“Better say first” – Fatal failure of the arbitration process needs to be fairly intimated to the tribunal at the appropriate time

In the case of China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another [2020] SGCA 12, the contractor seeking to set aside an arbitral award made in favour of the owners of the power generation plant was unsuccessful before the Singapore Court of Appeal. The arbitration was seated in Singapore and conducted under the 1998 Rules of Arbitration of the International Chamber of Commerce. It is interesting to note that the arbitration was conducted in parallel to the completion of the construction works by third parties after the owners’ termination of the EPC contract with the contractor.

The contractor relied solely on the ground that during the arbitration, it was not given a reasonable opportunity to respond to the owners’ case, which it alleged was a breach of natural justice. The crux of the contractor’s allegations centred around certain procedural orders regarding disclosure of documents that the contractor contended was a mismanagement of the proceedings by the tribunal.

The Court of Appeal found that, amongst other things, the contractor presented itself as ready, able and willing to proceed with the main evidentiary hearing (i.e. despite all the allegations it is now belatedly raising). The alleged unfairness to the contractor was not previously been brought to the attention of the tribunal.

Since there was a lack of fair intimation from the contractor to the tribunal regarding its disagreement with the now-contested procedural orders, the Court of Appeal explained at paragraph 168 of the judgment that an “aggrieved party cannot complain after the fact that its hopes for a fair trial had been irretrievably dashed by the acts of the tribunal, and yet conduct itself before that tribunal ‘in real time’ on the footing that it remains content to proceed with the arbitration and obtain an award”. The contractor’s appeal for the arbitral award to be set aside was thus dismissed. The Court held that the principle is that a party which intends to contend there was a fatal failure in the due process of the arbitration is required to make fair intimation to the tribunal that it intends to take up this contention at the appropriate time should the tribunal insist on proceeding.

This case reinforces Singapore’s place as a supportive forum for arbitration. The Court of Appeal has laid down helpful guidance in this case to reduce the opportunity for abuse of due process complaints. The Court recognised that a misuse of due process complaints could “lead to defensive procedural decision-making on the part of the tribunal in an effort to safeguard its award”, expose arbitrating parties to delays and increased costs, and ultimately “erode the legitimacy of arbitration as a whole and its critical role as a mode of binding dispute resolution”.

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