai@drewnapier.com __________________________________

RESPECTING THE PARTIES’ CHOSEN LAW QUARELLA SPA V SCELTA MARBLE

AUSTRALIA PTY LTD [2012] SGHC

166 Given the prevalence of choice of law clauses in arbitration agreements, parties who are unsuccessful in an arbitration may attempt to set aside the arbitral award (“Award”) on the basis that the arbitral tribunal (“Tribunal”) applied the wrong law in rendering its Award. In the recent decision of Quarella SpA v Scelta Marble Australia Pty Ltd [2012] SGHC 166, the Singapore High Court rejected just such an argument made by Quarella SpA (“Quarella”), the plaintiff in this case, thereby upholding the Award which had been successfully obtained by Scelta Marble Australia Pty Ltd (“Scelta”), the Defendant in this case Cavinder Bull, SC, Woo Shu Yan and Colin Liew represented Scelta. BACKGROUND The dispute arose out of the termination of an exclusive distribution agreement (“Agreement”) entered into by Quarella, an Italian manufacturer of composite stone products, and Quarella’s Australian distributor, Scelta. Clause 25 of the Agreement (“Clause 25”) stated that the Agreement was to be governed by the United Nations Convention on Contracts for the International Sale of Goods (“CISG”) and where not applicable by Italian law. The Agreement also provided that any dispute which arose should be decided by arbitration in Singapore according to

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the International Chamber of Commerce (“ICC”) Rules of Arbitration. Scelta commenced arbitration proceedings against Quarella claiming that Quarella had breached the Agreement. Scelta was represented by Australian solicitors and Cavinder Bull SC appeared as counsel. Quarella was represented by an international firm and David O’Çallaghan SC appeared as counsel. The week-long hearing of the arbitration was conducted in Milan. Quarella argued as a preliminary issue that the Agreement was governed by the CISG, and not Italian law. The basis of Quarella’s argument was that Clause 25 amounted to a direct choice by the parties of the CISG as the applicable law, notwithstanding that the CISG, under its own internal rules of applicability, did not apply to distribution agreements such as the Agreement. In the Award, the Tribunal disagreed with Quarella’s submission, ruling that the CISG was inapplicable and that the Agreement was therefore governed by Italian law. Applying Italian law, the Tribunal went on to rule in favour of Scelta on the merits and ordered Quarella to pay damages and costs to Scelta. Dissatisfied with the Award, Quarella commenced an action in Singapore under the International Arbitration Act (Cap 143A) to set aside the Award. Quarella argued that the Tribunal had wrongly interpreted Clause 25 of the Agreement, which according to Quarella was on its true construction a direct choice by the parties of the CISG as the applicable law, and that the Tribunal should therefore have applied the CISG to the merits of the dispute. Quarella contended that the Award should consequently be set aside under Articles 34(2)(a)(iii) and 34(2)(a)(iv) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). Article 34(2)(a)(iii) of the Model Law provides that a court may set aside an Award if, among other things, the Award “deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration”. Quarella argued that, by applying Italian law rather than the CISG (which had allegedly been expressly chosen by the parties in

Clause 25 as the applicable law), the Tribunal had exceeded the scope of submission to arbitration. Article 34(2)(a)(iv) of the Model Law provides that a court may set aside an Award if, amongst other things, “the arbitral procedure was not in accordance with the agreement of the parties”. Quarella argued that, by failing to apply the CISG, the Tribunal had failed to comply with Article 17 of the ICC Rules of Arbitration, which provides, in relevant part, that the parties are free to agree upon the rules of law to be applied by the Tribunal to the merits of the dispute. According to Quarella, the arbitral procedure was therefore not in accordance with the agreement of the parties. THE SINGAPORE HIGH COURT’S

DECISION The High Court rejected Quarella’s arguments, thereby upholding the Award in Scelta’s favour. In relation to Article 34(2)(a)(iii) of the Model Law, the High Court observed that Article 34(2)(a)(iii) applies where the Tribunal improperly decided matters that had not been submitted to it, or failed to decide matters that had been submitted to it. In the instant case, the High Court noted that the issue of the applicable law was submitted to the Tribunal, and that the Tribunal therefore did decide matters that were submitted to it. Furthermore, the High Court underscored that errors of law or even errors of fact were insufficient to warrant setting aside an Award under Article 34(2)(a)(iii) of the Model Law, and therefore an argument that the Tribunal applied the wrong governing law did not constitute a ground for setting aside the Award under Article 34(2)(a)(iii). In relation to Article 34(2)(a)(iv) of the Model Law, the High Court noted that, where a Tribunal fails to apply the law chosen by the parties, there may be a risk in some jurisdictions that the Award will be set aside. This occurred in an arbitration in Egypt, where an Egyptian court set aside an Award on the basis that the Award failed to apply the law agreed by the parties, as required by Egyptian arbitration law. However, in the present case, the High Court held that, unlike Egypt, Singapore’s arbitration law contained no express provision allowing an Award to be set aside where the Tribunal fails to apply the law chosen by the parties. In addition, the High Court pointed out that, in the present case, the Tribunal had not

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failed or expressly refused to apply the parties’ choice of law clause (ie Clause 25). Instead, the Tribunal had “respected the choice of law clause…, interpreted the law so chosen and came to the conclusion that the CISG did not apply”. Therefore, Article 34(2)(a)(iv) of the Model Law was not engaged and the Award could not be set aside on that ground. COMMENT The High Court’s decision in the instant case is consistent with the general policy of minimal curial intervention in international arbitration proceedings adopted by the Singapore courts. It is also consistent with the case law of most other jurisdictions, under which Awards cannot be set aside on the basis that the Tribunal allegedly applied the wrong law to the merits of the dispute. It is important to note, however, that the High Court in the present case emphasised that, pursuant to Article 17 of the ICC Rules of Arbitration, the Tribunal must respect the choice of law made by the parties. This suggests that, where a Tribunal simply fails or refuses to apply the chosen law, there may be scope to argue that the resulting Award may be set aside under Article 34(2)(a)(iv) of the Model Law. However, the tenor of the decision in the present case suggests that it would take a fairly extreme case for this argument to be successful, especially as long as the policy of minimal curial intervention holds sway. If you have questions or comments on this article, please contact:

Woo Shu Yan Associate Director, Dispute Resolution T: +65 6531 4103 E: shuyan.woo@drewnapier.com Colin Liew Associate, Dispute Resolution T: +65 6531 2466 E: colin.liew@drewnapier.com __________________________________

APPRECIATING THE IMPORTANCE OF CULTURAL NUANCE BEFORE AN INTERNATIONAL ARBITRATION PANEL1 There has been a significant increase in the number of international arbitrations in Asia in the last 5 years. In Singapore, for example, the Singapore International Arbitration Centre handled 188 new cases in 2011, more than double the 90 new cases which it handled in 2006 and nearly triple the 64 new cases which it handled 10 years ago, in 2001. In particular, construction arbitrations are on the rise. This is a natural consequence of the continued economic growth in many parts of Asia which has resulted in more construction and infrastructure development. Arbitration is the established mode of dispute resolution for the disputes that inevitably arise from such projects, especially when they are international in nature. The sizes of the construction disputes in Asia also continue to increase with the average amounts in issue growing rapidly. The types of dispute that have been referred to arbitration cover the full range of construction and engineering, from commercial and residential buildings to roads, tunnels, and bridges, in numerous countries across Asia. This increase in economic activity comes at a time when Asian businesses and Asian economies have significant bargaining power. This has resulted in Asian parties having a greater say in respect of the venue of the arbitration, the rules to be applied and even, though to a lesser extent, the choice of law. Asian businesses and corporations which were in the past content to agree to arbitration in more established arbitration venues

1 This is an extract of a paper delivered by Cavinder Bull, SC, in September 2012 at the International Construction Conference in London jointly organized by the UK Society of Construction Law, The UK Technology and Construction Solicitors’ Association and Technology & Construction Bar Association of UK. Cavinder was invited to address the Conference on the subject of International Advocacy.

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like London and Geneva are now more likely to insist on arbitration closer to home. This has resulted in more arbitrations being held in places like Singapore, Hong Kong and Malaysia. Some of these venues have invested heavily in arbitration infrastructure; Maxwell Chambers in Singapore being the most obvious example. This is a dedicated arbitration facility in Singapore which houses state of the art arbitration hearing rooms, and where a host of arbitration relevant services are available including, for example, translation and transcription services. The increase in the number of arbitrations being held in Asia has been accompanied by a noticeable and perhaps natural increase in the number of arbitrations where Asian arbitrators are appointed to arbitral panels. Some arbitral institutions are well known to prefer appointing, if possible, a presiding arbitrator from the seat of the arbitration. This is usually explained as being useful since the presiding arbitrator will then tend to have some knowledge of the arbitration laws applicable in the country where the arbitration is likely to take place. Moreover, Asian corporations are more willing today than say 10 years ago to appoint an Asian arbitrator, not so much out of parochialism but because they believe that an Asian arbitrator will understand the evidence of Asian witnesses and the perspectives of an Asian business dealing with challenging projects in developing countries. All this therefore means that the arbitration advocate should expect to face a multinational arbitral panel. In particular, the advocate should anticipate addressing and be prepared to address arbitrators who are from Asia or who live and work in Asia. The Asian contexts of many of these arbitrations grow in significance with the addition of arbitrators who themselves will approach these disputes from an Asian perspective. There is of course a central core of such work which has no cultural nuance, Asian or non-Asian. A written agreement says what it says and if the governing law is English law or New York law (as it often is), it makes no difference whether the contract is to be performed in Singapore or Manchester. Likewise, expert evidence on the capabilities of various machinery will not differ depending on which continent they are being

operated in. The main thrust of the construction arbitration practitioner’s work will remain the same and his or her skills may be deployed usefully regardless of where the seat of the arbitration is and regardless of where the construction or engineering project is located. However, it is important to realise when arbitrating in places like Singapore, Hong Kong or Beijing that there are cultural differences and historical perspectives that will subtly define how an Asian arbitrator hears what an arbitration practitioner has to say in submission. Such subtle interplay also defines what an Asian arbitrator may take away from the cross-examination of an Asian witness. The arbitration practitioner who is unaware of such dynamics may be putting all the “right” questions and may believe that he or she is getting all the “right” answers, only for the arbitrators with a deeper knowledge of Asia, taking away quite a different message from the exercise. As advocates, we know that it is not what we say that matters, it is what the adjudicator hears us say that counts. Persuasion sounds not in our own voices, but in the ears of those we seek to sway. In the international context of cross-border arbitrations, there are a host of “war stories” about the culturally insensitive or culturally naïve. There have also been significant writings on the subject. For example, Robert l Gegios and Stephen D R Taylor write about how the evidence of a fluent but non-native English speaker may well play out in a cross-cultural situation2:

“A fluent English-speaking Japanese witness is likely to use less direct expressions in accord with a cultural aversion to public conflict. Further, he or she is perhaps looking at the hearing as part of wider business relationships, which may be best served by downplaying any conflict in the hope of minimizing future fallout. In addition to differences in phraseology, he or she is likely to apply indigenous delivery style, including use of pauses and accents. The result may

2 Robert L Gegios and Stephen D R Taylor, ‘Cross-Cultural Understanding: An Essential Skill in International Advocacy’ in Anita Alibekova and Robert Carrow (ed), International Arbitration and Mediation – From the Practitioner’s Perspective (Yorkhill Law Publishing 2007).

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convey a very different literal interpretation to a native-speaking audience. Further, that audience may draw differences from non-verbal [cues] such as eye contact, arm crossing and so forth. There may be no recognition that these have a completely different meaning in the culture and mind of the speaker. The result may be an assumption of disingenuousness, or other similarly harmful conclusion, when in fact none existed.”

In this hypothetical, the cultural sensitivity of the native-speaking audience is critical; whether this audience refers to the counsel conducting the cross-examination or the arbitration panel3. With the increase of Asian representation in arbitral panels, it is less likely today that arbitral tribunals in Asia will be culturally ignorant when compared to what one might have encountered 10 years ago. It is thus even more important that arbitration counsel not be left behind. In the hypothetical of the Japanese witness, the end result might not be that insensitive arbitrators misinterpret the evidence of the witness. Rather, the danger is that advocates practicing in that environment may fail to appreciate exactly how the evidence is being perceived by the arbitrators. The counsel conducting the cross-examination in the hypothetical may conclude his cross-examination believing that he has seriously damaged the evidence of the Japanese witness, not realising that the culturally sensitive arbitration panel, one of whom is from London, another from Japan and a third from Singapore, may fully understand the Japanese witness’ “use of pauses and accents” as the perfect response to the line of questioning. In fact, were that witness to have given an articulate verbal rebuttal, the tribunal may well raise an eyebrow and hear in that not the words of a truthful witness but the sound of his lawyer’s voice.

3 See also: The Importance of Recognising Cultural Differences in International Dispute Resolution, Karen Mills, J.D., FCIArb., Chartered Arbitrator, adapted from a paper presented at the Chartered Institute of Arbitrators, Malaysia Branch International Arbitration Conference, held in Kuala Lumpur, 31 March - 1 April, 2006.

For the advocate, understanding the perspectives of the adjudicator is crucial. It is the adjudicator who we seek to persuade. As international arbitration advocates face more Asian faces in arbitral panels and cross-examine more Asian witnesses, we need to understand how Asian businesses are run and the factual contexts of the Asian projects that may be the subject matter of dispute. Most of all, we need to make efforts to understand how a growing cohort of Asian arbitrators will react to the exercise of our craft. That will significantly improve our effectiveness as advocates seeking to assist our clients in the growing number of arbitrations in Asia. If you have questions or comments on this article, please contact:

Cavinder Bull, SC Director, Dispute Resolution T: +65 6531 2416 E: cavinder.bull@drewnapier.com __________________________________

CASE WIN Davinder Singh, SC, together with Jaikanth Shankar, Mingguan Lim and Vishal Harnal, successfully represented Hyflux Ltd, a publicly listed company renowned in the water management and environmental solutions industries, against Ashcraft Holdings Pte Ltd in an arbitration under the rules of the Singapore International Arbitration Centre. The dispute arose out of a shareholder’s agreement between the parties relating to the establishment of Hyflux Filtech (Singapore) Pte Ltd (“HFS”). Hyflux, pursuant to and in accordance with that agreement, served a put option notice on Ashcraft requiring Ashcraft to purchase all of Hyflux’s shares in HFS at a fair value. Ashcraft disputed, among other things, Hyflux’s right and entitlement to issue the put option notice.

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The Tribunal ruled in favour of Hyflux and granted all of the reliefs it sought against Ashcraft. The Tribunal also ordered Ashcraft to bear all of Hyflux's costs. Drew & Napier LLC 10 Collyer Quay #10-01 Ocean Financial Centre Singapore 049315 www.drewnapier.com T : +65 6535 0733 T : +65 9726 0573 (After Hours) F : +65 6535 4906

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INTERNATIONAL ARBITRATION GROUP Drew & Napier’s International Arbitration Group is one of region’s top practices and is listed as one of the world’s top arbitration practices by the Global Arbitration Review 100. Our lawyers are dedicated to achieving winning outcomes no matter the jurisdiction, institution or tribunal. We represent clients from a diverse range of industries, and are frequently instructed by international law firms to act as counsel at hearings in Singapore and abroad. Our group comprises both eminent advocates who are well versed in arbitration practice, as well as a core team who specialise almost exclusively in international arbitration. In addition, we have specialist arbitration lawyers who practise in specific industry sectors, such as building and construction.   Our clients include Fortune 500 companies, multinational corporations and foreign governments. Our experience spans numerous industries such as building & construction, finance, information technology, energy & utilities, and property; and countries including Australia, Brunei, China, Hong Kong SAR, India, Indonesia, Japan, Malaysia, South Korea, Switzerland, Thailand, United Kingdom and the United States of America. Prestigious industry publications like Chambers Asia, Legal500 and Practical Law Company consistently confirm our leadership with Tier 1 rankings in International Arbitration. Many of our lawyers are also panel arbitrators, fellows or members of a number of arbitration institutions. Cavinder Bull, SC was appointed Vice-President of the Asia Pacific Regional Arbitration in August 2011 – a year after he was appointed Deputy Chairman of the Singapore International Arbitration Centre. These prestigious appointments lend weight to our position as leaders of international arbitration in Singapore. Our lawyers have extensive experience representing numerous international and local clients in arbitrations before the following institutions: ■ Singapore International Arbitration Centre ■ Kuala Lumpur Regional Centre for Arbitration ■ London Court of International Arbitration ■ Singapore Chamber of Maritime Arbitration ■ American Arbitration Association ■ Singapore Institute of Arbitrators ■ International Chamber of Commerce ■ Singapore Institute of Architects ■ China International Economic & Trade ■ UNCITRAL Rules arbitrations

Arbitration Commission ■ Other ad hoc arbitrations ■ Hong Kong International Arbitration Centre

Copyright in this publication is owned by Drew & Napier LLC. This publication may not be reproduced or transmitted in any form or by any means, in whole or in part, without prior written approval. Drew & Napier LLC accepts no liability for, and does not guarantee the accuracy of information or opinion contained in this publication. This publication covers a wide range of topics and is not intended to be a comprehensive study of the subjects covered nor is it intended to provide legal advice. It should not be treated as a substitute for specific advice on specific situations.

Davinder Singh, SC International Arbitrator, KLRCA T: +65 6531 2403 F: +65 6532 7149 E: davinder.singh@drewnapier.com Jimmy Yim, SC Regional Arbitrator, SIAC Fellow, SIArb T: +65 6531 2505 F: +65 6533 9029 E: jimmy.yim@drewnapier.com Hri Kumar, SC T: +65 6531 2522 F: +65 6532 7149 E: hri.kumar@drewnapier.com Cavinder Bull, SC Vice President, APRAG Deputy Chairman, SIAC SIAC Panel Arbitrator T: +65 6531 2416 F: +65 6533 3591 E: cavinder.bull@drewnapier.com

Randolph Khoo Fellow, CIArb and SIArb Arbitrator, Law Society Arbitration Scheme T: +65 6531 2418 F: +65 6532 7149 E: randolph.khoo@drewnapier.com Adrian Tan T: +65 6531 2424 F: +65 6532 7149 E: adrian.tan@drewnapier.com Tony Yeo T: +65 6531 2512 F: +65 6220 0324 E: tony.yeo@drewnapier.com Tan Liam Beng Regional Arbitrator, SIAC Panel Arbitrator, SIArb Fellow, CIArb, SIArb and MIArb T: +65 6531 4139 F: +65 6533 3591 E: liambeng.tan@drewnapier.com Kelvin Tan T: +65 6531 2526 F: +65 6532 7149 E: kelvin.tan@drewnapier.com

Eugene Tan T: +65 6531 4144 F: +65 6533 3591 E: eugene.tan@drewnapier.com

Consultants Joseph Grimberg, SC T: +65 6531 2453 F: +65 6533 0694 E: joseph.grimberg@drewnapier.com

Cheryl Tan T: +65 6531 2426 F: +65 6535 4906 E: cheryl.tan@drewnapier.com