CBP v CBS: Setting Aside Arbitration Award for Breach of Natural Justice

In CBP v CBS, the Singapore High Court heard an application to set aside an arbitration award. The plaintiff, CBP, argued that the arbitrator breached the rules of natural justice by denying them the opportunity to present their case fully. The court, presided over by Ang Cheng Hock J, found that the arbitrator's decision to deny the plaintiff the right to call witnesses amounted to a breach of the fair hearing rule, causing prejudice to the plaintiff. Consequently, the court set aside the arbitration award.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Arbitration award set aside.

1.3 Case Type

Arbitration

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court sets aside an arbitration award due to a breach of natural justice, specifically the denial of a fair hearing.

1.7 Decision Date

30 January 2020

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
CBS	Defendant	Corporation	Appeal Lost	Lost	Chia Su Min Rebecca of Allen & Gledhill LLP Peh Aik Hin of Allen & Gledhill LLP Lee May Ling of Allen & Gledhill LLP
CBP	Plaintiff	Corporation	Appeal Won	Won	Clarence Lun Yaodong of Foxwood LLC Samuel Lim Jie Bin of Foxwood LLC Lim Jia Ying of Foxwood LLC Lin Yu Mei of Foxwood LLC Giam Zhen Kai of Foxwood LLC Tan Yingxian Selwyn of Foxwood LLC

3. Judges

Judge Name	Title	Delivered Judgment
Ang Cheng Hock	Judge	Yes

4. Counsels

Counsel Name	Organization
Chia Su Min Rebecca	Allen & Gledhill LLP
Peh Aik Hin	Allen & Gledhill LLP
Lee May Ling	Allen & Gledhill LLP
Clarence Lun Yaodong	Foxwood LLC
Samuel Lim Jie Bin	Foxwood LLC
Lim Jia Ying	Foxwood LLC
Lin Yu Mei	Foxwood LLC
Giam Zhen Kai	Foxwood LLC
Tan Yingxian Selwyn	Foxwood LLC

4. Facts

Buyer and Seller entered into agreements for the sale and purchase of coal.
The agreements contained an arbitration clause.
The Seller assigned its trade debts to the Bank.
A dispute arose regarding the second tranche of coal.
The Bank commenced arbitration proceedings against the Buyer.
The Buyer raised a jurisdictional objection to the arbitration proceedings.
The arbitrator denied the Buyer the right to call witnesses.

5. Formal Citations

CBP v CBS, Originating Summons No 215 of 2019, [2020] SGHC 23

6. Timeline

Date	Event
2014-11-19	Buyer entered into an agreement to buy coal from the Seller.
2014-12-21	Seller shipped the second tranche of coal.
2015-01-14	Coal arrived at the port of Gangavaram, India.
2015-01-19	Seller informed the Buyer of the assignment of trade debts to the Bank.
2015-01-22	Bank sent the Bill of Exchange to the Buyer.
2015-02-12	Buyer's bank sent a SWIFT message to the Bank, indicating acceptance of the Bill of Exchange.
2015-06-22	Buyer failed to make payment of the outstanding price.
2015-07-06	Bank sent chasers to the Buyer seeking payment.
2015-10-01	Buyer alleged short delivery and reduced market price.
2015-12-02	Representatives of the Seller met with the Buyer’s representatives.
2016-10-21	Bank commenced arbitration proceedings against the Buyer.
2017-04-25	Sole arbitrator was appointed.
2017-12-06	Arbitrator issued a partial award.
2018-01-08	Buyer failed to file its defence.
2018-03-16	Buyer wrote to the arbitrator stating that it wished to contest the arbitration on its merits.
2018-04-08	Buyer sought a further extension of two days.
2018-04-10	Buyer submitted its defence and counterclaim.
2018-04-24	Bank submitted its reply and defence to the Buyer’s counterclaim.
2018-06-01	Arbitrator made a direction that the Buyer provide detailed written statements from each of the Buyer’s named witnesses.
2018-06-01	Buyer stated that it was a breach of the rules of natural justice for the arbitrator to require the Buyer to submit a written statement from each witness before he decided whether to hold an oral hearing for the witnesses to be examined.
2018-06-04	Arbitrator assured parties that he had not made any decisions on whether a hearing ought to be held and if so, what the form of such hearing would be.
2018-06-06	Buyer stated that the calling of witnesses was within its entitlement under r 28.1 of the SCMA Rules.
2018-06-07	Arbitrator denied the Buyer’s request to dispose of the need to provide detailed written statements of its named witnesses.
2018-07-04	Arbitrator wrote to both counsel, again requesting for written witness statements from the Buyer.
2018-07-16	Buyer replied, simply stating that it was reiterating the contents of its earlier emails where it had asserted that it was entitled to call its witnesses notwithstanding the lack of written statements for each witness.
2018-07-20	Arbitrator made his direction that an oral hearing would be conducted on 21 August 2018, but there would be no witnesses presented at the hearing.
2018-08-20	Buyer wrote to the arbitrator to reiterate that the denial of witness examination was a violation of the principles of natural justice.
2018-08-21	Arbitrator conducted the hearing via telephone.
2018-11-16	Final award was issued.
2019-08-05	Defendant’s Submissions
2019-08-07	Hearing date
2019-10-23	Hearing date
2019-10-25	Hearing date
2020-01-31	Judgment reserved.

7. Legal Issues

Breach of Natural Justice
- Outcome: The court found that the arbitrator breached the rules of natural justice by denying the plaintiff the right to call witnesses, thus setting aside the arbitration award.
- Category: Substantive
- Sub-Issues:
  - Denial of fair hearing
  - Inability to present case
Jurisdiction of Arbitrator
- Outcome: The court did not rule on this issue as the award was set aside on other grounds.
- Category: Jurisdictional
- Sub-Issues:
  - Assignment of arbitration agreement
  - Timeliness of jurisdictional objection

8. Remedies Sought

Setting aside of arbitration award

9. Cause of Actions

Breach of Contract

10. Practice Areas

Arbitration
Commercial Litigation

11. Industries

Manufacturing
Banking

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd	High Court	Yes	[2007] 3 SLR(R) 86	Singapore	Cited for the four requirements to establish a breach of natural justice in challenging an arbitration award.
John Holland Pty Ltd v Toyo Engineering Corp (Japan)	High Court	Yes	[2001] 1 SLR(R) 443	Singapore	Cited with approval in Soh Beng Tee for the requirements to establish a breach of natural justice.
ADG and another v ADI and another matter	High Court	Yes	[2014] 3 SLR 481	Singapore	Cited for the lack of distinction between the right to be heard as an aspect of the rules of natural justice under s 24(b) of the IAA and Art 34(2)(a)(ii) of the Model Law.
Re Shankar Alan s/o Anant Kulkarni	High Court	Yes	[2007] 1 SLR(R) 85	Singapore	Cited regarding insufficient evidence to show a prima facie case of reasonable suspicion of bias on the part of the arbitrator.
TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd	High Court	Yes	[2013] 4 SLR 972	Singapore	Cited regarding insufficient evidence to show a prima facie case of reasonable suspicion of bias on the part of the arbitrator.
Taigo Ltd v China Master Shipping Ltd	High Court	Yes	[2010] HKEC 952	Hong Kong	Cited as an example of written documents that parties submit may include pleadings, documentary evidence and, in certain instances, witness statements.
Dalmia Dairy Industries Ltd v National Bank of Pakistan	English Court of Appeal	Yes	[1978] 2 Lloyd’s Rep 223	England and Wales	Cited for the principle that national courts have recognized a tribunal's power to 'gate' witnesses, including by declining to set aside arbitral awards solely on the ground of a tribunal's decision to refuse to hear witness testimony.
ADG and another v ADI and another matter	High Court	Yes	[2014] 3 SLR 481	Singapore	Cited regarding the wide and flexible procedural power of the Tribunal is subject to the standards set by the rules of natural justice and in particular the right to be heard.
Triulzi Cesare SRL v Xinyi Group (Glass) Co Ltd	High Court	Yes	[2015] 1 SLR 114	Singapore	Cited for the principle that an arbitral tribunal is the master of its own procedure, but its case management powers are not without limits, and are subject to the rules of natural justice, which include the right to be heard.

13. Applicable Rules

Rule Name
Arbitration Rules of the Singapore Chamber of Maritime Arbitration (3rd Edition, 2015)

14. Applicable Statutes

Statute Name	Jurisdiction
International Arbitration Act (Cap 143A, 2002 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Arbitration
Breach of natural justice
Fair hearing
Witness gating
Assignment of receivables
Oral agreement
SCMA Rules

15.2 Keywords

Arbitration
Breach of natural justice
Singapore
Setting aside
Award
Witnesses

17. Areas of Law

Area Name	Relevance Score
Arbitration	90
Natural justice	75
Contract Law	60
Witness gating	50

16. Subjects

Arbitration
Contract Law
Civil Procedure