By Wong Siew Hong, Eldan Law LLP
Nature of Case
Setting aside – Rules of natural justice
Facts
The disputes relate to the construction of a power generation plant in Guatemala. The Appellant is the contractor and the Respondent is the owner. Following delays, the Respondent terminated the contract in January 2014 and commenced arbitral proceedings. The agreement provided for disputes to be referred to a Singapore - seated arbitration under the 1998 Rules of Arbitration of the International Chamber of Commerce.
The agreement provided a 90-day period for the completion of the arbitration. The tribunal was constituted in March 2014, meaning that the arbitration should have been completed by June 2014, or, if extended,, to September 2014.
In May 2014, the parties agreed to amend this timeline. Thereafter, certain procedural orders were issued, including an Attorneys’-Eyes Only (“AEO Regime”) Order, which was modified along the way and eventually lifted. The Appellant also made extensive changes to its team of external counsel and expert witnesses. There was late filing of the of the Appellant’s expert report. Another issue that arose concerned discovery of documents.
Eventually the main evidentiary hearing took place in July 2015 and the tribunal rendered its award in November 2015. The Respondent’s claim was allowed by the tribunal. Meanwhile, the project works were completed in July 2015.
In February 2016, the Appellant filed an Originating Summons (“OS”) to set aside the Tribunal’s award. The OS was dismissed and the Appellant appealed to the Court of Appeal. In the OS, the Appellant had relied on 3 grounds for the setting aside. At the appeal, it relied on one ground viz it was not allowed a full opportunity to respond to the Respondent’s claim.
The Ruling
The Court of Appeal dismissed the appeal. The Court of Appeal held that:
First, the Tribunal did make a determination that there were compelling grounds to impose the AEO Regime, and there was no reason to disturb that determination;
Second, the Judge rightly rejected the Appellant’s submission that the AEO Regime had unjustifiably shifted the burden of proof onto the Appellant. The Court of Appeal held that the Appellant’s submission was misconceived. The question is not whether the AEO Order had adversely impacted CMNC’s preparation of its case but whether the balance struck by the Tribunal in making the AEO Order as a whole is one which was so unfair or unreasonable as to fall outside the range of what a reasonable and fair-minded tribunal might have done in the circumstances. On this, the Court of Appeal found no reason to impeach the Tribunal’s decision.
Third, the Court of Appeal found that the Tribunal did carefully weigh the potential prejudice to CMNC in making the AEO Order and did not accept that the Appellant’s argument that the Tribunal’s management of the discovery was unacceptable or amounted to a breach of natural justice. The Court of Appeal found that the Tribunal was simply doing the best it could in the circumstances to strike a fair balance between the parties’ interests.
The Court of Appeal noted that the AEO Regime was lifted almost four months before the main evidentiary hearing. The Court of Appeal also rejected the Appellant’s arguments that its expert’s preparations had been seriously affected by the AEO Regime, noting that the parties had agreed to certain timelines.
As a statement of general principle, the Court of Appeal declared that if a party intends to contend that there has been a fatal failure in the process of the arbitration, then there must be fair intimation to the tribunal that the complaining party intends to take that point at the appropriate time if the tribunal insists on proceeding. The complaining party, at the very least, should seek to suspend the proceedings until the breach has been satisfactorily remedied. The complaining party cannot simply “reserve” its position until after the award to see how the result turns out before deciding whether or not to take the point. The Court of Appeal noted that it is a contradiction in terms for a party to claim that proceedings had been irretrievably tainted by a breach of natural justice, when at the material time it presented itself as a party ready, able and willing to carry on to the award.
In conclusion, the Court of Appeal saw no basis upon which to interfere with the Judge’s decision to dismiss the application to set aside, and therefore dismissed the appeal.