Cim v Cin

• Jurisdiction: Singapore
• Judge: Philip Jeyaretnam JC
• Judgment Date: 01 April 2021
• Docket Number: Originating Summons No 1184 of 2020
• Year: 2021
• Court: High Court (Singapore)

CIM

and

CIN

[2021] SGHC 75

Philip Jeyaretnam JC

Originating Summons No 1184 of 2020

General Division of the High Court

Arbitration — Award — Recourse against award — Setting aside — Arbitration respondent expressing misunderstanding of arbitration claimant's case during arbitration hearing — Arbitration claimant remaining silent on arbitration respondent's misunderstanding — Arbitral award accepting arbitration claimant's case — Whether breach of natural justice

Arbitration — Award — Recourse against award — Setting aside — Assessment of damages in arbitral award premised on unpleaded assumption — Whether breach of natural justice

Held, dismissing the application:

(1) In an application to set aside an arbitral award on the basis that a party's right to be heard had been breached, it would not be enough that that party had not in fact foreseen the possibility of a tribunal's chain of reasoning, if a reasonable party in the same position would have done so. The court would not rescue a litigant who had failed to apprehend that an issue was alive or in play, if he should reasonably have done so: at [41] and [42].

(2) There was no basis for imposing on counsel a duty to intervene and correct opposing counsel. Counsel were not expected to intervene whenever opposing counsel seemed to misunderstand something, especially because not every expression of misunderstanding could be taken at face value. Counsel were responsible for arguing their own case, not for ensuring that the other side met their case: at [65] and [66].

(3) CIM's natural justice challenge to the Co-operation Finding was not made out. CIN's actual case had been clear in substance since its statement of reply, and was fleshed out as the arbitration proceeded. CIN's counsel's silence in the face of CIM's counsel's expressed misunderstanding was far from sufficient to alter the shape of the issues in play. It was therefore not open to CIM to claim that it could not have reasonably foreseen the Tribunal's reasoning in relation to the Co-operation Finding: at [57], [58], [63], and [73].

(4) CIM's natural justice challenge to the Calculation of Damages Finding was not made out. The Tribunal had addressed CIM's arguments in relation to this issue. While it had not simply chosen from the bases of calculation presented by CIN, it was not required to slavishly do so; it could apply its own reasoning, so long as it did not depart so far from the parties' positions that neither of them could have contemplated the result. The assumption which the Tribunal ultimately relied upon, that the parties would have agreed on evenly spaced deliveries, did not have to be pleaded, and was in any case supported by the evidence before the Tribunal: at [76] to [78].

(5) CIM's jurisdictional challenges were not elaborated upon in their own right and rested only on the material put forth on the natural justice challenges. Given the court's conclusion on the natural justice challenges, the court was satisfied that both the Co-operation Finding and the Calculation of Damages Finding were within the scope of submission to arbitration: at [74] and [80].

Case(s) referred to

China Machine New Energy Corp v Jaguar Energy Guatemala LLC [2020] 1 SLR 695 (refd)

Glaziers Engineering Pte Ltd v WCS Engineering Construction Pte Ltd [2018] 2 SLR 1311 (refd)

Government of the Republic of the Philippines v Philippine International Air Terminals Co, Inc [2007] 1 SLR(R) 278; [2007] 1 SLR 278 (refd)

JVL Agro Industries Ltd v Agritrade International Pte Ltd [2016] 4 SLR 768 (refd)

Kempinski Hotels SA v PT Prima International Development [2011] 4 SLR 633 (refd)

Mackay v Dick (1881) 6 App Cas 251 (refd)

Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86; [2007] 3 SLR 86 (folld)

Facts

CIN had contracted with CIM for the delivery of a specified quantity of clinker. When CIM failed to deliver part of the clinker, CIN brought a claim in arbitration against CIM. CIM contended in its defence that it was not obliged to deliver that part of the clinker, as conditions precedent in respect of the delivery had not been satisfied. In response to this defence, CIN's case was that CIM had through its own failures prevented the satisfaction of the conditions precedent, and that it was not entitled to rely on these failures to excuse the non-delivery.

In CIM's written opening submissions for the arbitration, CIM's counsel expressed a mistaken understanding that CIN's case was in fact that CIM had been in anticipatory breach, which CIN could accept and be excused from further performance. When CIM's counsel repeated this misconception at the arbitration hearing, CIN's counsel did not correct her.

The arbitration tribunal (the “Tribunal”) issued an award in favour of CIN, making two findings in the process. First, it accepted CIN's case that CIM could not rely on the non-fulfilment of these conditions precedent to excuse its failure to deliver (the “Co-operation Finding”). Second, it assessed the damages to which CIN was entitled on the basis that there would have been five evenly spaced shipments of clinker (rather than on the bases pleaded by CIN) (the “Calculation of Damages Finding”).

CIM filed the present application, seeking to set aside the Co-operation Finding and the Calculation of Damages Finding. CIM contended that there had been a breach of natural justice, as it could not have anticipated the reasoning adopted by the Tribunal in making the Co-operation Finding and the Calculation of Damages Finding. CIM also challenged the Co-operation Finding and the Calculation of Damages Finding on jurisdictional grounds, arguing that the findings were beyond the scope of the submission to arbitration.

Legislation referred to

Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed)

International Arbitration Act (Cap 143A, 2002 Rev Ed) s 24(b)

Sale of Goods Act 1979 (c 54) (UK) ss 51, 51(3)

Nakul Dewan SA (instructed), Loong Tse Chuan and Lim Wei Shen Mark (Allen & Gledhill LLP) for the plaintiff;

Siraj Omar SC, Allister Brendan Tan Yu Kuan, Cheng Hiu Lam LarisaandJoelle Tan (Drew & Napier LLC) for the defendant.

1 April 2021

Judgment reserved.

Philip Jeyaretnam JC:

Introduction

1 It is axiomatic that arbitrators must make their decisions only on matters submitted or argued before them. Notice of those matters must have been given to the other party. When a party is taken by surprise by the arbitrator's chain of reasoning, it raises the question of whether that party has been denied the opportunity to be heard.

2 In this case, CIN, the claimant in an arbitration, answered one aspect of the arbitration respondent CIM's defence obliquely in its statement of reply, and only responded squarely in its final reply closing submissions. Along the way, CIM's counsel in the arbitration had articulated what it thought was CIN's case, which was something different from CIN's actual case and was wholly unpleaded. She was not corrected on her thinking by CIN's counsel in the arbitration, at least not until CIN's final reply closing submissions. CIM contends that CIM's counsel did not anticipate the reasoning adopted by the arbitration tribunal (the “Tribunal”), and could not reasonably have done so. Consequently, CIM has brought this present application to set aside the portions of the Tribunal's award (the “Award”) resting on the unanticipated reasoning.

3 In these circumstances, the question is whether it was reasonable for CIM not to anticipate the Tribunal's reasoning. In considering this question, a key aspect is how the court should look at CIN's counsel's silence when CIM's counsel said what she thought were the issues in play. It is this aspect which presents some novelty in what is otherwise a clearly signposted and brightly illuminated path for the court to take in its review of an arbitration award challenged on this ground.

Background

4 The arbitration, conducted under an agreed expedited procedure, concerned a long-term contract for the supply over time of a specified quantity of clinker at a fixed price. The approximate size of shipments was agreed, as well as the total period. That period was subsequently extended. Five shipments were made and paid for, leaving almost half of the originally contracted quantity still to be delivered. There was a second contract that featured in relation to a defence that is not in issue in this challenge, and there is no need to say more about it in this judgment.

The pleadings in the arbitration

5 CIN submitted a notice of arbitration to the Singapore International Arbitration Centre (“SIAC”) under the applicable arbitration clause. In its notice of arbitration and its statement of claim (the “Statement of Claim”), CIN sought to hold CIM liable for non-delivery of the remaining contracted quantity of clinker under the first contract, claiming damages to be assessed in accordance with s 51 of the Sale of Goods Act 1979 (c 54) (UK) (the “English Sale of Goods Act”).

6 In its statement of defence (the “Statement of Defence”), CIM contended, among other defences, that it was a condition precedent that, in respect of each shipment, parties had to agree a laycan, and thereafter CIN had to nominate a vessel. As no laycans had been agreed for the balance of the clinker, nor had any vessel been nominated by CIN, CIM was not obliged to deliver.

7 CIN's primary response in its statement of reply (the “Statement of Reply”) to this part of CIM's defence was to deny that there were any conditions precedent to delivery. However, CIN's Statement of Reply then went on to add that “[i]n any event, [CIM was] relying on its own failures to agree on the shipment loading laycan”. Pleading that CIM was “evidently unwilling to proceed with a contract which price changes had made unfavourable to it”, CIN concluded that “[a]s such, without agreement on laycan [CIN] was unable to proceed with nominating the performing vessel...