Czt v Czu

• Jurisdiction: Singapore
• Judge: Chua Lee Ming J,Dominique Hascher IJ,Sir Jeremy Cooke IJ
• Judgment Date: 27 November 2023
• Docket Number: Originating Summons No 1 of 2023
• Court: High Court (Singapore)

CZT

and

CZU

[2023] SGHC(I) 22

Chua Lee Ming J, Dominique Hascher IJ and Sir Jeremy Cooke IJ

Originating Summons No 1 of 2023

Singapore International Commercial Court

Arbitration — Award — Recourse against award — Setting aside — Whether arbitral procedure was not in accordance with agreement of parties — Whether ex parte calls by one of arbitrators to parties' solicitors was in breach of agreed arbitral procedure — Article 34(2)(a)(iv) UNCITRAL Model Law on International Commercial Arbitration

Arbitration — Award — Recourse against award — Setting aside — Whether majority acted in breach of natural justice — Whether majority failed to consider critical arguments made by plaintiff in arbitration — Whether majority reached conclusions in final award based on facts or matters that were not argued by parties during arbitration — Whether there was reasonable suspicion of bias on part of majority — Section 24(b) International Arbitration Act 1994 (2020 Rev Ed) — Article 34(2)(a)(ii) UNCITRAL Model Law on International Commercial Arbitration

Arbitration — Award — Recourse against award — Setting aside — Whether majority exceeded terms or scope of submission to arbitration — Whether majority reached conclusions in final award based on facts or matters that were not argued by parties during arbitration — Article 34(2)(a)(iii) UNCITRAL Model Law on International Commercial Arbitration

Held, dismissing the application:

(1) Pursuant to s 24(b) of the IAA, the court might set aside an arbitral award if there was a breach of natural justice. A party challenging an arbitration award as having contravened the rules of natural justice had to establish: (a) which rule of natural justice was breached; (b) how it was breached; (c) in what way the breach was connected to the making of the award; and (d) how the breach prejudiced its rights: at [27] and [28].

(2) The failure by an arbitral tribunal to address an issue submitted to it for decision could constitute a breach of the fair hearing rule: at [31].

(3) A breach of the fair hearing rule could also arise from the tribunal's chain of reasoning. To comply with the fair hearing rule, the tribunal's chain of reasoning had to be: (a) one which the parties had reasonable notice that the tribunal could adopt; and (b) one which had a sufficient nexus to the parties' arguments. A party had reasonable notice of a particular chain of reasoning (and of the issues forming the links in that chain) if: (a) it arose from the parties' pleadings; (b) it arose by reasonable implication from their pleadings; (c) it was unpleaded but arose in some other way in the arbitration and was reasonably brought to the party's actual notice; or (d) it flowed reasonably from the arguments actually advanced by either party or was related to those arguments: at [33].

(4) An arbitral tribunal had to ensure that the essential issues were dealt with; it did not need to deal with each point made by a party and in determining the essential issue, the tribunal should not have to deal with every argument canvassed under each of the essential issues: at [35].

(5) In the present case, the fact that the Majority did not deal specifically with an argument raised was insufficient reason to set aside the Final Award. The Majority had dealt with the essential issues in the Arbitration, and it did not have to deal with every point made by the plaintiff in support of its case. Even if there was a breach of the fair hearing rule, there was no causal nexus between the breach and the Final Award, and the breach did not prejudice the plaintiff's rights: at [42], [43], [53] and [54].

(6) The court disagreed that the Majority's finding that one of the issues was “uncontentious” meant that the Majority had ignored the plaintiff's argument on that issue. The word “uncontentious” did not mean “undisputed” and the Majority was simply expressing its view that its finding should not give rise to argument: at [48] to [50].

(7) Where an arbitral tribunal made a decision based on matters that were not argued by the parties or based on arguments and positions that were wrongly attributed to the parties, the tribunal would have breached natural justice since the parties did not have the opportunity to be heard on these matters: at [56].

(8) Pursuant to Art 34(2)(a)(iii) of the Model Law, the court might set aside an arbitral award if the award dealt with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contained decisions on matters beyond the scope of the submission to arbitration. Article 34(2)(a)(iii) concerned the issue that was determined by a tribunal, which was different from the arguments of the parties on the issue. Thus, where an issue that was determined by a tribunal was within the scope of submission to arbitration, a complaint that the tribunal's chain of reasoning involved arguments that were not raised by the parties would be more appropriately framed as a complaint of breach of natural justice: at [58] to [60].

(9) A two-stage inquiry was followed in assessing whether an arbitral award should be set aside under Art 34(2)(a)(iii) for an excess of jurisdiction: (a) first, the court had to identify what matters were within the scope of submission to the arbitral tribunal; and (b) second, whether the arbitral award involved such matters, or whether it involved a new difference outside the scope of the submission to arbitration and accordingly would have been irrelevant to the issues requiring determination: at [61].

(10) In the present case, the overarching issue which the Majority determined was within the scope of the submission to arbitration. The plaintiff's complaints about the Majority's chain of reasoning would be more appropriately framed as complaints of breach of natural justice. However, none of the points made by the Majority went outside the range that could be expected when construing contractual provisions and comparing the terms of related agreements. The parties were on notice as to comparisons to be made between the wording of one contract vis-à-vis another. Even where the points were not pleaded or argued, the plaintiff failed to show that the Majority's findings had prejudiced its rights: at [64], [82] and [85].

(11) One of the pillars of natural justice was that the adjudicator had to not be biased. Bias might be actual or apparent. The test for apparent bias was whether there were circumstances that would give rise to a reasonable suspicion or apprehension of bias in the fair-minded and informed observer; the test was an objective one: at [88] and [89].

(12) A careful reading of the Final Award and the Dissent did not give rise to a reasonable suspicion of bias on the part of the Majority. The plaintiff's arguments largely relied on the arguments that it had made in connection with its unsuccessful submissions that the Majority failed to consider critical arguments and that the Majority based its conclusions on extraneous matters. As for the plaintiff's reliance on the Dissent, the bare allegation by the Minority was hardly sufficient basis for a finding of apparent bias: at [91] to [100].

(13) The ex parte calls by one of the arbitrators in the Majority to the parties' solicitors did not give rise to a reasonable suspicion of bias. They evidenced unhappiness with the Minority's dissemination of the Dissent, contrary to the ICC's position that the Dissent should not form part of the Final Award; further, they took place after the Final Award had been issued. In addition, there was no breach of the agreed arbitral procedure: at [106] and [107].

Case(s) referred to

AKN v ALC [2015] 3 SLR 488 (folld)

BOI v BOJ [2018] 2 SLR 1156 (folld)

BTN v BTP [2022] 4 SLR 683 (folld)

BZW v BZV [2022] 1 SLR 1080 (folld)

CFJ v CFL [2023] 3 SLR 1 (folld)

CJA v CIZ [2022] 2 SLR 557 (folld)

CKH v CKG [2022] 2 SLR 1 (folld)

Coal & Oil Co LLC v GHCL Ltd [2015] 3 SLR 154 (folld)

CYE v CYF [2023] SGHC 275 (folld)

CZT v CZU [2023] 5 SLR 241 (refd)

Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd [2010] SGHC 80 (folld)

L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2013] 1 SLR 125 (folld)

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

TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972 (folld)

Facts

In arbitration proceedings commenced by the defendant against the plaintiff (the “Arbitration”), the arbitral tribunal (the “Tribunal”), by a majority (the “Majority”), issued an award against the plaintiff (the “Final Award”).

The plaintiff applied to set aside the Final Award pursuant to:

• (a) section 24(b) of the International Arbitration Act 1994 (2020 Rev Ed) (“IAA”) and/or Art 34(2)(a)(ii) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”) (ie, the Majority acted in breach of natural justice);

• (b) further or in the alternative, Art 34(2)(a)(ii) of the Model Law (ie, the Majority exceeded the terms or scope of the submission to arbitration);

• (c) further or in the alternative, Art 34(2)(a)(iv) of the Model Law (ie, the arbitral procedure was not in accordance with the agreement of the parties); and

• (d) further or in the alternative, Art 34(2)(b)(ii) of the Model Law (ie, the award was in conflict with the public policy of Singapore). In its submissions before the court, the plaintiff did not rely on (d).

The plaintiff's case before the court was as follows:

• (a) The Majority failed to consider critical arguments made by the plaintiff in the Arbitration.

• (b) The Majority reached conclusions in the Final Award based on facts or matters that were not argued by the parties during the Arbitration and wrongly attributed arguments and positions to the parties that were not supported by the Arbitration record.

• (c) There was a reasonable suspicion of bias on the part of the Majority as...