Gumusut-Kakap Semi-Floating Production System (Labuan) Ltd. v Sabah Shell Petroleum Co. Ltd.

Appellant(s): Gumusut-Kakap Semi-Floating Production System (Labuan) Limited

Respondent(s): Sabah Shell Petroleum Company Limited

• YA Dato' Che Mohd Ruzima Bin Ghazali
• YA Datuk Wong Kian Kheong
• YA Tuan Ong Chee Kwan

• The appellant and respondent entered into a contract for a Semi-Floating Production System, which subsequently led to arbitral proceedings initiated by the appellant for variation works and a counterclaim by the respondent for rectification costs.
• The arbitral tribunal issued an award largely in favour of the respondent, ordering the appellant to pay over USD324 million, which the appellant then sought to set aside in the High Court.
• The High Court dismissed the appellant's application to set aside the arbitral award and refused to set aside an ex parte enforcement order obtained by the respondent, prompting the appellant to file two appeals before the Court of Appeal.

• Whether the arbitral tribunal exceeded its mandate or dealt with matters beyond the scope of submission to arbitration by awarding a sum against the appellant that exceeded a contractual limitation of liability.
• Whether the High Court erred in not exercising its discretionary power under ss 37(1)(a)(iv), (v), (3) and 39(1)(a)(iv), (v), (3) of the Arbitration Act 2005 (AA) to sever the arbitral award.
• How the "terms of the submission to arbitration" and "scope of the submission to arbitration" should be ascertained, particularly in relation to a contractual limitation of liability clause.

• The Court of Appeal, by majority, allowed the appellant's appeals, finding that the arbitral tribunal had exceeded its mandate by failing to apply the express contractual limitation of liability.
• The Court held that the "terms of the submission to arbitration" and "scope of the submission to arbitration" included the contractual limitation of liability, as it was pleaded by the appellant in its defence to counterclaim and disputed by the respondent.
• Exercising its discretion under ss 37(3) and 39(3) AA, the Court severed the award, limiting the appellant's total liability to the respondent to USD200,000,000.00, with pre-Award and post-Award interest adjusted accordingly.