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2022 MarsdenLR 1031
HIGH COURT MALAYA KUALA LUMPUR
SABAH SHELL PETROLEUM COMPANY LIMITED – Appellant
Versus
GUMUSUT-KAKAP SEMI-FLOATING PRODUCTION SYSTEM (LABUAN) LIMI.... – Respondent
[Originating Summons No: WA-24C(ARB)-10-05/2020 & WA-24C(ARB)-18-03/2021]
The judgment reinforces the principle that arbitral awards should not be set aside unless clear evidence of procedural irregularity or breach of natural justice exists, maintaining the integrity of the arbitral process.
Headnote:(A) Arbitration Act 2005 – Sections 37 and 39 – Setting aside of arbitration award – The court dismissed the applications to set aside an arbitration award based on various claims of breach of natural justice and excess of jurisdiction. The appropriate grounds for setting aside were outlined, emphasizing minimal court intervention in arbitral matters while preserving party autonomy. (Paras 1-111)
(B) Natural Justice – Breach – Allegations of coercion and undue influence were deemed baseless as the tribunal adequately allowed parties to present their cases fairly in the arbitration process. (Paras 30-46)
(C) Public Policy – The court outlined that any claim of contravention of public policy must show that the arbitral award offends fundamental notions of justice, which was not proven by the applicant. (Paras 25-57)
(D) Cost Assessments – The tribunal's methodology in determining costs claims via sampling and extrapolation, though disputed, was found reasonable given case complexity and prior agreement among parties. (Paras 32-46, 57-60)
(E) Limitation of Liability – Legal interpretation of contract clauses concerning liability limits was upheld, indicating that the tribunal acted within its jurisdiction. (Paras 88-96)
(F) Final Determination – The applications to set aside the arbitration award were dismissed, reflecting the court's deference to the arbitral tribunal's findings and a commitment to uphold the integrity of arbitration. (Paras 109-111)
JUDGMENT
Introduction
[1] These are applications to set aside an arbitration award as well as to set aside the registration of the same award pursuant to ss 37 and 39 of the Arbitration Act 2005 (" AA ").
[2] The Plaintiff in KL High Court Originating Summons No WA-24C(ARB)-10-05/2020 ("Enforcement Application") and Defendant in KL High Court Originating Summons No WA-24C(ARB)-18-03/2021 ("Setting Aside Application") is a limited company incorporated in the United Kingdom and involved in the oil and gas business.
[3] The Defendant in the Enforcement Application and Plaintiff in the Setting Aside Application is a limited company incorporated in Labuan and involved in the crude oil and natural gas production business as well.
[4] For ease of reference and convenience, the parties will hereinafter be described as SSPC and GKL respectively.
Background And Preliminary
[5] In 2004, SSPC and its co-venturers Petronas Carigali Sdn Bhd, Conoco Philips Sabah Ltd and Murphy Sabah Oil Co Ltd discovered oil at the Gumusut-Kakap field and declared it commercially viable.
[6] Hence in 2005, Petroliam Nasional Bhd ("Petronas") appointed SSPC under a production sharing contract ("PSC") as the unit operator of the Gumusut-Kakap field to undertake operations and extraction of oil therefrom on behalf of all the co-venturers.
[7] On 17 November 2006, SSPC issued an instruction and authorization to proceed letter to MISC Bhd to commence engineering, procurement and construction of a semi-submersible floating production platform ("Semi-FPS"). This Semi-FPS is a specially designed purpose built platform that weighs 37,500 metric tonnes and stationed at sea for 30 years. It is capable to operate in waters up to depth of 1,200 metres and produce up to 150,000 barrels of oil per day. The Semi-FPS together with the accomodation vessel is depicted below.
[8] In 2012, MISC Bhd incorporated GKL as its wholly owned subsidiary and special purpose vehicle to take over the engineering, procurement and construction of the Semi-FPS.
[9] Thus by a Lease Agreement (Contract No C-591672) dated 9 November 2012 ("Contract"), SSPC and GKL contracted for the carrying out of the engineering, procurement, construction and lease of the Semi-FPS.
[10] Subsequently, there were disputes and differences that arose between the parties in connection with the performance of the Contract particularly on the punctuality of completion as well as quality of work of the Semi-FPS. Thus in crux, GKL claimed for unpaid disputed variation work claims that allegedly arose under the Contract whilst SSPC set off and counterclaimed for disputed claims for costs of defects remediation work carried out to make good allegedly non-conforming work done and liquidated delay damages.
[11] These disputes and differences were referred to arbitration that commenced on 2 September 2016 before an eminent and experienced arbitral tribunal comprising of Sir Vivian Ramsey QC, Professor Doug Jones and Dr Robert Gaitskell QC ("collectively "Tribunal"). Sir Vivian Ramsey is a chartered civil engineer and barrister. He is also a retired judge of the English Queens Bench Division (Technology and Construction Court), an arbitrator and international judge of the Singapore International Commercial Court presently. Professor Doug Jones is a lawyer, arbitrator and international judge of the Singapore International Commercial Court presently too. Dr Robert Gaitskill is a chartered electrical engineer, barrister and arbitrator. The arbitral proceeding was conducted under the auspices of the Kuala Lumpur Regional Centre of Arbitration (now Asian International Arbitration Centre) and subjected to the KLRCA Arbitration Rules. It was agreed by the parties as recorded in the Procedural Order no 1 dated 6 February 2017 that the application of ss 41, 42, 43 and 46 of the AA is excluded from the arbitral proceeding.
[12] The Tribunal published its final award dated 8 April 2020 ("Award") by ordering as follows in para (3461
