Soh Beng Tee v Fairmount: Setting Aside Arbitration Award for Breach of Natural Justice

Soh Beng Tee & Co Pte Ltd (SBT) appealed against the High Court's decision to set aside an arbitration award in favor of SBT against Fairmount Development Pte Ltd (Fairmount). The Court of Appeal of Singapore, comprising Chan Sek Keong CJ, Andrew Phang Boon Leong JA, and V K Rajah JA, heard the case on 9 May 2007. The dispute arose from a construction contract where SBT claimed wrongful repudiation. Fairmount sought to set aside the award, alleging the arbitrator dealt with an issue outside the scope of submission and deprived Fairmount of its right to be heard. The Court of Appeal allowed SBT's appeal, holding that the arbitrator had not breached the rules of natural justice.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal on setting aside an arbitration award. The court held that the arbitrator did not breach natural justice rules, allowing the appeal.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Soh Beng Tee & Co Pte LtdAppellantCorporationAppeal AllowedWon
Fairmount Development Pte LtdRespondentCorporationAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Chan Sek KeongChief JusticeNo
Andrew Phang Boon LeongJustice of the Court of AppealNo
V K RajahJustice of the Court of AppealYes

4. Counsels

Counsel NameOrganization
Abraham VergisDrew & Napier LLC
Daniel ChiaDrew & Napier LLC
Jimmy YimDrew & Napier LLC
Ling Tien WahRodyk & Davidson
Jeyaretnam Philip AntonyRodyk & Davidson

4. Facts

  1. Fairmount, as developer, employed SBT as main contractor on 1 July 1997.
  2. The original completion date was 1 February 1999, later extended to 6 February 1999.
  3. SBT submitted numerous applications for extensions of time, but only a five-day extension was granted.
  4. Fairmount claimed a $1.5m performance bond and further damages of $3,212,113.16 from SBT.
  5. SBT rejected the claim and invoked the arbitration clause, claiming damages for wrongful repudiation.
  6. The arbitrator ruled in favor of SBT, awarding $2,043,432.27 and the return of the performance bond.
  7. Fairmount applied to set aside the award, alleging the arbitrator dealt with an issue outside the scope of submission.

5. Formal Citations

  1. Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd, CA 100/2006, [2007] SGCA 28

6. Timeline

DateEvent
Fairmount employed SBT as the main contractor.
Parties entered into a formal contract.
Original agreement completion date.
Extended completion date after a five-day extension.
SBT was served with a delay certificate in relation to the mock-up units.
SBT was served with a delay certificate in relation to the main works.
Mr. Law granted a mere five-day extension that extended the date of completion of the project to 6 February 1999.
Mr Law issued a written notice declaring that SBT had failed to proceed with due diligence and expedition.
Mr Law issued a Termination Certificate.
Fairmount terminated SBT’s employment.
Arbitration award dated.
Court of Appeal decision date.

7. Legal Issues

  1. Breach of Natural Justice
    • Outcome: The court held that there was no breach of the rules of natural justice.
    • Category: Procedural
    • Sub-Issues:
      • Denial of right to be heard
      • Failure to consider relevant evidence
  2. Setting Aside Arbitration Award
    • Outcome: The court upheld the arbitrator's jurisdiction.
    • Category: Procedural
    • Sub-Issues:
      • Jurisdiction of arbitrator
      • Scope of submission to arbitration
  3. Wrongful Termination of Contract
    • Outcome: The court found that Fairmount wrongfully terminated the contract.
    • Category: Substantive
    • Sub-Issues:
      • Validity of termination certificate
      • Repudiatory breach

8. Remedies Sought

  1. Setting Aside Arbitration Award
  2. Damages

9. Cause of Actions

  • Breach of Contract
  • Wrongful Repudiation

10. Practice Areas

  • Arbitration
  • Commercial Litigation
  • Construction Law

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Fairmount Development Pte Ltd v Soh Beng Tee & Co Pte LtdHigh CourtYes[2007] 1 SLR 32SingaporeCited as the judgment under appeal, where the High Court set aside the arbitration award based on a breach of natural justice.
John Holland Pty Ltd v Toyo Engineering Corp (Japan)N/AYes[2001] 2 SLR 262SingaporeCited for the principle that a party challenging an arbitration award for contravening the rules of natural justice must establish the breach, its connection to the award, and resulting prejudice.
Fox v PG Wellfair LtdEnglish Court of AppealYes[1981] 2 Lloyd’s Rep 514England and WalesCited for the principle that an arbitrator should bring any differing views of the facts to the attention of the parties.
Société Franco-Tunisienne D’Armement-Tunis v Government of CeylonN/AYes[1959] 1 WLR 787N/ACited for the principle that a new point that would bring about a dramatic development of the case should be communicated to the advocate in such a way as enabled him to deal with it.
The VimeiraEnglish Court of AppealYes[1984] 2 Lloyd’s Rep 66England and WalesCited for the principle that an arbitrator is obliged to put a point to the parties so that they have an opportunity of dealing with it.
Gbangbola v Smith & Sherriff LtdN/AYes[1998] 3 All ER 730N/ACited for the principle that a tribunal does not act fairly and impartially if it does not give a party an opportunity of dealing with arguments which have not been advanced by either party.
F Hoffmann-La Roche & Co AG v Secretary of State for Trade and IndustryN/AYes[1975] AC 295N/ACited for the principle that once a fair hearing has been given to the rival cases presented by the parties the rules of natural justice do not require the decision maker to disclose what he is minded to decide.
The PamphilosEnglish High CourtYes[2002] 2 Lloyd’s Rep 681England and WalesCited for the principle that the duty to act fairly is quite distinct from the autonomous power of the arbitrators to make findings of fact.
Carillion Construction Limited v Devonport Royal Dockyard LimitedEnglish Court of AppealYes[2005] EWCA Civ 1358England and WalesCited for the principle that it is often not practicable for an adjudicator to put to the parties his provisional conclusions for comment.
Trustees of Rotoaira Forest Trust v Attorney-GeneralNew Zealand High CourtYes[1999] 2 NZLR 452New ZealandCited for the principles applicable to the requirements of natural justice in arbitration.
ABB AG v Hochtief Airport GmbHN/AYes[2006] 2 Lloyd’s Rep 1N/ACited for the principle that it is not a ground for intervention that the court considers that it might have done things differently or expressed its conclusions on the essential issues at greater length.
Weldon Plant Ltd v The Commission for the New TownsN/AYes[2001] 1 All ER (Comm) 264N/ACited for the principle that an award should be read supportively and given a reading which is likely to uphold it rather than to destroy it.
Vee Networks Ltd v Econet Wireless International LtdN/AYes[2005] 1 Lloyd’s Rep 192N/ACited for the principle that it is not normally appropriate for the court to try the material issue in order to ascertain whether substantial injustice has been caused.
Anwar Siraj v Ting Kang ChungN/AYes[2003] 2 SLR 287SingaporeCited for the principle that the Court’s supervisory role is to be exercised with a light hand and that arbitrators’ discretionary powers should be circumscribed only by the law and by the parties’ agreement.
PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SAN/AYes[2006] 1 SLR 197SingaporeCited for the principle that the term “public policy” should not be expansively construed so as to avoid providing “a fertile basis for attacking arbitration awards”.
PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SACourt of AppealYes[2007] 1 SLR 597SingaporeCited for the principle that the term “public policy” should not be expansively construed so as to avoid providing “a fertile basis for attacking arbitration awards”.
Government of the Republic of the Philippines v Philippine International Air Terminals Co, IncN/AYes[2007] 1 SLR 278SingaporeCited as a case where the issues of whether time was at large and whether SBT was entitled to an extension of time are not necessary adjuncts to each other even though, as we hold, they are closely related.
Koh Bros Building and Civil Engineering Contractor Pte Ltd v Scotts Development (Saraca) Pte LtdN/AYes[2002] 4 SLR 748SingaporeCited as an example of an arbitrator who simply refuses to hear from a party on an issue which he eventually finds is critical and was submitted to him for a decision.
Zermalt Holdings SA v Nu-Life Upholstery Repairs LtdN/AYes[1985] 2 EGLR 14N/ACited for the principle that the rules of natural justice do require, even in an arbitration conducted by an expert, that matters which are likely to form the subject of decision, in so far as they are specific matters, should be exposed for the comments and submissions of the parties.
Warborough Investments Ltd v S Robinson & Sons (Holdings) LtdEnglish Court of AppealYes[2004] 2 P&CR 6England and WalesCited for the principle that the lack of opportunity in itself caused a substantial injustice, regardless of what the outcome of the arbitration would have been.
Cameroon Airlines v Transnet LimitedN/AYes[2004] EWHC 1829 (Comm)N/ACited for the principle that it is the procedural irregularity, the denial of a fair hearing, if such there be, which must be shown to have caused a substantial injustice.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Arbitration Act (Cap 10, 2002 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Arbitration Award
  • Natural Justice
  • Extension of Time
  • Termination Certificate
  • Repudiatory Breach
  • Liquidated Damages
  • Acts of Prevention
  • Time at Large
  • SIA Conditions
  • Due Diligence
  • Wrongful Termination

15.2 Keywords

  • arbitration
  • construction
  • contract
  • natural justice
  • Singapore

17. Areas of Law

Area NameRelevance Score
Arbitration90
Natural justice70
Contract Law60
Extension of Time50

16. Subjects

  • Arbitration
  • Contract Law
  • Construction Law
  • Civil Procedure