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.
