Triulzi Cesare SRL v Xinyi Group (Glass) Company Ltd

• Jurisdiction: Singapore
• Judgment Date: 30 October 2014
• Date: 30 October 2014
• Docket Number: Originating Summons No 1114 of 2014
• Court: High Court (Singapore)

Triulzi Cesare SRL

Plaintiff

and

Xinyi Group (Glass) Co Ltd

Defendant

[2014] SGHC 220

Belinda Ang Saw Ean J

Originating Summons No 1114 of 2014

High Court

Arbitration—Arbitral tribunal—Powers—Case management powers—Whether court should intervene in case management decisions by arbitral tribunal

Arbitration—Award—Final award—Recourse against award—Setting aside—Whether applicant afforded reasonable opportunity to be heard in respect of expert evidence—Article 34 (2) (a) (ii) UNCITRAL Model Law on International Commercial Arbitration (set out in First Schedule, International Arbitration Act (Cap 143 A, 2002 Rev Ed)) —Section 24 (b) International Arbitration Act (Cap 143 A, 2002 Rev Ed)

Arbitration—Award—Final award—Recourse against award—Setting aside—Whether award could be set aside for breach of parties' agreed arbitral procedure—Article 34 (2) (a) (iv) UNCITRAL Model Law on International Commercial Arbitration

Arbitration—Award—Final award—Recourse against award—Setting aside—Whether award could be set aside for not being in accordance with Article 18 UNCITRAL Model Law on International Commercial Arbitration—Article 18 UNCITRAL Model Law on International Commercial Arbitration

Arbitration—Award—Final award—Recourse against award—Setting aside—Whether non-application of international convention as applicable law not in accordance with public policy of Singapore—Article 34 (2) (b) (ii) UNCITRAL Model Law on International Commercial Arbitration

The plaintiff and defendant had entered into three contracts for the purchase and installation of washing machines. A dispute subsequently arose and parties agreed to commence arbitration proceedings. The arbitration took place before the tribunal (the ‘Tribunal’). Parties adopted the International Chamber of Commerce Rules of Arbitration 2012 (‘ICC Rules 2012’) and the International Bar Association Rules on the Taking of Evidence in International Arbitration (‘the IBA Rules’). A procedural timetable issued by the Tribunal provided for a ‘Filing of Witness Statements’ by 25 March 2013, which was subsequently changed to 1 April 2013, and hearing dates fixed for 22 to 25 April 2013. The plaintiff later objected to the defendant filing an expert witness statement on 1 April 2013 on the basis that there was an agreement to dispense with expert evidence. The plaintiff asked for the expert statement to be excluded and in the alternative for it to be allowed to file one too. On 5 April 2013, the Tribunal directed that the plaintiff file a report by 15 April 2013 and admitted the defendant's report.

On 12 April 2013 the plaintiff complained that it had insufficient time. On 16 April 2013 the Tribunal gave parties further directions and stated that the hearing would not be vacated. No expert report was filed by the plaintiff any time before the evidentiary hearing and the hearing proceeded as tabled. On 25 April 2013, the plaintiff's counsel applied to the Tribunal to adduce an expert report. The Tribunal rejected the application and the hearing proceeded without admitting the report. The award was issued and dated 12 August 2013 (the ‘Award’).

In its application to set aside the Award, the plaintiff argued that the Tribunal's conduct of the arbitral proceedings caused it prejudice. First, the Tribunal had admitted the defendant's expert witness statement in breach of the parties' agreed arbitral procedure, thereby breaching Art 34 (2) (a) (iv) of the UNCITRAL Model Law on International Commercial Arbitration (‘the Model Law’) (‘Issue 1’). In the absence of a procedural agreement, the Award could be set aside for not being in accordance with Art 18 of the Model Law (‘Issue 1 A’). Second, the plaintiff was not afforded a reasonable opportunity to be heard in respect of expert evidence, in breach of Art 34 (2) (a) (ii) of the Model Law and s 24 (b) of the International Arbitration Act (Cap 143 A, 2002 Rev Ed) (‘the IAA’) (‘Issue 2’). Third, that the decision of the Tribunal not to apply the United Nations Convention on the International Sale of Goods (‘the CISG’) as the applicable law of the three contracts did not accord with the public policy of Singapore (‘Issue 3’).

Held, dismissing the application to set aside the award:

(1) Article 34 (2) (a) (iv) of the Model Law was not engaged if the non-observance of either an agreed procedure of Art 19 (1) or the minimum procedural requirements of Art 18 was not due to circumstances attributable to the arbitral tribunal but was derived from the applicant's own doing: at [51] .

(2) Article 34 (2) (a) (iv) was also not engaged if the challenge to the award was against the arbitral tribunal's procedural orders or directions which fell within the exclusive domain of the arbitral tribunal: at [52] .

(3) Not all technical or minor breaches would invariably result in an award being set aside. Most supervising courts inquired into the materiality of the procedural requirements that was not complied with and the nature of the departures from the parties' agreed arbitral procedures. Even so, prejudice or materiality of a breach was not expressly stipulated under Art 34 (2) (a) (iv) of the Model Law and should be understood as a factor that a court would consider in the exercise of its discretionary power to set aside awards under Art 34 (2): at [54] , [60] , [64] and [66] .

(4) The supervising court would also be wary of any attempts by a party to repackage or re-characterise its original case and arguments that were previously advanced in the arbitration for the purpose of challenging the award: at [67] .

(5) In respect of Issue 1, there was no procedural agreement to exclude expert witness statements. Also, the procedural timetable here was established by the Tribunal and not by the parties. The Tribunal's procedural timetable was not ‘an agreed procedure’ between parties for the purposes of a setting-aside application under Art 34 (2) (a) (iv) of the Model Law: at [84] , [85] and [88] .

(6) If there was a procedural agreement as alleged, the alleged prejudice that eventuated as a result of the breach had to have had a causal connection with the admission of the defendant's expert report. This did not involve an inquiry into the circumstances where the plaintiff was allowed to adduce its own expert evidence. In this case, the defendant's expert report did not affect the Tribunal's conclusions: at [98] , [104] and [105] .

(7) In respect of Issue 1 A, the purpose of Art 18 is to protect a party from the arbitral tribunal's conduct. In this case, the non-filing of the plaintiff's expert evidence was entirely its own doing. The evidence in this case pointed, at best, to a misunderstanding of the scope of the direction on the ‘Filing of Witness Statements’ or some other mistake on the plaintiff's part: at [106] .

(8) The plaintiff could not complain about the ten-day extension afforded to it by the Tribunal to adduce expert evidence. The Tribunal's decision to extend time by another ten days for the plaintiff to file its expert witness statement was made after taking into account parties' arguments and a myriad of factors including the arbitral tribunal's obligation to conduct the arbitration fairly and expeditiously. Furthermore, the plaintiff omitted to disclose the full extent of its need for its expert: at [111] .

(9) In the context of Art 18, ‘equality’ had to be interpreted reasonably in regulating the procedural aspects of the arbitration and did not require that the arbitral tribunal ensure that both parties were treated identically. The amount of time to be afforded to a party could not be based solely on the amount of time afforded to the other party. In the present context it could not be said that the plaintiff had been treated unequally: at [112] , [114] , [115] , [116] .

(10) In respect of Issue 2, there is a distinction between a challenge against the procedural orders and directions made in the course of the arbitral proceedings and a challenge to the making of the Award. The court had to be persuaded that the Tribunal's procedural decisions, albeit a matter of case management, amounted to a breach of natural justice: at [118] .

(11) In the context of Art 18, ‘full opportunity’ only required the Tribunal to accord each party a ‘reasonable opportunity’ to present its case. This was no different from affording a party a reasonable opportunity to be heard and there was thus no need to rely on Art 18 since the principles there accorded with the principles of natural justice in both s 24 (b) of the IAA and Art 34 (2) (a) (ii) of the Model Law: at [124] .

(12) By adopting the ICC Rules 2012 and the IBA Rules, the parties had agreed to grant the Tribunal broad and flexible case management powers. That the Tribunal was the master of its own procedure was one of the foundational elements of the international arbitral process although the exercise of its powers was governed by the rules of natural justice: at [128] , [129] , [131] .

(13) An arbitral tribunal exercising case management powers would take into consideration a myriad of factors, including the arbitral tribunal's obligation to conduct the arbitration fairly and expeditiously. The supervisory role of the court over the Tribunal's exercise of its case management powers should therefore be exercised with a light hand in the context of a challenge on the basis of the fair hearing rule and the conduct complained of had to be sufficiently serious or egregious so that one could say a party had been denied due process: at [132] , [134] .

(14) In the circumstances, and in order to conduct matters expeditiously, the Tribunal was entitled to come to its conclusion to grant an extension of ten days for the plaintiff to file an expert report and there was no breach of natural justice. Even if there was, there was no evidence of prejudice suffered by the plaintiff: at [136] , [150] , [159] .

(15) In respect of Issue 3, the...