Singapore International Commercial Court upholds $146 million arbitral award against Reliance Infrastructure

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

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

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

Shangai Electric and Reliance Infrastructure had entered into a supply contract in relation to the power project in 2008.

Shanghai Electric also claimed that then Additional Vice-President of Reliance Infrastructure Rajesh Agrawal had signed a guarantee letter, through which Reliance Infrastructure had guaranteed the performance of certain obligations by Reliance (UK) towards Shanghai Electric. The said letter was said to contain an arbitration clause as well.

Reliance Infrastructure, however, denied having entered into such a guarantee arrangement at all. It added that in any case, Rajesh Agrawal did not have the authority to enter into any such arrangement.

Notably, 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 guarantee letter - inclusive of Reliance’s letter head - was printed in black and white.

Reliance Infrastructure said that this new information threw serious doubt on the origins of the guarantee letter.

The SIAC eventually passed its ruling against Reliance in December 2022, and awarded damages to Shanghai Electric.

Among other findings, the SIAC opined that the Reliance Infrastructure did not expressly put in issue whether the guarantee letter was forged. Therefore, it said that Reliance must be assumed to have conceded that the guarantee letter existed.

After Reliance challenged the verdict, the SICC has now upheld the arbitral award in a January 31 ruling.

Highlights of the findings in the SICC judgment

1. Reliance ought to have argued on the alleged “forgery” of the guarantee letter earlier and did not have good reason to raise this ground at a later point of time.

2. For similar reasons, the SICC rejected Reliance’s argument that the arbitral tribunal did not have jurisdiction over the matter on the ground that Rajesh Agrawal did not have any authority to execute the arbitration agreement on behalf of Reliance.

Further, the SICC was unconvinced by Reliance’s claim that it had, in fact, challenged the arbitration agreement since it challenged the validity of the guarantee letter.

“That 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…Accordingly, to put in issue that the Guarantee Letter was invalid does not impliedly put in issue that the arbitration agreement was also invalid,” the SICC said.

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

For context, Reliance had claimed that it became aware of the forgery only later, partly because Agrawal had refused to comment on the issue since he had left Reliance and joined a competitor, namely, Adani. As per Reliance, Agrawal had feared at the time that any comment on the matter would be in breach of his contractual obligations to his new employer (Adani).

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

Even so, the SICC opined that Agrawal's testimony before the Court was not convincing.

“First, if Mr Agrawal could not remember the email (concerning the guarantee letter), he could not reliably give evidence of what he meant when sending that email. Secondly, his explanation is unconvincing and does not match the words he in fact used, as described above."

By comparison, the Court found that it was more convinced by the evidence given by Shanghai Electric in support of the genuineness of the guarantee letter.

Both Reliance and Shanghai Electric had also produced handwriting experts to support their submissions with respect the authenticity or lack thereof of the guarantee letter. The SICC, however, found the findings of the handwriting expert produced by Shanghai Electric more compelling.

The SICC proceeded to dismiss Reliance Infrastructure’s application to set aside the SIAC award.

The Court also ordered the payment of costs to Shanghai Electric, although the amount of costs have not been specified yet and were left to the parties to jointly decide on within fourteen days.

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

Shanghai Electric was represented by Senior Advocate Cavinder Bull along with his team at Drew & Napier, as well as Ketan Gaur and Aayush Mitruka from Trilegal and Nicholas Emmet Graham Leslie from Fountain Court Chambers.

[Read Judgment]