SICC refused to set aside Arbitral Award based on breach of rules of natural justice and inability to Present One’s Case

In CYW v CYX [2023] SGHC(I) 10, the Singapore International Commercial Court (“SICC”) dismissed CYW’s application to set aside an arbitral award made in favour of CYX on the grounds of breach of the rules of natural justice and alleged inability to present one’s case.

Mr C of CYW signed a Sales and Management Service Agreement (the “SMA”) with Company B, purportedly on CYW’s behalf, which contemplated a bill of exchange facility between Company B and CYX to fund the purchase orders made by CYW under the SMA. On the same note, under the SMA, CYW would first issue monthly purchase orders for cattle, Company B would raise bills of exchange for its services with CYW as drawee and CYX as payee and CYW was required to pay the total amounts set out in each bill of exchange in accordance with the facility agreement between Company B and CYX. Mr C was later removed as director of CYW and CYW refused to accept several bills of exchange. CYX thus appointed receivers and managers of the livestock and its proceeds in the exercise of its powers under the Security Deed.

CYW commenced arbitration proceedings at the SIAC in Singapore. CYW denied its liability to pay the accepted bills because CYW lacked capacity to enter into the Security Deed or to accept the bills and Mr C had no authority to enter into the Security Deed on CYW’s behalf. CYW sought declarations that the Security Deed and related contracts were void and invalid, as well as consequential damages. CYX counterclaimed, sought to enforce the Security Deed and counterclaimed for, among other items, the amount unpaid on the accepted bills. The Tribunal dismissed CYW’s claim, declared that the Security Deed was valid, and ordered CYW to pay CYX damages with interest (“the Award”).

Upon the application to set the award aside before the SICC, there were two issues presented i.e. whether there was a breach of natural justice by reason of CYW not having been given a fair opportunity to present its case (“1st issue”) and whether, assuming that there was a breach of natural justice, CYW had suffered prejudice as the Tribunal was denied the benefit of arguments that had a real chance of making a difference to its decision (“2nd issue”).

On the 1st issue, it was up to the SICC to decide whether the Award should stand given that CYW had consistently failed to follow the Tribunal's instructions. The Tribunal had given CYW more than a reasonable opportunity to file the necessary documentation, i.e CYW had about 8 months to submit the necessary documentation, however CYW was unable to provide a timeline on the missing documentation. CYW's actions would, if they continued, result in the adjournment of the proceedings. The SICC was of the view that the Tribunal’s approach was one which was open to be taken by a reasonable and fair-minded tribunal, and there was therefore no breach of natural justice as CYW had been given a reasonable opportunity to present its case.

On the 2nd issue, CYW’s contended that the witness’s evidence would have had a real chance of making a difference to the Tribunal’s decision however there was no evidence of what the witness was likely to say in his report on the question of Mr C’s actual or implied authority. In any event, the witness’s opinion could not affect the basis on which the Tribunal unanimously reached their conclusion on ostensible authority and estoppel which the Tribunal concluded were matters governed by Queensland law. Additionally, there was nothing to suggest that the witness would have given an opinion contrary to that of CYX’s witness, or that the Tribunal’s decision was incorrect.

This decision demonstrates how the SICC uses a comprehensive approach to determine the issues in a dispute, taking into account not only the written arguments made by the parties but also the evidence presented, the testimony of the witnesses, and the expert reports supplied by the parties. With the SICC adopting this broad review on the range of matters to be determined in the arbitration, the threshold to succeed in setting aside an award based on breach of the rules of natural justice and inability to present one’s case is rather high.