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In Singapore court proceedings, the usual course is to award a successful litigant party-and-party costs on a standard basis. Exceptional circumstances are required to justify a departure from the usual course.

In BTN v BTP [2021] SGHC 38, the Singapore High Court confirmed that an unsuccessful application to set aside an arbitral award or to resist enforcement of the same is not, in and of itself, an exceptional circumstance in which indemnity costs may be ordered by the Singapore Court.

The plaintiffs made an unsuccessful application to set aside a partial arbitral award. In their submissions on costs, the defendants argued that the plaintiffs had put them to considerable costs to fend off “unmeritorious proceedings” that ought to not have been brought in the first place  ̶  bearing in mind that the parties had agreed to resolve their disputes in arbitration and to honor any award made in the arbitration. The defendants relied on this to argue that they should be entitled to costs on an indemnity basis.

In its decision, the Singapore High Court reiterated that the discretion to award indemnity costs is a judicial one and should only be made in exceptional circumstances. The court also found that an unsuccessful application of this nature is not an exceptional circumstance warranting a departure from the usual course of awarding costs on a standard basis.

Having considered the position under Hong Kong and Singapore law, the court made the following findings:

  • An unmeritorious application is not necessarily an unarguable case that hints of bad faith justifying an award for indemnity costs.
  • Although the plaintiffs’ application had turned out to be unmeritorious, the plaintiffs had conducted their case in an economical way without undue prolongation of the hearings or submissions.
  • The court noted that in contrast, the defendants’ conduct (for example, instructing senior counsel at the last minute) warranted scrutiny as it: (i) demonstrated that the defendants thought that there was merit in the plaintiffs’ application; and (ii) invariably extended the hearing.

In the course of its decision, the court also restated the following categories of conduct that may provide good reason to order indemnity costs:

  • where the action is brought in bad faith, as a means of oppression or for other improper purposes
  • where the action is speculative, hypothetical or clearly without basis
  • where a party’s conduct in the course of proceedings is dishonest, abusive or improper
  • where the action amounts to wasteful or duplicative litigation or is otherwise an abuse of process

This case highlights a key distinction between the procedural laws of Singapore and Hong Kong when it comes to unsuccessful set-aside applications related to arbitral proceedings. The defendants had sought to rely upon the default rule under Hong Kong law, pursuant to which indemnity costs will be granted when an arbitral award is unsuccessfully challenged in court, unless special circumstances can be shown. The court in BTN v BTP refused to follow the default position in Hong Kong, noting that the Hong Kong position contradicts the costs principles prescribed by the Singapore Rules of Court.

Author

Nandakumar Ponniya is a Principal in the Dispute Resolution Practice Group Baker & McKenzie in Singapore. Nandakumar is seasoned in international arbitration with a focus on building, infrastructure and construction law. He regularly advises on infrastructure projects such as rail systems, oil and gas facilities, and utilities plants, as well as commercial and residential developments across the Asia Pacific region. Nandakumar can be reached at [email protected] and +65 6434 2663.

Author

Richard Allen is a Local Principal in the Singapore office of Baker McKenzie and a member of the Firm's Global Dispute Resolution Practice Group. His practice covers a broad spectrum of contentious and non-contentious work, including commercial and competition litigation, international arbitration, public law and regulatory advice. He is a member of the Law Society of England & Wales, the LCIA Young International Arbitration Group, the Royal Institute of International Affairs (Chatham House), the International Law Association, the American Society of International Law and the International Legal Network of Avocats Sans Frontières. Richard Allen can be reached at [email protected] and + 65 6434 2663.

Author

Lavania Rengarajoo is an Associate at the Dispute Resolution team at Baker & McKenzie in Singapore. Her practice encompasses general commercial litigation and international arbitration. Lavania can be reached at [email protected] and +65 6434 2773.