Abstract
In the case of Wang Bin v Zhong Sihui, Zhong Sihui (the “defendant”) sought to set aside an enforcement order related to an arbitral award issued by the Shenzhen International Arbitration Court (“SCIA”) on the basis of ineffective notice having been received in the arbitration proceedings. Specifically, the defendant complained that the notice she had received had been sent via SMS to a number registered under her husband’s name. Rejecting this argument, the court found that the defendant had actual notice of the arbitration, citing inconsistencies in her testimony and supporting evidence.
The court upheld the use of SMS as a valid method for serving arbitration notices under the SCIA rules, recognizing the evolving nature of electronic communications in legal processes. This development represents significant progress in adopting pragmatic and practical solutions for effective dispute resolution in international arbitration.
Case Background
The decision arose from the defendant’s application to set aside an enforcement order arising out of an arbitral award issued by the SCIA tribunal. The tribunal had found that the defendant, jointly with her husband, Mr. Lin, had entered into a loan agreement with the claimant. The loan had fallen due, and the tribunal issued an award ordering that Mr. Lin and the defendant repay the principal amount of RMB 2,820,000 plus interest of RMB 341,200 (as at 19 August 2020), and costs of RMB 137,940 (the “Award”). [i]
Prior to the commencement of the arbitration proceedings, the SCIA had sent the arbitration notice to the defendant via SMS at a mobile phone number (the “4732 Number”) written on the Loan Agreement and on a copy of the defendant’s passport the defendant had signed. The defendant claimed not to have seen the notice, and did not attend the arbitral hearing. The arbitral tribunal proceeded with the hearing in the defendant’s absence, eventually issuing the Award.
The defendant sought to set aside the enforcement of the Award on the basis that (a) she did not have proper notice of arbitration proceedings; and (b) there was material non-disclosure of key facts in the claimant’s application for enforcement.
Key Points of the Judgment
The Court’s key findings are set out below.
1 Whether the defendant had proper notice of the Arbitration?
1.1 SMS is a permitted method for serving arbitration notices under the SCIA Rules.
1.1.1 Art. 6 (2) of the SCIA Rules was held to include SMS as a form of “electronic data interchange that can provide a record of delivery”. Specifically, Art. 6 (2) provides that “Unless otherwise agreed by the parties, all written documents, notices and materials in relation to the arbitration proceedings may be delivered in person or sent by mail, facsimile, electronic mail, or any other means of electronic data interchange that can provide a record of delivery, or by any other means the SCIA considers appropriate.” (emphasis added).
1.1.2 Wong Li Kok Alex JC also cited the Singapore Supreme Court Practice Directions 2021 to illustrate that other electronic means of service are increasingly permitted. Wong JC went on to comment that as commerce has increasingly moved from communications by postal mail to electronic methods, communications beyond email should also be considered appropriate methods of service. This would not only reflect a growing trend in other jurisdictions of a wider range of methods of service being accepted, it would also be more business-friendly in reflecting the reality of how commercial parties correspond with each other through various messaging apps and platforms.
1.2 What constitutes proper notice?
The judgment cited the precedent case of DEM v DEL[ii] to illustrate that where actual notice of a request for arbitration or arbitration notice can be established, any complaint as to the lack of proper notice will be precluded as a basis for setting aside the Award or denying enforcement.
A finding of actual notice requires evidence that the respondent to the arbitration has received notice and is actually aware of the arbitration in question. Mere evidence of the act of delivery will not suffice.
1.3 The defendant had actually received notice of the Arbitration.
1.3.1 The 4732 Number was a number that had been provided to the claimant for the purposes of contacting the defendant, as it is derived from the loan agreement and the copy of the defendant's passport attached to the said agreement. This indicated that the number was provided to the claimant for contact with the defendant.
1.3.2 The SCIA logs showed that the Arbitration documents were all sent and
received by the 4732 Number.
1.3.3 The 4732 Number was in the defendant’s ‘custody and control’, notwithstanding the fact that it was registered to Mr. Lin. The defendant’s own affidavit had shown that the 4732 Number was her telephone number in her Visitor Registration Form with the Chinese Authorities.
1.4 Evidence given on behalf of the defendant was found to be inconsistent and contradictory.
1.4.1 The defendant claimed to be unaware of the arbitration notice, but alleged that she had relied on Mr. Lin to provide context and content to her assertions.
1.4.2 The defendant's claim that the relevant phone was used by her child or maid and that she had therefore not read the text messages herself was also not accepted. The judge pointed out that if the phone were used by a young child or a maid, it was reasonable that the defendant as a parent would check the phone frequently to ensure that the child was not exposed to inappropriate calls or messages. The Judge further noted that Mr. Lin had no reason to leave the 4732 number in Singapore for his children, knowing that he had left the very same number for creditors to contact.
1.4.3 Mr. Lin's claim that he did not want the defendant to be disturbed was also inconsistent with his conduct in providing the 4732 number on the copy of the passport the defendant gave to the claimant and leaving the 4732 number phone with the defendant.
1.4.4 Even though Mr. Lin was not aware that the SCIA had used the 4732 number to contact the defendant during the arbitral process, Mr. Lin did not challenge the award at that time. He also had not clarified how the tribunal had come to the conclusion that the defendant had been lawfully served. Instead, he only raised this point at the enforcement stage. Allegations as to a failure of service raised only two and a half years after the Arbitration were simply implausible.
2 Whether the claimant fulfilled his obligation of full and frank disclosure in an application for enforcement?
2.1 Application of enforcing the arbitral award requires full and frank disclosure under Singaporean law. An applicant must disclose to the court all matters within its knowledge even if they are prejudicial to its case.
2.2 Although the duty of full and frank disclosure should not be taken slightly in this case, there was no material non-disclosure by the claimant. The defendant focused on the claimant's affidavit having alleged that the defendant and others “all participated in the arbitration proceeding”. The defendant asserted that this statement was misleading. The court finds that the arbitration decision annexed to the claimant’s affidavit, and contained the tribunal’s reasoning as to the defendant’s failure to appear at the evidentiary hearing. The Court thus found that the claimant had no deliberate deceptive intent, but was merely ambiguous in expression. This did not amount to a failure of full and frank disclosure.
Comments
In recent arbitration practice, service by email and other electronic means has increasingly become permissible.
1 The acceptance of service by electronic means other than email is provided for in the arbitration rules of many arbitral institutions in addition to the SCIA.
1.1 The UNCITRAL Arbitration Rules set out that "A notice, including a notification, communication or proposal, may be transmitted by any means of communication that provides or allows for a record of its transmission." It further specifically makes reference to service via electronic means such as emails and facsimiles. [iii]
1.2 The CIETAC arbitration rules stipulate that "All documents, notices and materials in relation to the arbitration (“arbitration documents”) may be delivered by electronic means.···Electronic means of delivery include service of arbitration documents by electronic means to the email addresses or other electronic addresses agreed/designated by the parties, or via the digitalized information exchange system of CIETAC or other information system easily accessible to all parties, etc.". [iv]
1.3 The SIAC arbitration rules provide that, "Any such notice, communication or proposal may be transmitted by any form of electronic communication (including electronic mail and facsimile)." [v]
2 This case is significant for its support of electronic service methods, including SMS, in international arbitration. The judgment emphasizes the importance of clear communication in contracts and the need for parties to ensure the accuracy and availability of contact information for effective dispute resolution.
2.1 In determining what phone number documents should be served at, the elements to be taken into account include, but are not limited to, a) the contact number stated in the relevant agreement; b) the contact number written on the photocopies of IDs or passports of relevant person; c) other evidence proving that the number was used by the designated person, such as numbers entered into registration forms for official documents.
2.2 The phone number being registered to someone else is not determinative. So long as it can be proved that the phone was, at the relevant times, under the custody and control of the designated person, proper service (by means of actual notice) can still be effected.
2.3 It is of pivotal importance for the arbitral institution to keep detailed records of electronic service records as those records can be used as proof of the relevant party’s knowledge of the electronic service in subsequent applications for recognition and enforcement of any award.
With the rapid development of technology, the delivery of arbitration documents has also developed in a clearer and more efficient direction. This case is significant for its support of electronic service methods, including SMS, in international arbitration.
To ensure the efficacy of dispute resolution mechanisms, it is prudent for parties engaged in business transactions to meticulously delineate all pertinent contact information within the contractual framework. Furthermore, it is imperative to undertake diligent verification of the accuracy and availability of such information as provided by the counterparty. This due diligence will serve to fortify the legitimacy of communication methods, including but not limited to SMS and other electronic means, which may become pivotal in the context of dispute resolution. By adhering to these practices, or agreeing contractually-stipulated means of service, parties can better ensure that the courts and arbitral tribunals are equipped with reliable channels for the service of notices, thereby upholding procedural integrity and ensuring the effectiveness of the dispute resolution process.
[i] [2024] SGHC 189.
[ii] [2024] SGHC 80.
[iii] Article 2, Paragraph 1. of the UNCITRAL Arbitration Rules (2021) .
[iv] Article 8, Paragraph 1. of the CIETAC Arbitration Rules (2024).
[v] Paragraph 2.2 of the SIAC Arbitration Rules 2016.