In BQP v BQQ [2018] SGHC 55 (“BQP v BQQ), the Singapore High Court confirmed that arbitrators are generally free to determine matters of evidence and procedure in international arbitrations, unhindered by the national laws of the seat and the underlying contract.

Facts

BQQ commenced an SIAC1 arbitration in Singapore against BQP for breach of contract, in accordance with the arbitration clause in contract A. BQP objected to the tribunal’s jurisdiction on the basis that contract A was superseded by contract B, which required parties to arbitrate their dispute through BANI2 arbitration in Indonesia.

The tribunal considered both contracts with guidance from evidence of pre-contractual negotiations between the parties, and concluded that contract B did not supersede contract A. The tribunal therefore found that it had the jurisdiction to decide the dispute. BQP challenged the tribunal’s award on jurisdiction in the High Court of Singapore.

In dismissing the BQP’s challenge on the tribunal’s award on jurisdiction, one of the issues that the High Court had to decide was whether pre-contractual negotiations are admissible in evidence to construe written agreements.

High Court’s decision

At the outset, the High Court held that the question of the admissibility of pre-contractual negotiations in construing written agreements was a question of evidence or procedural law3 (while observing that it’s not a settled issue in all jurisdictions), and not a question of contract law which governs the substantive rights of the parties.4

The High Court acknowledged that this was an important issue, insofar as it related to domestic litigation proceedings in Singapore. However, different considerations applied to international arbitration and where parties have agreed that the tribunal shall determine the relevance, materiality, and admissibility of all evidence, the tribunal would be entitled to disregard traditional common law evidentiary rules on the admissibility of parol evidence in contractual interpretation.

In refusing BQP’s leave to appeal to the Court of Appeal, the High Court made the following observations:

  1. The parts of the Singapore Evidence Act that cover relevancy, proof, production and effect of evidence do not apply to arbitral proceedings. This, the High Court remarked is “unsurprising”, as Parliament understood that parties resort to arbitration “precisely because they wish to avoid the national laws of countries shackling their quest for a speedy, commercial and practical outcome to their dispute.”5
  2. Since the parties agreed that any dispute arising out of their contract would be resolved under the SIAC Rules,6 they also agreed that “the tribunal shall determine the relevance, materiality and admissibility of all evidence” – regardless of their admissibility under national law.7
  3. This was consistent with the rules of other major arbitral institutions, including the LCIA,8 HKIAC,9 and AAA.10Although the ICC Rules do not contain a specific provision like those of the other institutions, the Court observed that an ICC tribunal has inherent broad powers to apply the rules of law it determines to be appropriate.11
  4. Floodgates arguments that the admission of pre-contract negotiations or subsequent conduct could vastly expand discovery obligations and the volume of evidence were dismissed as not being valid in the arbitration context as most international arbitrations now adopt the IBA Rules on the Taking of Evidence in International Arbitration (IBA Rules).12

Comment

The High Court’s reasoning in BQP v BQQ arguably extends beyond Singapore-seated SIAC arbitrations to any arbitration which proceeds on the basis that matters of evidence are for the tribunal alone to determine. It therefore should apply to all arbitrations initiated under other major arbitral institutions, such as the LCIA, HKIAC, AAA, as well as the ICC.

In choosing its institutional rules, parties should appreciate the extent of the power such rules afford on the tribunal as to how it treats evidence. By giving the tribunal absolute discretion, parties gives the tribunal the power to equally disregard any established rules of evidence.

However, what constitutes evidential or procedural law issues in one jurisdiction may be considered substantive law issues in another. It is not difficult to see how the High Court in BQP v BQQ could have reached the opposite decision had the admissibility of pre-contractual negotiations – which is closely connected to substantive principles of contractual interpretation – was considered a substantive rather than procedural law issue under Singapore law.