Case Note

• Author: Alan J S DE ROCHEFORT-REYNOLDS1 MIR (University of Melbourne), JD (University of Melbourne); MCIArb; Arbitration Associate to Dr Michael Pryles AO PBM.
• Publication year: 2022
• Published date: 01 March 2022
• Date: 01 March 2022

1 Challenging an arbitral award on the basis that the tribunal refused to hear fact witness evidence is “rarely, if ever, successful”.2 Parties have a fundamental right to be heard,3 but national legislation and arbitration rules generally give tribunals wide discretion over evidence,

including witness testimony.4 At the same time, courts are reluctant to second-guess a tribunal's procedural decisions.5 In CBS v CBP6 (“CBS”), however, the Singapore Court of Appeal upheld such a challenge, finding that an arbitrator's decision under the Rules of the Singapore Chamber of Maritime Arbitration7 (“SCMA Rules”) to prohibit a party from adducing any oral evidence was a breach of natural justice because the party did not have a “full opportunity” to present its case.8 While the court accepted that an arbitrator could limit some witness testimony in certain circumstances, it held that the arbitrator was not entitled to bar all fact witness testimony, and accordingly, the resulting award was set aside.

2 The case highlights the tension between a tribunal's power to control proceedings,9 including hearings, and a party's right to natural justice. Both are core principles of international arbitration and CBS is a useful exposition of recent Court of Appeal jurisprudence on their interplay. Ultimately, the exact boundary between the two principles will “turn on … precise facts and circumstances”.10

3 This leads to a second point. One of the “facts and circumstances” in balancing between a tribunal's power to control proceedings and a party's right to natural justice is a tribunal's power to restrict a factual witness's oral testimony, known as “witness-gating”. Witness-gating has received little prior discussion in Singapore. The International

Arbitration Act11 (“IAA”) likewise gives little guidance on the power's existence and exercise.

4 This case note considers the Court of Appeal's treatment of witness-gating and suggests that, properly understood, witness-gating is not a one-size-fits-all solution. Rather, as will be discussed later in the article, leading arbitral rules variously provide for three types of witness-gating: (a) power to exclude all witnesses; (b) power to exclude a witness; and (c) power to limit witness testimony. Some rules expressly permit one or more of these types of witness gating. In other rules, the power is implied. The specific type of witness-gating permitted by the applicable rules and how it manifests itself affects the evidence available in the arbitration. This is already a common source of conflict.12 As the type of witness-gating power allowed is central to natural justice and to the parameters of a party's opportunity to be heard, clarifying the operation of witness-gating under various rules helps reduce inefficiencies created by “due process paranoia”13 and, more generally, enhances the dispute resolution process.

I. Facts

5 The dispute in CBS originated from a sale of Australian coal. An Indian buyer (“Buyer”) entered into two sale and purchase agreements with a seller for two shipments of coal. Pursuant to the second agreement, the seller executed an accounts receivable purchase facility with a Singapore bank (“Bank”). Under this facility, the seller assigned its trade debts to the Buyer and its rights under the second agreement which provided for disputes to be resolved by way of the arbitration under the SCMA Rules.14

6 The first shipment of coal was delivered without difficulty. When the second shipment was made, the Buyer accepted a bill of exchange drawn by the seller but did not make payment to the Bank citing short delivery and a declining market. Eventually, in December 2015, representatives of the Buyer and the seller met to discuss the owed moneys (“December Meeting”) where, the Buyer said, they orally agreed to a global settlement of the dispute in exchange for a lower price per tonne of coal. That the meeting occurred was not disputed but the seller denied that any agreement was reached.15

7 Payment was still not made, and the Bank commenced arbitration proceedings against the Buyer in Singapore before a sole arbitrator under the SCMA Rules. Shortly before the Buyer filed its defence,16 the arbitrator asked the parties to agree on the necessity of an oral hearing in light of r 28.1 of the SCMA Rules which provides:

Unless the parties have agreed on a documents-only arbitration or that no hearing should be held, the Tribunal shall hold a hearing for the presentation of evidence by witnesses, including expert witnesses, or for oral submissions. [emphasis added]

8 The Bank said that the dispute concerned “contractual interpretation” alone and that the arbitration should be documents-only or, alternatively, a hearing should be held for oral submissions alone.17 In contrast, the Buyer said a hearing for taking oral evidence was necessary because the cornerstone of its defence was the oral agreement purportedly made at the December Meeting. Witnesses had “to be examined” on this point.18 The Buyer did not file any witness statements with its defence but did list seven witnesses whom it intended to call, six of whom were present at the meeting. Just three of the witnesses were under its employ or control.19

9 The arbitrator directed the Buyer to provide detailed statements from the witnesses it intended to call before he decided whether an oral hearing was necessary.20 The Buyer refused. It said that r 28.1 of the SCMA Rules entitled it to call witnesses because the parties had not agreed to

documents-only arbitration. The arbitrator repeated the request some weeks later, adding that if the witness statements were not provided, the Buyer would be taken to have waived “any right to submit witness” testimony at an oral hearing.21 The Buyer repeated its position.

10 The arbitrator then ordered a hearing for oral submissions only pursuant to r 28.1 of the SMCA Rules. Pursuant to the same rule, no witnesses would be called because the Buyer “had ‘failed to provide witness statements or any evidence of the substantive value of presenting witnesses’”.22 Central to the arbitrator's order was a reading of r 28.1 in which a hearing for the presentation of witness evidence was an alternative to a hearing for oral submissions.

11 The Buyer did not participate in the hearing.23 The arbitrator then rendered a final award in favour of the Bank, including finding that an agreement for a lower price had not been made at the December Meeting.

II. Decision below: CBP v CBS [2020] SGHC 23

12 Seeking to set aside the award, the Buyer's primary claim before the Singapore High Court was that the arbitrator's prohibition on oral testimony breached the rules of natural justice under s 24(b) of the IAA and Art 34(2)(a)(ii) of the UNCITRAL Model Law (“Model Law”) as enacted in Singapore.24 This encompassed its claim that it had been denied the right to be heard.25 It was uncontroversial that an award could be set aside where an identified rule of natural justice was breached, the breach affected the award and the breach prejudiced a party's rights.26 According to the Buyer, the arbitrator lacked discretion to limit the hearing to oral submissions and the prohibition on fact witness testimony breached the rules of natural justice. In turn, the breach had prejudiced the Buyer's rights.

13 Ang Cheng Hock J agreed. Turning first to r 28.1 of the SCMA Rules, a plain reading of the provision made clear that without the parties'

agreement to documents-only arbitration, an oral hearing must be held.27 It was not disputed that there was no such agreement.28 Therefore, the central dispute was whether, as the Bank said, the arbitrator could direct that an oral hearing be held for oral submissions or for taking witness testimony, or if the Buyer was correct that a hearing was to be for making submissions and taking evidence. In Ang J's view, reading r 28.1 disjunctively was inconsistent with the provision's purpose, commentary accompanying the SCMA Rules,29 and surrounding provisions.30 In particular, r 30.5 of the SCMA Rules allows witnesses to submit written witness statements and specifically envisions those witnesses leading oral evidence or being cross-examined at a hearing. Thus, a submissions-only hearing could only occur where the parties had decided not to lead oral evidence and forgo cross-examination. As such, r 28.1 did not grant “express” witness-gating powers; any power to limit or exclude witness testimony must come from another source.31

14 To this point, the Bank submitted that rr 25.1 and 25.2 of the SCMA Rules — which give the tribunal the “widest discretion … allowed by the [IAA]” in conducting the proceedings “to ensure the just, expeditious, economical and final determination of the dispute” — empowered the arbitrator to gate all the Buyer's witnesses.32 While his Honour did not finally decide whether the rule empowered the arbitrator to gate witnesses,33 he had “significant doubt” that this rule allowed an arbitrator to “deny the calling of any, let alone all, of the witnesses”.34 In Ang J's view, the “fundamental utility” of witness-gating “is to prevent unnecessary delay”.35 However, any such power was subject to requirements of natural justice; efficiency on its own did not trump the need to ensure a just determination of the dispute.36 This meant that while a tribunal could impose reasonable limits on witness testimony, “witnesses ought not to be rejected on the basis of efficiency or savings of costs” unless a tribunal has “a substantive basis to conclude that all the witnesses sought to be presented are irrelevant or superfluous”.37

15 As oral evidence of the December Meeting was clearly fundamental to the Buyer's defence, shutting out all witness testimony denied the Buyer an adequate opportunity to be heard. This breach of natural justice was directly connected to the final award in which the arbitrator entirely rejected the Buyer's...