AQU v AQV [2015] SGHC 26

In AQU v AQV, the Singapore High Court rejected various allegations of breach of natural justice that were raised by the plaintiff in its application to set aside an arbitral award.

Background facts

The defendant was awarded a contract to supply and deliver stone finishing for a construction project (the “1st Contract”). The 1st Contract was subsequently novated to the plaintiff. The parties later entered into a second contract (the “2nd Contract”) for the supply and delivery of tiles and stone finishing to common areas in the construction project.

A dispute subsequently arose between the parties regarding the amount which the plaintiff was obliged to pay the defendant under the 1st Contract and the 2nd Contract. As a result, the defendant commenced arbitration proceedings. At the end of the arbitration, the arbitrator issued an award in favour of the defendant (the “Award”).

Set aside application before Singapore High Court

The plaintiff applied to set aside the Award on the ground that there had been a breach of natural justice in the making of the Award. In particular, the plaintiff alleged that:

  • the arbitrator had reached a conclusion that was not argued by either party;
  • the arbitrator failed to consider an argument that had been raised by the plaintiff; and
  • the arbitrator had made a finding of fact in the absence of any logically probative evidence to support the same.

Whether the arbitrator had reached a conclusion that was not argued by either party

According to the High Court, as long as a conclusion reasonably flows from the parties’ arguments, natural justice would not be regarded as having been breached just because an arbitrator comes to a conclusion which has not been argued by either party.

The High Court found that the plaintiff’s characterisation of the arbitrator’s finding (viz that it was not based on the defendant’s position taken in the arbitration proceedings) was incorrect. In particular, the High Court referred to the fact that the Award had set out the arguments and pleadings of the parties in some detail. Thus, the arbitrator was apprised of the parties’ respective positions and had considered them. In fact, the High Court found that the arbitrator’s conclusion was aligned to the position taken by the defendant in the arbitration.

The High Court also rejected the plaintiff’s argument that the arbitrator had failed to deal with the arguments made by the plaintiff. It held that an arbitrator need not deal with all arguments put forward by a party, and does not need to reject specific issues, where it is clear that a finding on a particular argument satisfactorily disposes of such issues.

Whether the arbitrator had failed to consider the plaintiff’s argument

The High Court opined that the courts, in considering an application to set aside an arbitral award on grounds that the arbitrator had failed to consider certain arguments, should not undertake a review of the substantive merits of the underlying dispute between the parties. Instead, the question which the courts had to consider was whether the arbitrator had applied his mind to the issues before him and considered the arguments raised.

On the facts, the High Court found that although the arbitrator had not expressly dealt with a particular argument that the plaintiff had raised, he had not failed to consider or understand the issue in question. Moreover, the arbitrator’s summary of the plaintiff’s position in the Award showed that he fully understood the plaintiff’s argument.

Whether the arbitrator had made a finding of fact without probative evidence

The High Court observed that the law was not fully settled as to whether an arbitral award may be set aside on the basis that it is a breach of natural justice for an arbitrator to make findings of fact when there is no logically probative material before him on which to base those findings. The court refrained from expressing a concluded view on the matter, and opined that the Award was in fact grounded on evidence before the arbitrator.

Conclusion

This decision affirms the policy of minimal curial intervention when the Singapore courts are faced with an application to set aside an arbitral award. It also clarifies the parameters of the various bases upon which a breach of natural justice may be established. The High Court also emphasised that parties should not view the courts as an appeals tribunal and that an error of law or fact does not amount to a breach of natural justice which warrants curial intervention.