Singapore High Court Refuses To Set Aside An Award And Remits The Matter To The Tribunal

In Vietnam Oil and Gas Group v Joint Stock Company (Power Machines – ZTL, LMZ, Electrosila Energomachexport) [2024] SGHC 244 the dispute concerned whether an EPC contract had been validly terminated under Vietnamese law.

Vietnam Oil & Gas Group (“PVN”) challenged the arbitral tribunal’s final award on the basis that the tribunal had breached Sec. 24(b) of the IAA and Arts 34(2)(a)(ii) and (iii) of the Model Law. PVN argued that the tribunal had breached the rules of natural justice which prejudiced PVN’s rights. Under Sec. 24(b) of the IAA, PVN argued that the tribunal breached the fair hearing rule, as the tribunal’s chain of reasoning had no nexus to the parties’ arguments. Under Art 34(2)(a)(ii) of the Model Law, PVN argued that it was unable to present its case as the tribunal’s findings dealt with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contained decisions on matters beyond the scope of the submission to arbitration.

The tribunal found that the contractor had terminated the EPC contract by way of a second, valid, notice of termination which overrode a first, invalid notice, notwithstanding its express observation that neither of the parties’ Vietnamese law experts had specifically dealt with this particular scenario.  The employer then applied to set aside the findings on liability and damages on the basis of breach of natural justice and excess of jurisdiction. The Court agreed that the Tribunal’s decision on termination constituted a breach of natural justice and had “no nexus” to the parties’ pleaded cases. 

However, The High Court declined to set aside the finding or the award, because the tribunal had made many other findings of which there was no reason to set aside.  Instead, the Court exercised its discretion under Article 34(4) of the UNCITRAL Model Law (incorporated into Singapore law) to suspend the setting aside proceedings and remit the termination question to the tribunal. 

Remission is a power which seems to be less commonly invoked by the courts in Singapore. The matter was remitted to the tribunal in order to give the tribunal the opportunity to remedy the breach of the fair hearing rule and therefore eliminate the grounds for the setting aside application. This case is a reminder that when reviewing arbitral awards it is useful to consider whether the tribunal’s chain of reasoning has arisen out of either or both parties’ case as this could form the basis to challenge the award in court.