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Breach of natural justice and the limited rights of appeal under the Singapore International Arbitration Act

22 October 2013
Two recent decisions the Singapore High Court confirm the principle of minimal curial intervention in arbitral awards and highlight the limited rights of appeal to the Singapore courts for parties who elect to arbitrate.

There is no provision under the Singapore International Arbitration Act ("IAA") or the 1985 UNCITRAL Model Law for the courts to set aside arbitral awards in cases of errors of law or fact on the part of the arbitral tribunal.  Applications to the Singapore courts for an arbitral award to be set aside can only be made on the basis of a breach of natural justice, under Clause 24 of the IAA, and/or that the award deals with issues beyond those referred to the Tribunal, under Article 34 of Model Law (which is incorporated into the IAA).

In TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186 the applicant alleged that the sole arbitrator had breached natural justice by failing in his duties:

  • to give reasons and explanations in the Award,
  • to attempt to understand the parties' submissions,
  • to deal with every argument presented; and
  • not to look beyond the parties' submissions.

The court noted that established case law required it to read the Award "generously".  The court found, on the facts, that the duties had not been breached and that the applicant's real argument was that the arbitrator had misunderstood the law and the facts, which is not a ground for challenging an award under the IAA.

The court also rejected in principle the argument that the arbitrator had a duty to deal with every argument presented by counsel, and held that only the essential issues needed to be addressed by the arbitrator.

By contrast, in Sapura-Schulz Hydroforming Sdn Bhd and another v Schulz Export GMBH and others [2013] SGHC 196 the High Court found that it was required to intervene as it was apparent on the face of the Award that the arbitrator had mischaracterised one of the counterclaims as an issue of relief rather than liability.  The arbitrator had therefore failed to consider an entire head of counterclaim, which was one of the essential issues before him.  The Respondent had clearly been prejudiced by the arbitrator's failure to consider the head of counterclaim.  The court upheld the Award, but remitted the counterclaim to a new tribunal for determination.

Whilst these cases demonstrate the Singapore courts support for the arbitral process, they are also a reminder of the limited rights of appeal in international arbitration and that an application to set an award aside must not be a guise for a rehearing of the full merits and conduct of the arbitration.

*A version of this article was originally published by Practical Law Arbitration http://uk.practicallaw.com/country/arbitration

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