Singapore Court of Appeal: Breach of Natural Justice in Documents-Only Procedures

Wan Sern Metal Industries Pte Ltd (Wan Sern) v Hua Tian Engineering Pte Ltd (Huan Tian [2025] SGCA 5 deals with breach of justice allegations in documents-only arbitrations. The Plaintiff Wan Sern initiated arbitration under the Singapore International Arbitration Centre (SIAC) Rules against its subcontractor, Hua Tian, after terminating their agreement due to alleged defective work. Hua Tian counterclaimed for wrongful termination and damages. The arbitration proceeded on a documents-only basis. Initially, Hua Tian sought payment for completed work but later it introduced a claim for “expectation interest,” including damages for incomplete work. Wan Sern contested this substantively but did not explicitly object to it as unpleaded.

The arbitrator ruled in favor of Hua Tian, awarding damages, including for incomplete work, reasoning that Wan Sern had not contested the damages calculation. The Singapore Court of Appeal set aside this part of the award, ruling that the arbitrator acted in breach of natural justice by failing to apply her mind to the legal basis of the expectation interest claim. She neither assessed whether it fell within the agreed scope of arbitration nor invited the parties to address this procedural issue. As a result, she denied Wan Sern a fair hearing on a key aspect of the dispute and wrongly assumed it had not objected to awarding damages for incomplete work.

The judgment underscores that documents-only arbitrations require heightened scrutiny due to limited opportunities for clarification. Arbitrators must ensure unpleaded claims are properly addressed by seeking parties’ views or inviting amendments. The failure to do so resulted in a decision beyond the agreed arbitral procedure.