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

CBS, a bank, appealed against the High Court's decision to set aside an arbitral award in favor of CBS against CBP, an Indian steel manufacturing company. The dispute arose from a coal purchase agreement where CBP failed to pay for a shipment. The arbitrator disallowed CBP's witnesses, leading to a breach of natural justice. The Court of Appeal dismissed the appeal, upholding the setting aside of the award.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding setting aside an arbitral award. The court upheld the decision to set aside the award due to a breach of natural justice.

1.7 Decision Date

19 January 2021

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
CBS	Appellant	Corporation	Appeal Dismissed	Lost	Peh Aik Hin of Allen & Gledhill LLP Lee May Ling of Allen & Gledhill LLP Rebecca Chia Su Min of Allen & Gledhill LLP Sampson Lim Jie Hao of Allen & Gledhill LLP
CBP	Respondent	Corporation	Judgment in favor of Respondent	Won	Clarence Lun Yaodong of Foxwood LLC Samuel Lim Jie Bin of Foxwood LLC Ammani Mathivanan of Foxwood LLC Leng Ting Kun of Foxwood LLC Charles Ho Jun Ji of Foxwood LLC

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Chief Justice	No
Judith Prakash	Justice of the Court of Appeal	No
Quentin Loh	Judge of the Appellate Division	Yes

4. Counsels

Counsel Name	Organization
Peh Aik Hin	Allen & Gledhill LLP
Lee May Ling	Allen & Gledhill LLP
Rebecca Chia Su Min	Allen & Gledhill LLP
Sampson Lim Jie Hao	Allen & Gledhill LLP
Clarence Lun Yaodong	Foxwood LLC
Samuel Lim Jie Bin	Foxwood LLC
Ammani Mathivanan	Foxwood LLC
Leng Ting Kun	Foxwood LLC
Charles Ho Jun Ji	Foxwood LLC

4. Facts

CBS, a bank, sought to enforce an arbitral award against CBP, a steel manufacturer.
The dispute arose from a coal purchase agreement between CBP and a seller, whose rights were assigned to CBS.
CBP claimed a subsequent oral agreement modified the price, which CBS disputed.
The arbitrator barred CBP from presenting witness testimony regarding the alleged oral agreement.
The High Court set aside the arbitral award due to a breach of natural justice.
CBS appealed, arguing no breach occurred and CBP was not prejudiced.

5. Formal Citations

CBS v CBP, Civil Appeal No 30 of 2020, [2021] SGCA 4
CBP v CBS, , [2020] SGHC 23

6. Timeline

Date	Event
2014-11-19	Buyer entered into an agreement with Seller to purchase coal.
2014-12-21	Second shipment of coal was shipped by the Seller to the Buyer.
2015-01-07	First Agreement and Second Agreement were executed.
2015-01-14	Coal arrived at Gangavaram, India.
2015-01-19	Seller informed Buyer of assignment of trade debts to the Bank.
2015-01-22	Bank sent a bill of exchange to the Buyer for payment.
2015-02-12	Buyer's bank sent a SWIFT message to the Bank stating Buyer accepted the Bill of Exchange.
2015-06-22	Buyer failed to make payment on the Bill of Exchange.
2015-10-01	Buyer raised issues regarding quantity and price of coal.
2015-12-02	Seller met with Buyer's representatives to discuss outstanding payment and alleged shortfall.
2016-10-21	Bank commenced arbitration against the Buyer.
2017-04-25	Sole arbitrator was appointed.
2017-12-06	Arbitrator issued a partial award concluding he had jurisdiction.
2018-01-08	Buyer failed to file its defence.
2018-03-16	Buyer informed arbitrator it intended to contest the claim on its merits.
2018-03-20	Arbitrator granted Buyer 14 days to file defence and counterclaim.
2018-04-08	Buyer sought a further extension.
2018-04-10	Buyer submitted its defence and counterclaim.
2018-04-24	Bank filed its reply and defence to the Buyer's reply on merits.
2018-05-07	Buyer stated an oral hearing was required and necessary.
2018-05-08	Arbitrator sought a descriptive basis of what the Buyer expects to develop with the introduction of the proposed witnesses.
2018-05-11	Buyer re-asserted the necessity of examining the witnesses.
2018-06-01	Arbitrator directed detailed written statements from each of the witnesses the Buyer plans to call.
2018-06-01	Buyer stated that it was a breach of the rules of natural justice for the arbitrator to require it to submit witness statements before he decided whether to hold an oral hearing.
2018-06-04	Arbitrator replied to the Buyer's email assuring parties that he had not made any decisions on whether a hearing ought to be held.
2018-06-06	Buyer replied stating that the calling of witnesses was within its entitlement under r 28.1 of the SCMA Rules.
2018-06-07	Arbitrator replied denying the Buyer's request to dispense with the detailed witness statements.
2018-07-04	Arbitrator wrote to both counsel, repeating his request for the witness statements from the Buyer and a brief of what constitutes breach of natural justice under Singapore law.
2018-07-16	Buyer reiterated its earlier position that it was entitled to call its witnesses to give oral evidence notwithstanding the lack of written statements for each witness.
2018-07-20	Arbitrator directed that a hearing would be held on 21 August 2018 for oral submissions only.
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. The Buyer did not join the call.
2018-11-16	Final Award was issued.
2020-08-05	Hearing date.
2020-08-26	Hearing date.
2021-01-20	Judgment reserved.

7. Legal Issues

Breach of Natural Justice
- Outcome: The court found that the arbitrator's denial of the Buyer's witness evidence constituted a breach of natural justice.
- Category: Procedural
- Sub-Issues:
  - Denial of opportunity to present evidence
  - Failure to allow witness testimony
- Related Cases:
  - [2007] 3 SLR(R) 86
  - [2020] 1 SLR 695
  - [2013] 1 SLR 125
Interpretation of Arbitration Rules
- Outcome: The court interpreted SCMA Rule 28.1 to mean that unless parties agree otherwise, an oral hearing for the presentation of witnesses is mandatory.
- Category: Substantive
- Sub-Issues:
  - Interpretation of SCMA Rule 28.1
  - Scope of arbitrator's powers
Arbitrator's Jurisdiction
- Outcome: The court did not address this issue.
- Category: Jurisdictional
- Sub-Issues:
  - Validity of assignment of arbitration clause

8. Remedies Sought

Monetary Damages
Setting aside of arbitral award

9. Cause of Actions

Breach of Contract

10. Practice Areas

Arbitration
Commercial Litigation

11. Industries

Banking
Steel Manufacturing

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 principles regarding setting aside an arbitral award on the ground of breach of natural justice.
China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another	Court of Appeal	Yes	[2020] 1 SLR 695	Singapore	Cited for the key principles for setting aside an arbitral award on the ground of breach of natural justice.
L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd and another appeal	Court of Appeal	Yes	[2013] 1 SLR 125	Singapore	Cited for the test of prejudice in setting aside an arbitral award for breach of natural justice.
Triulzi Cesare SRL v Xinyi Group (Glass) Co Ltd	High Court	Yes	[2015] 1 SLR 114	Singapore	Cited for the principle that the right to be heard must be assessed within the specific context of the facts and circumstances of the complaint.
ADG and another v ADI and another matter	High Court	Yes	[2014] 3 SLR 481	Singapore	Cited for the principle that the 'full opportunity' of presenting one's case must be balanced against considerations of reasonableness, efficiency and fairness.
Anwar Siraj and another v Ting Kang Chung and another	High Court	Yes	[2003] 2 SLR(R) 287	Singapore	Cited for the principle that the broad procedural powers of an arbitral tribunal are subject to the fundamental rules of natural justice.
Dalmia Dairy Industries Ltd v National Bank of Pakistan	English High Court	Yes	[1978] 2 Lloyd’s Rep 223	England	Cited for the principle that national courts have expressly recognised a tribunal’s power to gate witnesses even where the arbitral rules do not contain such an express provision.
AKN and another v ALC and others and other appeals	Court of Appeal	Yes	[2016] 1 SLR 966	Singapore	Cited for the purpose of Art 34(4) of the Model Law.
AKN and another v ALC and others and other appeals	Court of Appeal	Yes	[2015] 3 SLR 488	Singapore	Mentioned in relation to AKN (No 2).
Koh Sin Chong Freddie v Chan Cheng Wah Bernard and others and another appeal	Court of Appeal	Yes	[2013] 4 SLR 629	Singapore	Mentioned in relation to s 37 of the SCJA.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2014 Rev Ed)
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
Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Arbitration
Breach of Natural Justice
Setting Aside
Witness Gating
SCMA Rules
Oral Agreement
Coal Purchase Agreement
Assignment of Receivables

15.2 Keywords

arbitration
breach of natural justice
setting aside
SCMA Rules
witnesses
oral agreement
coal

17. Areas of Law

Area Name	Relevance Score
Arbitration	95
Setting Aside Arbitral Award	90
Recourse against award	90
International Arbitration Law	90
Natural justice	80
Jurisdiction of Arbitral tribunal	70
Breach of Contract	60
Contract Law	60
Construction of Contract	40
Revision of Proceedings	40
Interpretation of Contracts	40
Assignment	40
Duty of Candour	30
Estoppel	20
Rules of Court 2021	5
Affidavits	5
Commercial Real Estate	5

16. Subjects

Arbitration
Breach of Contract
Civil Procedure