2. Hydralift could transfer its rights under the arbitration agreement to NOV

KFELS argued that Hydralift could not have assigned its rights under the arbitration agreement to NOV. If correct, there would be no arbitration agreement between NOV and KFELS and NOV could not have pursued the counterclaim on which the Award was based.

The COA held that Hydralift could transfer its rights under the arbitration agreement to NOV in a merger because:

a. Under Norwegian law, such a transfer must be specifically prohibited by contract, and the Contract did not contain such a prohibition; and

b. Under Singapore law, a transfer in a merger is not considered an assignment.

3. Courts can enforce awards in misnomer situations

Notwithstanding the finding on legal personality, it remained true that the Award named Hydralift and not NOV and section 19 of the IAA requires a mechanical approach to enforcement.

However, the COA held that the power to enforce an award in true misnomer is not contrary to the mechanical approach under section 19 of the IAA, keeping in mind the policy of facilitating enforcement. Undue rigidity here is not warranted and emphasis should be placed on the substance of an award rather than its form.

In misnomer situations therefore, a court can enforce an award in favour of or against a party not expressly named in it because the effect, in substance, is in keeping with the terms of the award and satisfies the wording of section 19 of the IAA.

4. The COA should enforce the Award in this case

In this case, the COA held it should enforce the Award. Once the COA determined Hydralift and NOV to be the same legal person, the basic premise of KFELS’s case fell away. To determine whether the use of Hydralift’s name was a misnomer for NOV, the COA rejected subjective, intention based tests and instead formulated the following objective test:

“whether the name stated in the award, seen objectively against the relevant factual and legal background, is nothing more than the incorrect name of the legal person the award is in fact and in law to be enforced in favour of or against”.

Applying the above test, the COA held Hydralift’s name was a misnomer for NOV because:

a. They were the same legal person under Norwegian law;

b. Throughout the arbitration there was only one legal entity because Hydralift’s legal personality continued in NOV; and

c. Non-disclosure by NOV of the true state of affairs did not matter for the misnomer analysis.

Moreover, enforcement by NOV was not contrary to the tribunal’s intentions because the tribunal never considered whether to favour NOV or Hydralift. The tribunal, in keeping with its mandate, intended simply to issue the Award in favour of the successful party. That party was NOV under Norwegian law. The COA was simply giving effect to the tribunal’s mandate.

5. The court could correct the misnomer

The High Court had held that even if Hydralift’s name was a misnomer for NOV, it had to be corrected in the arbitration. If that was not done, the arbitration was a nullity from the start.

The COA disagreed and held that, in the case of a misnomer, the enforcing court can correct the record and the arbitration is still validly constituted. This aligns with the policy objectives of upholding the arbitral process and facilitating enforcement where possible. Denying enforcement for misnomers would be antithetical to those objectives.

6. NOV was not estopped from denying the respondent was Hydralift

The COA held that NOV was not estopped by its representation that Hydralift was the respondent because the requirement to show detrimental reliance by KFELS was not satisfied.

a. KFELS plainly thought it had a well-founded claim. Had it known of the mergers, KFELS would have applied to rectify Hydralift’s name and incurred the same costs.

b. NOV submitted to the tribunal’s jurisdiction, meaning KFELS would not have needed to constitute a new tribunal.

c. Had KFELS defended against the counterclaim on grounds that it was brought by a non-existent entity (i.e., Hydralift), NOV would have applied to rectify the name and, since Hydralift’s legal personality continued in NOV, the application would have been granted.

d. While NOV should not have concealed the fact of the mergers, it was immaterial to the arbitration.

The only possible detriment to KFELS was the costs of challenging enforcement. However, NOV had notified KFELS of the true state of affairs before KFELS commenced those proceedings. KFELS nonetheless chose to proceed.

What does this decision mean for you?

The issue of misnamed parties arises from time to time in international arbitrations. This may happen where, as in this case, companies merge or, for example, where one company becomes the successor of another (sometimes by way of statute). This decision provides helpful clarity on how the Singapore courts will approach the enforcement of awards involving misnamed parties.

Client Alert 2022-117