Singapore Arbitration: The Singapore International Commercial Court Refuses To Set Aside Another Arbitral Award On Natural Justice Grounds

• Jurisdiction: United States,Federal
• Law Firm: Mayer Brown
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Author: Mr Yu-Jin Tay, Kate H. Apostolova, Matt C. Shaw, Charles K. S. Tay and Maleeha Khan
• Published date: 14 February 2023

Last week, the Singapore International Commercial Court (SICC) refused to set aside partial arbitral awards. This week, the SICC again refused to set aside another arbitral award, emphasising the high threshold for a finding of breach of natural justice which is crossed only in "exceptional circumstances".

Key Takeaways

• This SICC decision is a reminder that Singapore courts consider that set aside applications should not constitute a "second bite at the apple" and that there must be a real basis for alleging that the tribunal has conducted the arbitral process "either irrationally or capriciously".
• This decision also reflects the "fair latitude" given to tribunals in determining the "essential issues" before them, while still upholding the obligation of the parties to brief the tribunal on those issues as fully and early as possible - the absence of which cannot then form the basis of the challenging party's breach of natural justice claim.
• Furthermore, the SICC decision highlights that a breach of natural justice alone is not sufficient to set aside an arbitral award. The challenging party must also show that there is a causal nexus between the breach and the award, and that the breach prejudiced its rights.

The Parties and Dispute

In February 2013, CUW, CUX and CUY (together, the "Claimants") and CUZ (the "Respondent") entered into two agreements, a share subscription agreement (SSA) and a shareholders' agreement (SHA) (together, the "Agreements") as partners in a power plant project in India.

Pursuant to the SSA, the Respondent was to invest as a subscription of equity shares in CUX in three tranches, with the first two made in 2013. There was a condition precedent that CUX would enter into a common loan agreement (CLA) with certain lenders in relation to debt financing for the project prior to the third tranche investment.

The Respondent objected to the CLA stating that its terms were contrary to the terms of the Agreements between the parties. In April 2016, the Respondent issued a Material Adverse Change Notice under the SSA to CUW and CUY calling on CUW to cure it. In response, in May 2016, CUW, on behalf of the Claimants, issued a letter to the Respondent seeking termination of the Agreements given the Respondent's repudiatory breach due to its April 2016 notice.

In December 2017, the Respondent, who was the claimant in the underlying arbitration, commenced arbitration proceedings against the Claimants (the respondents in the underlying...