CEF & CEG v CEH: Setting Aside Arbitral Award for Breach of Natural Justice and Exceeding Scope of Arbitration

CEF and CEG, the plaintiffs, applied to the High Court of Singapore to set aside an arbitral award against CEH, the defendant, alleging breaches of natural justice and exceeding the scope of arbitration. The dispute arose from a contract for the construction of a steel plant in Ruritania. Vinodh Coomaraswamy J dismissed the plaintiffs' application, finding that the issues stemmed from the plaintiffs' tactical decisions during arbitration, not from any actions of the tribunal. The court upheld the arbitral award, and the plaintiffs have appealed.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Plaintiffs' application dismissed with costs.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Plaintiffs' application to set aside an arbitral award is dismissed, finding no breach of natural justice or exceeding the scope of arbitration. The court upheld the award.

1.7 Decision Date

18 May 2021

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
CEF	Plaintiff	Corporation	Application Dismissed	Lost	Daryl Wong of WongPartnership LLP Alvin Yeo of WongPartnership LLP Chou Sean Yu of WongPartnership LLP Oh Sheng Loong of WongPartnership LLP
CEG	Plaintiff	Corporation	Application Dismissed	Lost	Daryl Wong of WongPartnership LLP Alvin Yeo of WongPartnership LLP Chou Sean Yu of WongPartnership LLP Oh Sheng Loong of WongPartnership LLP
CEH	Defendant	Corporation	Arbitral Award Upheld	Won	Davinder Singh of Davinder Singh Chambers LLC Hanspreet Singh Sachdev of Davinder Singh Chambers LLC David Fong of Davinder Singh Chambers LLC

3. Judges

Judge Name	Title	Delivered Judgment
Vinodh Coomaraswamy	Judge	Yes

4. Counsels

Counsel Name	Organization
Daryl Wong	WongPartnership LLP
Alvin Yeo	WongPartnership LLP
Chou Sean Yu	WongPartnership LLP
Oh Sheng Loong	WongPartnership LLP
Davinder Singh	Davinder Singh Chambers LLC
Hanspreet Singh Sachdev	Davinder Singh Chambers LLC
David Fong	Davinder Singh Chambers LLC

4. Facts

The first plaintiff was contracted to design and build a steel making plant for the Parent, later replaced by the defendant.
The contract was not a turnkey contract, requiring the defendant to erect a steel building to house the plant.
The plant never achieved its production target, leading to disputes between the parties.
The plaintiffs claimed the plant was complete, seeking a final acceptance certificate, which the defendant rejected.
The defendant counterclaimed for rescission based on misrepresentation.
The arbitral tribunal upheld the defendant’s misrepresentation claim and rescinded the contract and service agreement.
The tribunal ordered the defendant to repay the contract price less deductions for loans and the defendant's use of the plant.

5. Formal Citations

CEF and another v CEH, Originating Summons No 241 of 2020, [2021] SGHC 114

6. Timeline

Date	Event
2011-06-01	Contract signed between the Parent and the first plaintiff for the construction of a steel making plant.
2011-09-01	Assignment and novation: the defendant replaced the Parent as the first plaintiff’s counterparty under the Contract.
2014-03-01	Plaintiffs supplied additional equipment and services to the defendant.
2014-05-01	Plaintiffs and defendant entered into a Service Agreement.
2015-07-01	Plaintiffs extended first tranche of loans to the defendant.
2015-11-01	Plaintiffs extended second tranche of loans to the defendant.
2016-02-01	Plaintiffs claimed the Plant was complete and entitled to receive its final acceptance certificate; defendant rejected the claim.
2016-08-01	Plaintiffs commenced arbitration against the defendant.
2016-08-01	Defendant commenced arbitration against the plaintiffs.
2016-10-01	The two arbitrations were consolidated.
2017-01-01	Parties and tribunal signed the terms of reference for the arbitration.
2018-10-01	Joint evidentiary hearing in the consolidated arbitration took place.
2018-11-01	Joint evidentiary hearing in the consolidated arbitration took place.
2019-11-01	Tribunal issued its award.
2020-02-25	Affidavit filed on behalf of the Plaintiffs by the 1st Plaintiff’s Executive Vice President and Group General Counsel.
2020-06-22	Order made under ss 22 and 23 of the International Arbitration Act.
2020-08-04	Plaintiff's Written Submissions.
2020-08-04	Defendant's Written Submissions.
2020-08-11	Hearing date.
2020-08-12	Hearing date.
2020-04-06	Defendant’s 1st Expert Report.
2020-05-06	Affidavit filed on behalf of Defendant by Group Managing Director of Defendant’s holding company.
2020-06-05	Affidavit filed on behalf of Plaintiffs by the 1st Plaintiff’s Executive Vice President and Group General Counsel.
2021-05-19	Judgment date.

7. Legal Issues

Breach of Natural Justice
- Outcome: The court found no breach of natural justice.
- Category: Procedural
- Sub-Issues:
  - Inability to present case
  - Tribunal making decision on no evidence
Scope of Submission to Arbitration
- Outcome: The court found that the tribunal did not exceed the scope of submission to arbitration.
- Category: Procedural
- Sub-Issues:
  - Decision on matters beyond scope of submission
Enforceability of Arbitral Award
- Outcome: The court found the arbitral award to be enforceable.
- Category: Substantive
Rescission of Contract
- Outcome: The court upheld the tribunal's decision to rescind the contract.
- Category: Substantive

8. Remedies Sought

Setting aside of arbitral award
Declaration that plaintiffs performed obligations
Damages

9. Cause of Actions

Breach of Contract
Misrepresentation

10. Practice Areas

Arbitration
Commercial Litigation

11. Industries

Construction
Steel Industry

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation	High Court	Yes	[2010] 4 SLR 672	Singapore	Cited to support the interpretation of Article 34(2)(a)(iv) of the Model Law, stating that it contemplates situations where there are irregularities in the procedural rules agreed between the parties.
AMZ v AXX	High Court	Yes	[2016] 1 SLR 549	Singapore	Cited for the principle that an applicant challenging an award under Art 34(2)(a)(iv) must establish that the parties agreed on a particular arbitral procedure or that the Model Law prescribes a particular arbitral procedure, the tribunal failed to adhere to that agreed or prescribed procedure, and the failure to do so was causally related to the tribunal’s decision.
Margulies Brothers Ltd v Dafnis Thomaides & Co (UK) Ltd	Unknown	Yes	[1958] 1 WLR 398	England and Wales	The plaintiffs relied on this case to argue that there is an implied term in law in every arbitration agreement that any award which results from it must be in a form which is enforceable. The court distinguished this case.
Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd and another	Court of Appeal	Yes	[2008] 2 SLR(R) 623	Singapore	Cited as authority for the principle that where it is clear that a claimant has suffered some substantial damage, the fact that assessing the quantum of that damage is difficult because of its nature is no bar to an award of damages.
Yip Holdings Pte Ltd v Asia Link Marine Industries Pte Ltd	Court of Appeal	Yes	[2012] 1 SLR 131	Singapore	Cited as authority for the principle that the law does not require a claimant to prove the quantum of its damage with exact certainty.
Strait Colonies Pte Ltd v SMRT Alpha Pte Ltd	Court of Appeal	Yes	[2018] 2 SLR 441	Singapore	Cited for the principle that restitution and counter-restitution of benefits is the natural legal consequence of rescission.
RBC Properties Pte Ltd v Defu Furniture Pte Ltd	High Court	Yes	[2015] 1 SLR 997	Singapore	Cited for the principle that restitution and counter-restitution of benefits is the natural legal consequence of rescission.
AKN v ALC	Court of Appeal	Yes	[2015] 3 SLR 488	Singapore	Cited for the principle that a claim is within the scope of a submission to arbitration if a party could have, in principle, advanced that claim by way of an amendment to its pleadings in the arbitration.
Soh Beng Tee v Fairmount Development Pte Ltd	High Court	Yes	[2007] 3 SLR(R) 86	Singapore	Cited for the principle that the court will look at the pleadings and the proceedings in the arbitration holistically rather than technically in order to determine whether it ought to have been clear to the applicant that the point was in issue.
ADG v ADI	Court of Appeal	Yes	[2014] 3 SLR 481	Singapore	Cited for the principle that Article 34(2)(a)(ii) of the Model Law, in so far as it relates to a party’s ability to present its case is co-extensive in scope and result with s 24(b) of the Act.
Government of the Republic of the Philippines v Philippine International Air Terminals Co, Inc	High Court	Yes	[2007] 1 SLR(R) 278	Singapore	Cited for the principle that it is generally convenient to analyse a challenge under Art 34(2)(a)(ii) of the Model Law together with a challenge under s 24(b) of the Act.
Triulzi Cesare SRL v Xinyi Group (Glass) Co Ltd	High Court	Yes	[2015] 1 SLR 114	Singapore	Cited for the principle that if an applicant was given an opportunity to present its case on a particular issue but did not avail itself of that opportunity, the award will not be set aside.
L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd	High Court	Yes	[2013] 1 SLR 125	Singapore	Cited for the principle that the applicant must show that the breach of natural justice denied the tribunal the benefit of evidence or arguments that had a real, as opposed to a fanciful, chance of making a difference to its decision.
Salt v Stratstone Specialist Ltd	England and Wales Court of Appeal (Civil Division)	Yes	[2015] EWCA Civ 745	England and Wales	Cited for the principle that the plaintiffs bore the burden of proving the quantum of the diminution in value of the Plant.
Prometheus Marine Pte Ltd v King, Ann Rita and another appeal	Court of Appeal	Yes	[2018] 1 SLR 1	Singapore	Cited for the principle that a tribunal’s error of law – no matter how obvious, egregious or prejudicial – is no ground for setting aside an award under the Act or the Model Law.
AUF v AUG and other matters	High Court	Yes	[2016] 1 SLR 859	Singapore	Cited for the no evidence rule, which posits that an award which contains material findings of fact made with no evidential basis at all is liable to be set aside for breach of natural justice. The court rejected the plaintiffs’ submission that the no evidence rule should be accepted as a part of Singapore law.
TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd	High Court	Yes	[2013] 4 SLR 972	Singapore	Cited for the principle that whether an award is adequately reasoned is a matter of degree to be determined in the circumstances of each case and that inadequacy of reasons is not a ground, in itself, for setting aside an award.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
International Arbitration Act (Cap 143A, 2002 Rev Ed)	Singapore
Misrepresentation Act (Cap. 390, 1994 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Arbitral award
Natural justice
Scope of arbitration
Rescission
Misrepresentation
Counter-restitution
Reliance loss
Enforceability
Terms of Reference
Plant
Steel Building
Site

15.2 Keywords

arbitration
setting aside
natural justice
contract
misrepresentation
Singapore
construction
steel plant

17. Areas of Law

Area Name	Relevance Score
Arbitration	95
Rescission	80
Misrepresentation	75
Natural justice	60
Breach of Contract	60
Recourse against award	60
Contract Law	60
Damages	50
Jurisdiction of Arbitral tribunal	50
Scope of agreement	50
Civil Procedure	40
International Commercial Arbitration	40
Enforcement of Foreign Arbitral Awards	30

16. Subjects

Arbitration
Contract Law
Civil Procedure