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In Sai Wan Shipping Ltd v. Landmark Line Co, Ltd. [2022] SGHC 8, the Singapore High Court considered an arbitrator’s power to make peremptory orders in an ad hoc arbitration under the UNCITRAL Model Law. The court found that the respondent in the arbitration was not given the opportunity to provide input on procedural timetables, and was barred from raising a positive case and adducing evidence due to a purported failure to comply with a peremptory order. The court found there was a breach of natural justice, and the award was set aside.

What happened between the parties?

A dispute arose out of a charterparty agreement between the owner of the vessel (the claimant in the arbitration, and defendant in the application to set aside the second award (Owner)) and the charterer (the respondent in the arbitration, and plaintiff in the set aside application (Charterer)). Owner had sought an immediate interim award against Charterer for unpaid hire for a sum which it said was indisputably due based on Charterer’s final accounting of the charter. The sole arbitrator granted Owner’s application and issued a first partial final award.

Ten months later, Owner served further submissions to recover the balance of the charter hire and requested Charterer to serve its defence submissions within 28 days. In exchanges between Owner and Charterer, Charterer requested an extension of time, which was agreed. The arbitrator then passed a final and peremptory order ordering Charterer to serve its defence by 5pm on this extended date. It stipulated that, should Charterer fail to comply with the order, Charterer would be barred from advancing any positive case by way of defence or counterclaim, or any positive evidence, and it would simply be for Owner to prove its case. Charterer served its defence on the agreed day, but after the time stipulated in the order, citing internet connection issues. 

What did the arbitrator decide and why?

Since Charterer did not serve its defence submissions by the specified time, the arbitrator excluded the defence from his consideration. Charterer objected, noting that Owner had not identified any prejudice arising from the delay, and asked the arbitrator to exercise his discretion to admit the defence; however the arbitrator abided by his order. He also allowed further evidence and submissions by Owner, but denied Charterer the opportunity to respond. The arbitrator then passed his second final award without hearing witnesses and on a document-only basis.