Background

Section 24(b) of the International Arbitration Act (Cap 143A) (IAA) states:

“Notwithstanding Article 34(1) of the Model Law, the High Court may, in addition to the grounds set out in Article 34(2) of the Model law, set aside the award of the arbitral tribunal if - a breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party have been prejudiced.”

Section 34(2)(a)(ii) of the UNCITRAL Model Law (at the First Schedule of the IAA) (Model Law) states:

“An arbitral award may be set aside by the court specified in Article 6 only if - the party making the application furnishes proof that - the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case.”

Section 34(4) of the Model Law states:

“The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside.”

In TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972, the court found that an arbitral tribunal is not obliged to deal with every argument presented and only needs to ensure that the essential issues are dealt with (while being given fair latitude to determine what is essential and what is not). Additionally, the court found that an issue could be resolved impliedly even if not addressed expressly within an award.

Facts

The applicant had been the respondent in separate, but related arbitration proceedings against two different parties. Two related arbitral awards were ultimately issued against the applicant (as respondent).

The applicant applied to set aside the two related arbitral awards against it, on the following grounds:

• First, that there was a breach of natural justice pursuant to section 24(b) of the IAA.
• Second, that it had been unable to present its case within the meaning of Article 34(2)(a)(ii) of the Model Law (at the First Schedule of the IAA).

The basis for the applicant’s application was two-fold, it argued that:

• The tribunal had not dealt with all the issues put before it, and specifically, had not dealt with a claim for the respondent’s wasted costs which, the respondent contended, were occasioned by the claimant’s late amendments to its claim (Wasted Costs Issue).
• The tribunal had misunderstood its point on one of the issues (namely on the proper interpretation of a clause in the contract), wrongly concluding that there was a concession by the applicant when there was none, and ignored some of the applicant’s other submissions on the issue (Interpretation Issue).

In November 2018, the court suspended the set aside application under Article 34(4) of the Model Law to allow the arbitral tribunal an opportunity to take action to “eliminate the grounds for setting aside". It agreed with the applicant that the tribunal had not addressed the wasted costs issue that had been put before it; the tribunal had reserved its decision on these costs but had gone on to only deal with costs of the main claim and the counterclaim in the awards.

Suspension of the set aside application was, the court found, a curative option available where the omission or defect in the award could be cured, to avoid setting aside the award. The court clarified that remission to the arbitral tribunal is an alternative to setting aside, and the court has no power to remit a matter to the arbitral tribunal after the award is set aside. During remission, the setting aside proceedings would be suspended to enable the same arbitral tribunal to take steps to eliminate the ground for the setting aside, and then the proceedings would resume after the tribunal renders an additional award within the court’s stipulated time period.

The tribunal issued additional awards once the matter was remitted to it. In those additional awards, it became apparent that the tribunal was not persuaded by the applicant’s submissions on the Wasted Costs Issue.

Decision

The Singapore High Court refused to set aide the awards.

The court found that a necessary question for it to determine was whether the complaints were genuinely about the tribunal’s failure to ensure that essential issues were dealt with, as opposed to a veiled complaint that the tribunal did not deal with every argument raised (which it is not obliged to do). The court also had to decide if the applications related to the substantive merits of the underlying dispute, which would be beyond the court’s remit.

The Wasted Costs Issue

The court found, following remission, that the applicant’s concerns on the Wasted Costs Issue had been remedied by the tribunal in its additional awards. The court found that it was beyond its remit to review the merits of the tribunal’s decision on the Wasted Costs Issue, which had by then been addressed. The court therefore did not grant the application to set aside the award on the grounds of the Wasted Costs Issue.

Interpretation Issue

On the Interpretation Issue, the court approved the decision in TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972, which provided that a tribunal is not obliged to deal with every argument presented, and an issue may be resolved impliedly even if not addressed expressly within an award. As to the arbitral tribunal’s understanding of the submissions, the question would be whether the tribunal applied its mind to the critical issues and arguments – if they had done that, there would be no recourse available to the parties (even if the tribunal had got it wrong on the facts or law).

The court found that it was clear from the tribunal’s award that both parties had been afforded the opportunity to argue on the interpretation of the clause, and that the tribunal had come to its findings (not favouring the respondent’s interpretation) after considering the parties’ arguments. The court also found that the tribunal had given cogent reasons for its decision. Therefore, there was no merit in the argument that there was a breach of natural justice. The court found that this argument was nothing more than a thinly veiled attempt for the court to consider the merits of the tribunal’s decision – which was beyond its remit. The conclusion reached by the tribunal was one which reasonably flowed from the parties’ arguments, and which a reasonable litigant could have foreseen. The court therefore denied the application to set aside the awards on the grounds of the Interpretation Issue.

Comment

The decision demonstrates the high bar required to set aside an international arbitral award in Singapore, on the grounds of breach of natural justice and/or denial of the opportunity to be heard. Where an otherwise defective award is capable of cure, the court may use its powers of remission to permit the defects to be cured by the original tribunal, before allowing an application to set aside.

The decision is also a helpful reminder of an arbitral tribunal’s duties in respect of considering the parties’ arguments – while a tribunal is required to address essential issues, it is not required to deal with all issues put before it and may deal with issues impliedly instead of expressly in its award. The court will consider whether any application for setting aside on these grounds is in fact a veiled attempt to appeal the award on its merits.

Case

BSM v BSN and another matter [2019] SGHC 185 (13 August 2019) (Belinda Ang Saw Ean J).