Singapore Court Upholds $146 Million Arbitral Award Against Reliance Infrastructure; Directs It To Pay Shanghai Electric Group

Singapore Court Upholds $146 Million Arbitral Award Against Reliance Infrastructure; Directs It To Pay Shanghai Electric Group

The Singapore International Commercial Court (SICC) has upheld an arbitral award directing Anil Ambani of Reliance Infrastructure Limited to pay $146 million in dues and damages to a Chinese company, Shanghai Electric Group.

The judgment was delivered on 31 January by Philip Jeyaretnam, Sir Vivian Ramsey, and Anselmo Reyes.

The Singapore International Arbitration Centre (SIAC) had passed the award in 2022 in connection with a dispute concerning the Sasan Power Project.

In 2008, Shangai Electric and Reliance Infrastructure had entered a supply contract related to the power project.

Shanghai Electric claimed that then Additional Vice-President of Reliance Infrastructure Rajesh Agrawal had signed a guaranteed letter. This meant Reliance Infrastructure guaranteed the performance of certain obligations by Reliance (UK) towards Shanghai Electric. The company claimed that the letter contained an arbitration clause.

However, Reliance denied having entered a guarantee arrangement. It added that Agrawal had no authority to enter such an arrangement.

Even before the arbitral award was passed, the dispute snowballed into allegations by Reliance that the signatures on the guarantee letter cited by Shanghai Electric were forged.

The allegation was raised after Shanghai Electric, in response to a query by the arbitral tribunal, clarified via an email that the letter, inclusive of Reliance’s letterhead, was printed in black and white.

It was stated by Reliance Infrastructure that the new information raised serious doubt on the origins of the letter.

Eventually, in December 2022, the SIAC passed its ruling against Reliance and Shanghai Electric was awarded damages.

The SICC, apart from other findings, held that Reliance did not express whether the letter was forged. Therefore, it must have conceded its existence.

In a 31 January ruling, after Reliance challenged the verdict, the SICC upheld the arbitral award.

Highlights of the findings in the judgment:

• Reliance should have argued on the alleged ‘forgery’ of the guarantee letter earlier. It had no reason to raise the issue later.

• The SICC rejected Reliance’s argument that the arbitral tribunal did not have jurisdiction over the matter because Rajesh Agarwal did not have the authority to execute the arbitration agreement on behalf of Reliance.

• The SICC was unconvinced by Reliance’s claim that it had challenged the arbitration agreement since it challenged the validity of the guarantee letter. (The SICC stated, “The submission is squarely against the principle of separability. An agreement to arbitrate is a separate contract that survives the destruction or rescission of the underlying contract in which it is contained. Stating that the guarantee letter was invalid, does not mean that the arbitration agreement was also invalid.”

• The SICC was also not persuaded by the evidence given by Reliance in support of its claim that the guarantee letter was forged.

Reliance had claimed that it became aware of the forgery only later. That was because Agarwal refused to comment on the issue since he had left Reliance and joined a competitor company, Adani. As per Reliance, Agarwal feared that any comment on the matter would be in breach of his contractual obligations to his new employer.

It also submitted that in 2023, only after the arbitral award was passed and published, Agarwal spoke to Reliance and claimed that he had not signed the guarantee letter.

However, the SICC maintained that Agarwal’s testimony before the Court was not convincing. It stated, “If Agrawal could not remember the email (concerning the guarantee letter), he could not reliably give evidence of what he meant when sending that email. Also, his explanation is unconvincing and does not match his words.”

The Court was convinced by the evidence provided by Shanghai Electric in support of the genuineness of the guarantee letter.

Both Reliance and Shanghai Electric had produced handwriting experts to support their submissions on the authenticity or lack of the guarantee letter.

The SICC noted the findings of Shanghai Electric’s handwriting expert more compelling. It, therefore, dismissed the application of Reliance to set aside the SIAC award. The Court ordered Reliance to pay the costs to Shanghai Electric. The amount though was not specified, it was left to the parties to decide within 14 days.

Reliance Infrastructure was represented by senior advocate and King's Counsel Harish Salve (Blackstone Chambers) and Providence Law Asia, LLC.

Senior advocate Cavinder Bull along with his team at Drew & Napier appeared for Shanghai Electric. They were supported by advocates Ketan Gaur and Aayush Mitruka from Trilegal and Nicholas Emmet Graham Leslie from Fountain Court Chambers.