Kannan Ramesh JADCFJ v CFL

• Jurisdiction: Singapore
• Judge: Kannan Ramesh JAD,Dominique Hascher IJ,Arjan Kumar Sikri IJ
• Judgment Date: 31 January 2023
• Docket Number: Originating Summonses Nos 7 and 8 of 2020 and Originating Summons No 9 of 2021
• Court: High Court (Singapore)

CFJ and another

and

CFL and another and other matters

[2023] SGHC(I) 1

Kannan Ramesh JAD, Dominique Hascher IJ and Arjan Kumar Sikri IJ

Originating Summonses Nos 7 and 8 of 2020 and Originating Summons No 9 of 2021

Singapore International Commercial Court

Arbitration — Award — Recourse against award — Setting aside — Apparent bias — Whether president of tribunal's appointment to panel of experts constituted by highest court in Ruritania raised appearance of bias — Section 24(b) International Arbitration Act (Cap 143A, 2002 Rev Ed)

Arbitration — Award — Recourse against award — Setting aside — Breach of agreed arbitral procedure — Whether there was breach of agreed arbitral procedure as result of second partial award addressing only “Deceit Claim” on “Reserves” — Article 34(2)(a)(iv) UNCITRAL Model Law on International Commercial Arbitration as appended to International Arbitration Act (Cap 143A, 2002 Rev Ed)

Arbitration — Award — Recourse against award — Setting aside — Breach of natural justice — Whether tribunal made any findings in second and third partial awards that were in breach of natural justice — Section 24(b) International Arbitration Act (Cap 143A, 2002 Rev Ed)

Arbitration — Award — Recourse against award — Setting aside — Excess of jurisdiction — Whether tribunal made any findings in second and third partial awards that were in excess of jurisdiction — Article 34(2)(a)(iii) UNCITRAL Model Law on International Commercial Arbitration as appended to International Arbitration Act (Cap 143A, 2002 Rev Ed)

Held, dismissing the applications:

(1) The President's appointment did not raise an appearance of bias to the fair-minded and informed observer as the Panel had no link to the Purchaser. The fair-minded and informed observer was not wholly uninformed and uninstructed about the law in general and would take the trouble to inform himself on all relevant facts that were capable of being known by members of the public generally. A fair-minded and informed observer would understand that the Ruritanian court (and by extension the Panel) sat distinct from the Ruritanian Government: at [63] and [64].

(2) An arbitrator did not have to disclose every single appointment to the parties. An arbitrator only needed to disclose appointments and matters which would cause the fair-minded and informed observer to conclude that there was a real possibility of a lack of impartiality. This was an objective test. Given that there was no reasonable suspicion of bias, the question of whether the President ought to have disclosed the appointment did not arise: at [74] and [75].

(3) There was no agreed arbitral procedure as asserted by the Seller. The Seller was unable to point to any agreement that the Tribunal was to deal with all the claims relating to the Five Topics in a single award. Moreover, there was also no procedural order made by the Tribunal that there would be a single award for all the claims relating to the Five Topics: at [105], [107] and [108].

(4) A tribunal did not have to adopt an either/or approach and could choose to embrace a middle path between the two parties' positions as long as it was based on the evidence before it – in such a case there was no need to consult the parties unless the tribunal's reasoning represented a dramatic departure from what had been presented by the parties. Given that it was clear on the evidence that the Tribunal had given notice to the Seller that it would adopt the interpretation of the “SEC Standards” that it eventually did, there was no breach of natural justice: at [132] and [136].

(5) An arbitrator's decision might only be considered unfair where the challenging party could show that a reasonable litigant in his shoes could not have foreseen the possibility of reasoning of the type revealed in the award. While the Purchaser did not plead or put to the Seller's witnesses that a document known as the “2012 Business Plan” was “contaminated” by the Seller's employees, the court highlighted that the rule in Browne v Dunn(1893) 6 R 67 did not apply with as much rigour in arbitration. Moreover, the Tribunal's findings were wholly consistent with the Purchaser's case and the Seller's witnesses were also cross-examined extensively on this point: at [177] and [180].

(6) There would not be a breach of natural justice if the facts showed that the tribunal misunderstood the case, misunderstood the law or chose not to deal with a point as they thought it to be unnecessary. This was a corollary of the principle that while parties were free to choose their adjudicators, they had to also accept the consequences of the choices they made. When viewed in this light, the Seller's arguments were an attack on the merits of the Tribunal's decision: at [189] to [191].

(7) The scope of the Tribunal's jurisdiction was not necessarily limited by the “pleadings”, as any reference to “pleadings” was no more than a convenient analogy adopted by common-law lawyers. A practical view had to be taken regarding the substance of the dispute being referred to arbitration. The court had to not apply an unduly narrow view of what the issues in the arbitration were. Rather, the court had to have regard to the totality of what was presented to the tribunal whether by way of evidence, submissions, pleadings or otherwise and consider whether, in the light of all that, these points were live: at [243] and [245].

(8) In considering whether there was an excess of jurisdiction, the court would ordinarily examine the scope of the parties' submission to arbitration by reference to five sources (though not all of these materials might feature in every arbitration): the parties' pleadings, the list(s) of issues, opening statements, the evidence adduced, and closing submissions at the arbitration. Ultimately, the court would accord a margin of deference to the arbitral tribunal and examine the arbitration in the round to see whether or not an issue was live: at [246].

(9) In a memorials-based system, the Purchaser's statement of claim had to necessarily be read together with the documents attached thereto, such as the presentation slides. It was apparent from the memorials that the Purchaser's claim was not framed as narrowly as the Seller suggested, and the Seller was aware that a broader case was being run. Having considered the scope of the parties' submissions, it could not be said that the Third Partial Award involved matters outside the scope of submission to arbitration such that it would constitute a “new difference” that was irrelevant to the issues requiring determination by the Tribunal: at [255], [285] and [287].

(10) Whether a breach of natural justice was made out depended on whether the aggrieved party had been given a fair opportunity to deal with an issue that had been raised in the arbitration and whether there was prejudice suffered. Those issues naturally did not arise where the issue had been properly submitted to arbitration as the factual matrix relied on for both grounds in this case were identical such that the arguments were intertwined: at [223] and [307].

Case(s) referred to

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

Almazeedi v Penner [2018] UKPC 3 (refd)

Bloomberry Resorts and Hotels Inc v Global Gaming Philippines LLC [2021] 2 SLR 1279 (folld)

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

Bolkiah v Brunei Darussalam [2007] UKPC 62 (refd)

BQP v BQQ [2018] 4 SLR 1364 (folld)

Browne v Dunn (1893) 6 R 67 (refd)

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

CAJ v CAI [2022] 1 SLR 505 (folld)

CBX v CBZ [2022] 1 SLR 47 (refd)

CDM v CDP [2021] 2 SLR 235 (folld)

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

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

Halliburton Co v Chubb Bermuda Insurance Ltd [2021] AC 1083; [2020] UKSC 48 (refd)

Phoenixfin Pte Ltd v Convexity Ltd [2022] 2 SLR 23 (folld)

Prometheus Marine Pte Ltd v King, Ann Rita [2018] 1 SLR 1 (refd)

Senda International Capital Ltd v Kiri Industries Ltd [2022] SGCA(I) 10 (refd)

Sim Yong Teng v Singapore Swimming Club [2016] 2 SLR 489 (refd)

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 (refd)

Triulzi Cesare SRL v Xinyi Group (Glass) Co Ltd [2015] 1 SLR 114 (folld)

Wong Kok Chin v Singapore Society of Accountants [1989] 2 SLR(R) 633; [1989] SLR 1129 (refd)

X SpA v Y BV 4A 386/2015 (refd)

Facts

CFJ and CFK (collectively, “the Seller”) and CFL and CFM (collectively, “the Purchaser”) were two corporations in the oil and gas industry. On 23 July 2012, the Purchaser acquired a 49% stake in one of the Seller's subsidiaries (“the Subsidiary”) by way of a share purchase agreement (the “SPA”) to which the Seller and the Purchaser were parties. Thereafter, the Purchaser alleged that the Seller had, inter alia, deceived it into investing in the Subsidiary by making several representations.

The Purchaser commenced arbitration proceedings (“the Arbitration”) against the Seller. The following claims were made:

• (a) a claim for breach of contractual warranties (“the Warranty Claim”);

• (b) a claim in the tort of deceit in relation to misrepresentations concerning five aspects of the operations of the oil and gas fields which were owned and operated by the Subsidiary: “Reserves”, “Projects”, “Production”, “Decommissioning” and “Maintenance” (collectively, “the Five Topics”) (“the Deceit Claim”); and

• (c) a contractual claim for indemnification under a “Pre-Effective Date Indemnity” (“PEDI”) clause in the SPA concerning the Reserves, Decommissioning and Maintenance (“the PEDI Claim”).

The Arbitration was heard by a three-member tribunal (the “Tribunal”). The Tribunal delivered its decision on liability in three separate partial awards. The “First Partial Award” was delivered on 15 August 2017 and dismissed the Warranty Claim. The “Second...