Case Digests

Nature of Matter

Arbitration – Award – Recourse against award – Setting aside   

The plaintiff entered into a Consultancy Agreement dated 7 September 2012 (the "Agreement") with Z Co. Under the Agreement, Z Co was to provide the plaintiff with information and consultation/advisory services relating to opportunities for the plaintiff to “acquire an interest in producing oil and gas fields around the world”. In return, the plaintiff agreed to pay Z Co a fee (“Success Fee”) subject to certain conditions in the Agreement. Z Co thereafter assigned and novated the Agreement to its sister company, the defendant, pursuant to a Deed of Novation. Further, the plaintiff and defendant entered into the Amended and Restated Consultancy Agreement ("Amended Agreement"), and the expiry date under the Amended Agreement was 31 December 2013. The Agreement, Amended Agreement and Deed of Novation contained similar provisions that provided for disputes to be finally resolved by arbitration before the SIAC in accordance with the Rules of Arbitration of the International Chamber of Commerce then in effect.

In 2012, Z Co presented the X Opportunity (i.e. an opportunity for the plaintiff to acquire various interests in major oil fields in a country in Africa). While steps were taken for the plaintiff to take up X Opportunity, no sale and purchase agreement relating to X Opportunity was eventually entered into by the plaintiff due to, amongst others, tax issues. In early 2014 (after the expiry of the Amended Agreement), the plaintiff decided not to proceed with the proposed investment in X Opportunity.

Thereafter in December 2015, the plaintiff decided, as part of its expansion plans, to reconsider the investments relating to the X Opportunity, without the assistance of the defendant. The parties, without the defendant's involvement, were able to resolve the tax issues this time, and the investment was completed. In this regard, the defendant sought to claim the Success Fee from the plaintiff, who denied that the defendant was entitled to the Success Fee.

The defendant commenced arbitration proceedings against the plaintiff, on the following grounds that:

1. There was an oral agreement between the plaintiff and the defendant to extend the Agreement for a further period during which the defendant would continue to provide the services under the Agreement, and this would be reflected in a written contract to be executed in due course;
2. Alternatively, there was an implied contract between the defendant and the plaintiff on the same terms as the Agreement governing the interim period between the expiry of the Deed of Novation and the execution of a new contract; and
3. The plaintiff was estopped from denying that the Agreement was no longer valid.

The plaintiff contended, amongst others, that:

1. There was no agreement for the renewal or extension of the Amended Agreement or a fresh agreement;
2. Under Article 3.2 of the Amended Agreement, upon expiration of the Amended Agreement, the defendant and the plaintiff had no further obligation to each other unless a sale and purchase agreement for an investment ("SPA") had been executed but not completed at the time the Amended Agreement expired.
3. Under Article 12 of the Amended Agreement, no action or proceeding arising out of the Amended Agreement could be brought more than three months after the expiry of the Amended Agreement. The notice of arbitration was filed on 17 April 2018, more than 4 years out of time.

The Tribunal found that there was no express contract in existence between the parties after the expiry of the Amended Agreement, there was no extension by mutual agreement after 31 December 2013, and that the plaintiff was not estopped from denying that the Agreement was no longer valid. However, despite having rejected the defendant's pleaded case, the Tribunal found that the plaintiff was liable to pay the defendant the Success Fee for the X Opportunity on the basis that, amongst others:

1. The requirements for a Success Fee to be paid out under the Amended Agreement were satisfied;
2. While article 3.2 referred to an SPA that was executed, this also extended to an SPA that was being negotiated or in relation to an opportunity that would bear fruit subsequently;
3. The clauses relating to the requirements for a Success Fee payment did not require an executed SPA before the Agreement expired;
4. Since there was no requirement that an SPA be entered into before the Amended Agreement expired, Article 12 did not bar the defendant from claiming its Success Fee; and
5. The acquisition of shares in the December 2015 deal was the same transaction as the X Opportunity.

The Tribunal therefore awarded the defendant the sum of US$5,066,106.86 with interest and costs.

The Court set aside the Award relating to X Opportunity.

The plaintiff's case was that the Tribunal's findings breached s. 24(b) of the International Arbitration Act and Article 34(2)(a)(iii) of the Model Law, on the ground that the Tribunal had exceeded its jurisdiction.

Article 34(2)(a)(iii) of the Model Law could apply where the arbitral tribunal improperly decides matters that had not been submitted to it or failed to decide matters that had been submitted to it. In determining the matters that were submitted to the tribunal, the Court, citing the Court of Appeal case in PT Prima International Development Kempinski Hotels SA and other appeals [2021] 4 SLR 98, found that pleadings played an important role, and the Court should not construe pleadings narrowly. A practical view would have to be taken regarding the substance of the dispute referred to arbitration. Accordingly, the Court held that an arbitral tribunal was not entitled to depart from the pleadings to the extent of making its decision based on a ground that had not been pleaded at all and which could not be said to be ancillary to what had been pleaded. The Court further cited GD Midea Air Conditioning Equipment Co Ltd v Tornado Consumer Goods Ltd and another matter [2018] 4 SLR 271 stating that where a Tribunal has exceeded its jurisdiction by addressing matters beyond the scope of the submission to arbitration, there is no further requirement to show that the applicant had suffered “real or actual prejudice”.

The Court held that if the Tribunal found that there was no subsisting agreement after the Amended Agreement expired, that should have pointed the end of the defendant's claim, since the very premise of the defendant's claim would have been rejected. Instead, the Tribunal went on and awarded the Success Fee to the defendant on the basis of matters that were inconsistent with the defendant's own case.

In this regard, it was never the defendant's case in the arbitration proceedings that it had a valid claim if there was no subsisting agreement after the Amended Agreement expired. With respect to Article 3.2, the defendant had submitted that upon the expiration of the Amended Agreement, the plaintiff had an obligation under Article 3.2 to pay the Success Fee if an SPA has been executed before the Amended Agreement expired. As for Article 12, the defendant's case was that it had not come into effect given that the implied contract continued to subsist between the plaintiff and the defendant.

It was therefore clear that the Tribunal’s finding that the defendant was entitled to payment of the Success Fee was based on grounds that were entirely different from the defendant’s case in the arbitration proceedings. It was not possible to describe the Tribunal’s findings as being ancillary to the matter submitted to arbitration. The Court therefore held that the Tribunal had exceeded its jurisdiction in this case, which was sufficient for the setting aside of the Award relating to the X Opportunity.

Nature of Matter

Case Summary

1. The plaintiff, BZV, contracted to buy a vessel from the defendants, BZW, under a shipbuilding contract.
2. Disputes arose and the plaintiff pursued two claims against the defendants in arbitration: (i) a claim for liquidated damages for delay in delivery (“Delay Claim”), and (ii) a claim in damages for installation of incorrect generators (“Incorrect Generators Claim”).
3. In its award, the arbitral tribunal dismissed both of the plaintiff’s claims (“Award”).
4. The plaintiff applied to the Singapore High Court to set aside the Award (in part), under IAA, s 24(b) and Article 34(2)(a)(iii) of the Model Law.
5. The defendants, in turn, argued that (i) the plaintiff’s setting aside application was filed out of time pursuant to Article 34(3) of the Model Law and, (ii) even if the plaintiff had established grounds for setting aside the Award, the High Court judge should suspend the setting aside application and remit the Award to the tribunal pursuant to Article 34(4) of the Model Law to allow the tribunal to eliminate the grounds for setting aside.

1. The High Court found in favour of the plaintiff and set aside the award. 

1st Issue – Timing of the Setting Aside Application

2. As a preliminary point, the defendants argued that the plaintiff’s setting aside application was filed out of time as, even though the plaintiff’s Originating Summons (“OS”) was filed within the 3-month time-limit under Article 34(3) of the Model Law, the plaintiff’s supporting affidavit was filed well outside this time-limit. The defendant argued that the plaintiff’s “application” was incomplete when it filed the OS alone.
3. The High Court judge held that there was nothing in Article 34(3) of the Model Law and/or O. 69A, r.2(4) of the Rules of Court which rendered the plaintiff’s application out of time or precluded the plaintiff from relying on the grounds set out in its supporting affidavit. The High Court judge therefore rejected the defendants’ argument that the plaintiff’s application was made out of time. [24 – 47]

2nd Issue – IAA, s 24(b), Breach of Natural Justice 

4. The first ground relied on by the plaintiff to set aside the Award was IAA, s 24(b), i.e. that there had been a breach of natural justice.
5. The High Court judge held that, in order to succeed on IAA, s 24(b), the elements identified in John Holland Pty Ltd v Toyo Engineering Corp (Japan) [2001] 1 SLR(R) 443 would have to be established:

1. Which rule of natural justice was breached; 
2. How was it breached;
3. In what way the breach was connected to the making of the award;
4. How the breach prejudiced the plaintiff’s rights.

6. In relation to elements (a) and (b) above the High Court judge held that there had been a breach of the fair hearing rule as:

1. In relation to the plaintiff’s Delay Claim, the tribunal had not applied its mind to whether the plaintiff’s preventive act had caused the defendants to be unable to deliver the vessel on time. Beyond an ‘implicit acknowledgment’ that causation was relevant, “the tribunal … failed completely to identify for determination, let alone apply its mind to determine … the issue of causation.” [130 – 151] 
2. In relation to the plaintiff’s Incorrect Generators Claim, the court found that the tribunal did not rely on a chain of reasoning with a nexus to the defendants’ defences in arriving at its decision to dismiss this claim. [152 – 205]

7. In relation to element (c) above, the court held that the tribunal’s breach of natural justice on both claims was “casually connected to the making of the award”. [206 – 210]
8. In relation to element (d) above, the court held that if the tribunal had applied its mind to parties’ cases and the essential issues arising from parties’ arguments on those cases, it could certainly have found in favour of the plaintiff on both the Delay Claim and the Incorrect Generators Claim. The tribunal’s breach of natural justice therefore caused real prejudice to the plaintiff. [211 – 213]
9. Accordingly, the court held that the plaintiff’s application under IAA, s 24(b) succeeded.

3rd Issue – Art 34(2)(a)(iii) Model Law

10. The court held that it was not necessary to analyse the plaintiff’s application under Article 34(2)(a)(iii) Model Law separately as:

1. The plaintiff’s application under IAA, s 24(b) was successful, and already disposed of the matter [215]; and
2. In any case, the plaintiff’s attack under this alternate ground relied on the very same facts and raised the very same core concerns as its attack under IAA, s 24(b). [216]

4th Issue – Remission under Art 34(4) Model Law

11. The defendants argued that, even if the plaintiff’s grounds for setting aside were established, the High Court judge should exercise its discretion to suspend the setting aside application and remit the Award to the tribunal pursuant to Article 34(4) of the Model Law to allow the tribunal to eliminate the grounds for setting aside.
12. However, the High Court judge refused to exercise its discretion to remit the Award for two reasons:

1. First the tribunal’s breaches of natural justice were “fundamental and deeply woven into the analytical exercise which the tribunal undertook”. In order to eliminate the ground for setting aside on this, the tribunal would have to undertake de novo its entire analytical task which was not the purpose of remission. [222]
2. Second, the purpose of remission is to afford the party who has established a ground for setting aside a genuine opportunity to persuade the tribunal to arrive at a different result and not to give the tribunal a further opportunity to formulate ex pose facto rationalisations for its original decision. However, in this case, the High Court judge held that, based on the tribunal’s prior conduct, remission was unlikely to allow the plaintiff a genuine opportunity to persuade the tribunal to arrive at a different result. [223 – 224]

Nature of Matter

Case Summary

1. The appellants (collectively, “Bloomberry”) engaged the respondents (collectively “Global Gaming”) under a management agreement to develop and operate a resort and casino in Manila, Philippines. Disputes subsequently arose which resulted in Bloomberry terminating the management agreement for alleged material breaches by Global Gaming. 
2. Global Gaming commenced arbitration proceedings for wrongful termination. In its award, the tribunal found that there had been no material breaches of the management agreement by Global Gaming, and accordingly, it had been wrongfully terminated by Bloomberry (“Award”).
3. Bloomberry Resorts applied to the Singapore High Court to set aside the Award. Bloomberry claimed that it discovered after the Award that Global Gaming executives were the subject of investigations by the US Securities and Exchange Commission (“SEC”) and Department of Justice (“DOJ”) in relation with transactions at their previous employer, Las Vegas Sands (“LVS”). The SEC’s and DOJ’s finding were presented in various documents referred to as the “FCPA Findings”
4. Bloomberry argued that by suppressing or concealing evidence in the arbitration concerning the investigations into LVS and the FCPA Findings, Global Gaming had procured the arbitral award through fraud.
5. The High Court judge dismissed Bloomberry’s application on the grounds that (i) the application had been brought out of time pursuant to Article 34(3) of the Model Law and (ii) Bloomberry’s allegations that the Award had been procured through fraud were not made out  (“High Court Decision”).
6. Bloomberry appealed against the High Court Decision to the Singapore Court of Appeal (“SGCA”), relying on broadly its same arguments before the High Court.

    

1. The SGCA dismissed Bloomberry’s appeal and refused to set aside the Award and / or refuse enforcement of the Award. 

1st Issue – Whether Final Award was induced or affected by fraud [37] – [73] 

2. The 1st Issue before the SGCA was whether the Award was “induced or affected” by fraud such that the Award should be set aside or enforcement should be refused.
3. Bloomberg argued that there had been 2 types of fraud: (i) Global Gaming’s concealment of their employee’s purported fraudulent actions under their previous employer LVS and SEC’s and DOJ’s investigations into this conduct and (ii) the suppression of certain email evidence in the arbitration by Global Gaming’s counsel in breach of document production orders by the arbitral tribunal. [37]

4. The SGCA rejected Bloombery’s arguments for broadly three reasons.

5. First, the SEC’s and DOJ’s investigations did not need to be disclosed in the arbitration because they were not at issue. The investigations involved different companies and did not relate to Global Gaming or its activities. Bloomberry had also not alleged in the arbitration that Global Gaming or its principals had been involved in the conduct that was the subject of the investigations. [38] – [44]

6. Second, purportedly false statements made by Global Gaming’s executives to Bloomberry in 2012, which were inconsistent with the FCPA Findings, did not constitute fraud, because the FCPA Findings did not establish, to the requisite threshold of proof, that the 2012 statements were actually false. Further, the accuracy of the 2012 Statements had not been in issue at the arbitration. In any case, the fact that the 2012 statements were not made in the course of the arbitral proceedings was a key factor in the assessment of whether the arbitral award was induced or affected by fraud. [49] – [67]

7. Third, the non-disclosure of certain emails by Global Gaming did not amount to procedural fraud as, even if those emails fell with the scope of the tribunal’s document production orders, there was no evidence that the decision not to produce the emails was made dishonestly, aimed at deceiving the arbitral tribunal. [68] – [72]

2nd Issue - Time limit for setting-aside applications [74] – [97]

8. The 2nd Issue before the SGCA was whether the time-bar set out in Article 34(3) of the Model Law was applicable to applications to set aside awards which are based on grounds provided by IAA, s 24.
9. The court, relying on the language of Article 34(3), and the travaux preparatoire to the Model Law, held that the three-month time limit in Article 34(3) of the Model Law applied to all setting-aside applications brought under Article 34.
10. The SGCA held that setting aside grounds in the IAA, s 24 were subject to the same time limit, since they were a subset of the public policy ground in Article 34(2)(b)(ii) of the Model Law and did not form a separate regime, but provided additional grounds to set aside an award within the same framework.  

Nature of Matter

Setting aside of part of arbitral award – breach of natural justice; Tribunal’s power  

Case Summary

1. The applicant was the Claimant in the arbitration.
2. The main active Respondent (1st Respondent) in the arbitration had engaged the Claimant to provide certain services on the terms of a services agreement dated 18 December 2018 (“SA”) which included the following provisions: (1) the SA was for an initial term of 24 months and (2) clause 10.2 provided that if the SA was terminated during the Initial Term, the 1st Respondent would pay a “Make-Whole Amount” to the Claimant. The exception was if the termination had occurred pursuant to the grounds under clause 16.3 (including clause 16.3.1).
3. In the course of the Initial Term, the 1st Respondent purported to terminate the SA. The Claimant alleged that the 1st Respondent had wrongly terminated the SA and in doing so, the 1st Respondent has committed a material breach which brought the SA to an end.
4. The Claimant commenced an arbitration claiming, among other things, the Make-Whole Amount in the sum of USD 2.8 million against the 1st Respondent.
5. In the course of pleadings, the 1st Respondent pleaded in its Defence and Counterclaim (“D&CC”) that the Services Agreement had been terminated pursuant to clause 16.3.1, and so the Make-Whole Amount was not payable. The 1st Respondent did not plead that the relevant provisions on the Make-Whole Amount, or interest thereon, were unenforceable penalty clauses. (The “Penalty Issue”).
6. The Penalty Issue was first mentioned on 28 April 2020 (less than a month to the Evidentiary Hearing) when the 1st Respondent circulated the witnesses list, which included a legal expert on English law. The Claimant responded on the basis that “any issues involving the application of the law of England arising in [the Arbitration] can be addressed by way of submissions instead of adducing opinions via expert witnesses”.
7. On 6 May 2020, the 1st Respondent filed the Agreed List of Issues but did not list the Penalty Issue as an issue.
8. On that same day (6 May), the 1st Respondent filed an application for (among other things) to call an expert witness. This was objected to by the Claimant, specifically pointing out that the 1st Respondent had intended for the expert to cover issues, that were unpleaded, including the Penalty Issue.
9. Subsequently on 13 May 2020, during a telephone conference between the Tribunal and the Parties, the Tribunal rejected the 1st Respondent’s expert witness application and asked that the expert be co-counsel for the Respondent and make submissions on the English law.
10. On 18 May 2020, the 1st Respondent applied to amend its D&CC (“Amendment Application”) to plead the Penalty Issue as a defence but this was objected to by the Claimant and rejected by the Tribunal at the Evidential Hearing on 29 May 2020.
11. At the 17 June Oral Reply Hearing, the Tribunal asked that the Claimant addressed the Penalty Issue in full (the Claimant’s counsel objected to this).
12. Correspondences and directions ensued in which the Claimant maintained its objection to the Penalty Issue while the Tribunal maintained that it was in issue (collectively, the Claimant’s counsels emails as mentioned and its other objections, the “Email Objections”).
13. On 2 October 2020, the Tribunal issued the final award (“Award”) dismissing the Claimant’s claims on the sole basis of the Penalty Issue (among other orders).
14. The Claimant commenced this present application to (among other things) set aside the part of the Award where the Tribunal’s decision dismissed the Claimant’s claims on the basis of the Penalty Issue. The Claimant argued that:
    1. There had been a breach of natural justice prejudicing its rights;
    2. The Claimant was unable to present its case;
    3. The Award contains decisions on matters beyond the scope of the submission to the Arbitration; and
    4. The arbitral procedure was not in accordance with the agreement of the Parties.

15. The Court set aside the Tribunal’s decision on the Penalty Issue, and the parts of the Award affected by it. The Court found that the Tribunal had erroneously thought that the Claimant had agreed to the late introduction of the Penalty issue, when in fact the Claimant had objected to this (and had kept objecting to it).
16. There was a breach of natural justice prejudicing the Claimant, the Tribunal had exceeded the scope of submission to arbitration, and the Tribunal had acted contrary to the arbitral procedure agreed between the Parties.

A. Breach of Natural Justice/Inability to Put One’s Case

17. The Court found that the Tribunal never regarded the Penalty Issue to have been introduced of its own initiative; instead, it regarded that the Penalty Issue as having been introduced by the agreement of the Parties as of 13 May 2020 (but there was no such agreement).
18. Here, the penalty issue is a mixed question of law and fact: the 1st Respondent had acknowledged that the Amendment Application was necessitated by the need for a factual pleading to support its intended legal arguments.  Where an issue is not properly before the decision maker (in this case, not pleaded), a decision on the issue is susceptible to being set aside.
19. In this present case, there was a breach of natural justice in the way the Tribunal concluded that the Penalty Issue had become an issue in the Arbitration – it misapprehended that the Claimant had agreed to what it was, in fact, objecting to and this misapprehension continued through to the making of the Award with the Tribunal persistently failing to engage with the Claimant’s objections.
20. On the facts, the Penalty Issue was not pleaded at 1st instance and the Tribunal’s rejection of the 1st Respondent’s amendment application to plead the Penalty Issue as a defence signalled to the Parties that this was not an issue in the Arbitration.

B. Exceeding the Scope of the Arbitration

21. As the Court concluded that the Penalty Issue was never properly introduced into the Arbitration – instead, the Tribunal acted in breach of natural justice – the Court also found that the Tribunal’s dismissal of the Claimant’s claims on the basis of the Penalty Issue was outside the scope of the Arbitration. This was a further ground justifying the setting-aside of the affected parts of the Award.

C. Proceeding Contrary to the Parties’ Agreed Procedure

22. The Parties had agreed on the following: the Arbitration is to be expedited with completion by 2 July 2020; the procedural time-table that was embodied in PO1 (as adjusted by PO2) contemplated pleadings, document production, witness statement, oral testimony (evidential hearing) and written closing submissions and reply by 17 June 2020 and the award by 1 July 2020.
23. What happened instead was that on 17 June 2020, the Tribunal indicated that it regarded the Penalty Issue to be in issue in the Arbitration and in relation to this issue, the Tribunal asked that the Penalty Issue be addressed more fully including and allowing the Claimant to recall its witnesses.
24. The Court found that Penalty Issue was never pleaded as a defence by the 1^st Respondent and its Amendment Application to plead this in its D&CC was dismissed by the Tribunal. There was therefore no responsive pleading by the Claimant. Nor did the Tribunal provide for document production on the issue. The Tribunal also only ordered the Claimant’s witnesses to be cross-examined on the Penalty Issue but did not provide for the 1st Respondent’s witnesses to return to be cross-examined.
25. The Court pointed out that had the Penalty Issue been pleaded in the D&CC, the dispute would have been dealt with quite differently from the way things actually transpired. The Tribunal then had expected the Claimant to respond to the Penalty Issue only at the stage of oral reply submissions – in short order, and in a limited fashion.
26. The Court held that these were departures from the procedure agreed by the Parties and the manner in which it has happened affirmed its conclusion that the part of the Award affected by the Penalty Issue ought to be set aside.