Year Sun Chemitanks Terminal Corporation v Gunvor Singapore Pte Ltd

• Jurisdiction: Singapore
• Judge: S Mohan JC
• Judgment Date: 13 October 2021
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 51 of 2021

Year Sun Chemitanks Terminal Corp

and

Gunvor Singapore Pte Ltd

[2021] SGHC 229

S Mohan JC

Originating Summons No 51 of 2021

General Division of the High Court

Arbitration — Award — Recourse against award — Setting aside — Arbitrator disallowing plaintiff's application to adduce expert evidence — Whether plaintiff was deprived of reasonable opportunity to be heard — Article 18 UNCITRAL Model Law on International Commercial Arbitration

Arbitration — Award — Recourse against award — Setting aside — Arguments raised by plaintiff on certain issue addressed only in some parts of award under different issue — Whether arbitrator failed to consider or address arguments raised by one party — Whether there was breach of natural justice — Section 24(b) International Arbitration Act (Cap 143A, 2002 Rev Ed)

Held, dismissing the application:

(1) The audi alteram partem rule included an arbitrator bringing his or her mind to bear on an important aspect of the dispute. The threshold to draw an inference that an arbitrator had failed to consider an important pleaded issue was a very high one as such inference had to be shown to be clear and virtually inescapable. The threshold would be satisfied where it was undisputed that the arbitration tribunal simply failed to consider, whether explicitly or implicitly, the arguments notwithstanding the pleadings to that effect. However, in instances where the arbitrator had misunderstood the aggrieved party's case, or having been mistaken as to the law, or having chosen not to deal with a point pleaded by the aggrieved party because he thought it unnecessary, or had rejected the argument implicitly or otherwise, such inference should not be drawn: at [25].

(2) The imposition of such a high threshold by our courts was congruent with the principle of party autonomy. The courts could not interfere in the merits of an arbitral award and, in that process, bail out parties who had made choices that they came to regret, or offer them a second chance to canvass the merits of their respective cases. In approaching a complaint of breach of natural justice, an arbitral award was to be read: (a) generously and in a reasonable and commercial way; and (b) supportively by giving a reading which was likely to uphold it rather than to destroy it. It was not the court's function to assiduously comb an arbitral award microscopically in its attempt to determine if there was any blame or fault in the arbitral process: at [26] and [27].

(3) It was well established that Art 18 of the Model Law provided that each party had a right to have a reasonable opportunity to present its case. A “full opportunity” to present one's case under Art 18 of the Model Law was not an unlimited one and had to be balanced against considerations of reasonableness, efficiency and fairness. What amounted to a reasonable opportunity to be heard was an intensely factual inquiry and the court's concern was whether the proceedings were conducted in a fair manner. Ultimately, the overarching enquiry was whether what the tribunal did (or decided not to do) fell within the range of what a reasonable and fair-minded tribunal in those circumstances might have done and, in applying that test, the court assessed the tribunal's decision with reference to what was known to the tribunal at the material time: at [62] to [64].

(4) The tribunal, in the exercise of its wide discretion to determine the arbitral procedure, was accorded a margin of deference. If a party intended to contend that there had been a fatal failure in the process of the arbitration, then there had to be fair intimation to the tribunal that the complaining party intended to take that point at the appropriate time if the tribunal insisted on proceeding. The party could not simply reserve its position until after the award and if the result turned out to be palatable to it, not pursue the point, or if it were otherwise to then take the point: at [64] and [65].

(5) As to the 1st NJ Breach, a review of the Award did not lead to the clear and inescapable inference that the Arbitrator failed to give any consideration to the Arguments. The Arbitrator expressly stated that parties had agreed that if the defendant was entitled to losses arising from breaches of the Contracts for non-acceptance of gasoil, those losses were to be determined by s 50 of the Sale of Goods Act (Cap 393, 1999 Rev Ed) (“SOGA”) and that s 50(3) of the SOGA provided for a measure of damages enabling an innocent party to be put into the same position it would have been in had performance taken place. The reference to putting a party into the same position it would have been in had performance taken place demonstrated that the Arbitrator had put his mind to considering both the fact of losses suffered and the measure of such losses. The Arbitrator was in effect agreeing with the defendant's arguments on s 50(3) of the SOGA. The Arbitrator could be taken to have implicitly rejected the Arguments, which could not then give rise to any, let alone a clear and virtually inescapable, inference that the Arbitrator completely failed to address the Arguments. If the plaintiff was advancing the argument that the defendant had to prove actual loss under s 50(3) of the SOGA, it was incumbent on the plaintiff to raise the point clearly before the Tribunal at the material time; this it failed to do: at [36], [37], [41], and [45].

(6) The fact that the Arbitrator did refer specifically to certain aspects of the Arguments in the Award demonstrated that the Arbitrator had in mind and did consider the Arguments. The Arbitrator captured the essence of the “No Goods No Loss Argument” in a section of the Award which dealt with an issue pertaining to uncertainty of delivery terms under the Contracts. The fact that the No Goods No Loss Argument had not been advanced by the plaintiff specifically in relation to the uncertainty of terms issue demonstrated that the Arbitrator was alive to and had applied his mind to the Arguments or aspects of them laterally across the entire case where the Arbitrator felt that they might have relevance or more relevance. It could equally be concluded that the Arbitrator either rejected the Arguments implicitly, or did not find them convincing or at all relevant to the issue of an available market: at [49] to [51].

(7) A similar reasoning applied in relation to the Arbitrator's express reference to the Arguments when dealing with the issue of costs. Even though the drafting of the substantive and costs portions of the Award were undertaken by the Arbitrator at separate times, that did not mean that the court should not read the Award as a whole. When so read, the picture that emerged was that express reference was made by the Arbitrator to the Arguments or aspects of them in several parts of the Award, even if not specifically under the issue of damages: at [52] and [53].

(8) With regard to the 2nd NJ Breach, there was no breach of natural justice occasioned by the Arbitrator's decision to disallow expert evidence on Clause 26. The Arbitrator's decision was well within the ambit of the wide discretionary powers of the Arbitrator to determine matters pertaining to procedure and evidence. Nor could it be said that what the Arbitrator did fell outside the range of what a reasonable and fair-minded tribunal in those circumstances might have done: at [66].

(9) Further, there was no objection raised by the plaintiff to the Arbitrator's decision on the matter at the material time. The plaintiff's purported reservation of rights on the Arbitrator's decision was not in fact directed at the Arbitrator's decision to disallow expert evidence on Clause 26, but in relation to the Arbitrator's further procedural decision directing that part of the expert evidence that was allowed be submitted sequentially. Subsequent to the Arbitrator's ruling disallowing the expert evidence, the plaintiff continued with the proceedings right through to the completion of the evidentiary hearing and closing submissions without demur. It was not open to the plaintiff to belatedly raise the objection before the court that it was not afforded a reasonable opportunity to be heard. Further, any expert evidence led by the plaintiff, even if allowed, could not have reasonably made any difference to the Arbitrator's decision on Clause 26 of the Contracts: at [67] to [72].

Case(s) referred to

ADG v ADI [2014] 3 SLR 481 (folld)

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

BLC v BLB [2014] 4 SLR 79 (folld)

BRS v BRQ [2021] 1 SLR 390 (folld)

CAI v CAJ [2021] 5 SLR 1031 (folld)

CBS v CBP [2021] 1 SLR 935 (folld)

CDI v CDJ [2020] 5 SLR 484 (folld)

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

Dampskibsselskabet “Norden” A/S v Andre & Cie SA [2003] EWHC 84 (Comm) (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)

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

Facts

From May to September 2018, six contracts for the sale and purchase of various quantities of gasoil, ranging from 9,588.743mt to 13,930.843mt were executed by the parties. The plaintiff decided to increase the volume of gasoil to be purchased under a seventh contract dated 8 October 2018 (the “First Contract”) and an eighth contract dated 19 October 2018 (the “Second Contract”) respectively (collectively, the “Contracts”). Each of the Contracts concerned the sale by the defendant to the plaintiff of 20,000mt (+/- 10% at the seller's option) of gasoil with 500ppm sulphur content, with delivery on a FOB Taichung basis. Clause 26 of the Contracts (“Clause 26”), a destination restriction clause, provided that the seller (ie, the defendant) would be entitled to an indemnity for any fines or penalties imposed on it upon a breach of the clause by the buyer (ie, the...