In CVV and others v CWB [2023] SGCA(I) 9, the Singapore Court of Appeal considered what standard they should use to assess whether a tribunal has breached the rules of natural justice by allegedly failing to give adequate reasons for its decision.
CVV was an appeal from a decision of a judge of the Singapore International Commercial Court who refused an application under Section 24(b) of the International Arbitration Act 1994 (2020 Rev Ed) (which is co-extensive with Article 34(2)(a)(ii) of the Model Law) to set aside the arbitral award for an alleged breach of natural justice.
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Court may set aside award |
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24.Despite Article34(1) of the Model Law, the General Division of the High Court may, in addition to the grounds set out in Article34(2) of the Model Law, set aside the award of the arbitral tribunal if— |
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(a) |
the making of the award was induced or affected by fraud or corruption; or |
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(b) |
a breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party have been prejudiced. |
The Claimants alleged that the Tribunal had breached the rules of natural justice by failing to apply its mind to essential issues raised in their case. They claimed demonstrated the lack of consideration of certain points in its decision, a failure to refer to specific concessions made in cross-examination, as well as the use of inconsistent dates in its findings meant that a breach of the rules of natural justice had taken place and that the award should be set aside.
In considering the appeal, the Court of Appeal disagreed with a prior High Court judgment that the standards applicable to judges in court cases should be applied to arbitrators. While judges in court cases must give sufficient reasons such that an appellate court would able to understand and "do justice to" decisions taken at first instance, this does not apply to arbitration awards which are not subject to substantive review and are confidential. The principle of open justice (where "justice must not only be done but must be seen to be done") equally does not apply.
The Court of Appeal further noted that while it is settled law that a Tribunal is obliged to give reasons in its award, it is not settled in case law (a) what the content of that duty is, and (b) whether a failure to give adequate reasons is in itself a reason to set aside an award. It declined to pronounce on these issues, instead finding that the Claimants case was ultimately premised on the alleged failure to give reasons being demonstrative of the Tribunal's failure to apply its mind. It is notable that some arbitral institutions do not require arbitrators to give reasons at all. The American Arbitration Association is a well known example of this.
The Court found that the relevant question to be asked was whether the omission to give reasons was "so grave or so glaring as to point to the inescapable inference that the tribunal did not even attempt to comprehend the essential issues in the arbitration". The Court of Appeal found that the Claimants had not shown that the Tribunal failed to apply its mind to the essential issues raised by the Claimants' case, and therefore declined to set aside the award.
Even if the Tribunal did not individually address the points raised by the Claimants in the Award, the Award nonetheless showed that the Tribunal had indeed applied its mind to the key issues of the arbitration. The allegedly inconsistent dates used by the Tribunal were readily explicable by its decision to adopt the Respondents' witness' calculations as the best available evidence as the only calculations adduced before the Tribunal. If there was a question as to whether the Tribunal had made correct factual assumptions in adopting these calculations in the absence of better evidence from the Claimants, this was a merits question and not subject to review by the court.
In sum, the question of whether a failure to give adequate reasons can in itself be reason to set aside an award, outside of Section 24(b), has not been definitively answered. It is difficult to see how any of the other grounds set out in Article 34(2) of the Model Law for setting aside an arbitral award would apply. However, the case does make clear that if a claimant wishes to argue that the lack of adequate reasons is tantamount to a breach of natural justice so as to avail itself of Section 24(b), the burden of proving this is very high indeed – this is rightly so, to prevent parties from using this ground as a backdoor means to an appeal.
