CAI v CAJ: Setting Aside Arbitral Award for Breach of Natural Justice and Excess of Jurisdiction in Construction Dispute
In CAI v CAJ and CAK, the Singapore High Court considered an application by CAI to set aside part of an arbitral award. The dispute arose from a construction project where CAI claimed liquidated damages for delays. The Tribunal granted a 25-day extension of time to the defendants, CAJ and CAK. CAI argued that the Tribunal breached natural justice and exceeded its jurisdiction by considering an extension of time defense raised late in the proceedings. The High Court allowed the application in part, setting aside the Tribunal's decision to grant the extension of time, finding that the Tribunal breached natural justice and exceeded its jurisdiction.
1. Case Overview
1.1 Court
General Division of the High Court of the Republic of Singapore1.2 Outcome
Application allowed in part.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court sets aside part of an arbitral award, citing breach of natural justice and excess of jurisdiction in a construction dispute.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| CAI | Plaintiff | Corporation | Application allowed in part | Partial | Cavinder Bull, Lin Shumin, Amadeus Huang Zhen, Nicholas Jeyaraj s/o Narayanan, Chik Hui Rong Crystal |
| CAJ | Defendant | Corporation | Extension of time of 25 days set aside | Lost | Thio Shen Yi, Md Noor E Adnaan, Neo Zhi Wei, Eugene |
| CAK | Defendant | Corporation | Extension of time of 25 days set aside | Lost | Thio Shen Yi, Md Noor E Adnaan, Neo Zhi Wei, Eugene |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| S Mohan | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Cavinder Bull | Drew & Napier LLC |
| Lin Shumin | Drew & Napier LLC |
| Amadeus Huang Zhen | Drew & Napier LLC |
| Nicholas Jeyaraj s/o Narayanan | Nicholas & Tan Partnership LLP |
| Chik Hui Rong Crystal | Nicholas & Tan Partnership LLP |
| Thio Shen Yi | TSMP Law Corporation |
| Md Noor E Adnaan | TSMP Law Corporation |
| Neo Zhi Wei, Eugene | TSMP Law Corporation |
4. Facts
- CAI and defendants entered into agreements for the construction of a polysilicon plant.
- Defendants were required to achieve Mechanical Completion of the Plant by February 28, 2013.
- Mechanical Completion was delayed due to vibrations in compressors.
- B instructed the defendants to carry out piecemeal rectification of the compressors.
- Defendants never requested an extension of the deadline for Mechanical Completion.
- The Tribunal granted the defendants a 25-day extension of time.
- CAI sought to set aside the Award on grounds of breach of natural justice and excess of jurisdiction.
5. Formal Citations
- CAI v CAJ and another, Originating Summons No 1103 of 2019, [2021] SGHC 21
6. Timeline
| Date | Event |
|---|---|
| Engineering and Procurement Services Agreement and Field Engineering, Field Procurement and Construction Services Agreement signed. | |
| Original deadline for Mechanical Completion. | |
| CAK informed the manufacturer of the compressor motors that the compressors were exhibiting abnormal and excessive vibrations. | |
| Liquidated damages began to accrue. | |
| B commenced arbitration. | |
| B submitted a request for the joinder of CAI to the Arbitration with the mutual consent of the defendants. | |
| Tribunal rendered its final award. | |
| Addendum to the Final Award issued. | |
| CAI filed OS 1103. | |
| Hearing for OS 1103. | |
| Judgment reserved. |
7. Legal Issues
- Breach of Natural Justice
- Outcome: The High Court found that the Tribunal breached natural justice by allowing and ruling on the EOT Defence without giving the Arbitration Claimants a fair and reasonable opportunity to respond.
- Category: Procedural
- Sub-Issues:
- Denial of reasonable opportunity to respond to new defense
- Reliance on purported experience without intimation
- Excess of Jurisdiction
- Outcome: The High Court found that the Tribunal exceeded its jurisdiction by ruling upon and allowing the EOT defense, which had never formed part of the parties’ pleaded cases and was not an issue submitted for the Tribunal’s determination.
- Category: Jurisdictional
- Approbation and Reprobation
- Outcome: The High Court found that the doctrine of approbation and reprobation did not apply because CAI was not taking inconsistent positions by accepting payment in relation to the parts of the Award that it does not dispute, while seeking to challenge a part of the Award that it does dispute.
- Category: Procedural
8. Remedies Sought
- Setting aside of arbitral award
- Increase in liquidated damages
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Arbitration
- Construction Law
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| China Machine New Energy Corp v Jaguar Energy Guatemala LLC | Court of Appeal | Yes | [2020] 1 SLR 695 | Singapore | Emphasized the need for an aggrieved party to give fair intimation to the arbitral tribunal in “real time” if that party felt that a breach of procedural natural justice had occurred during the course of the arbitration proceedings. |
| JVL Agro Industries Ltd v Agritrade International Pte Ltd | High Court | Yes | [2016] 4 SLR 768 | Singapore | Explained the two aspects of a reasonable opportunity to present one’s case: a positive aspect and a responsive aspect. |
| Econ Piling Pte Ltd and another (both formerly trading at Econ-NCC Joint Venture v Shanghai Tunnel Engineering Co Ltd | High Court | Yes | [2011] 1 SLR 246 | Singapore | The initial burden of seeking leave to introduce a new defence laid on the defendants. |
| PT Prima International Development v Kempinski Hotels SA and other appeals | Court of Appeal | Yes | [2012] 4 SLR 98 | Singapore | Pleadings filed in the arbitration provide a convenient way to define the jurisdiction of the tribunal. |
| ASM Shipping Ltd of India v TTMI Ltd of England | High Court of Justice | No | [2005] EWHC 2238 (Comm) | England and Wales | Illustrates challenges to arbitral awards on the basis that one party was unable to present its case due to a breach of procedural natural justice by an arbitral tribunal. |
| BBA and others v BAZ and another appeal | Court of Appeal | Yes | [2020] 2 SLR 453 | Singapore | If a point was not taken before the tribunal at all in “real time”, the majority of the tribunal “cannot be faulted for not foreseeing any complications and not dealing with this issue in depth in the Award, when nothing was put forward to suggest that this was going to be anything other than a straightforward issue |
| L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd and another appeal | Court of Appeal | Yes | [2013] 1 SLR 125 | Singapore | The breach of natural justice was causally connected to the making of the Award and did occasion prejudice to the Arbitration Claimants. |
| AKN and another v ALC and others and other appeals | Court of Appeal | Yes | [2015] 3 SLR 488 | Singapore | A party who seeks to set aside an award on this ground must not only establish a breach of natural justice but also cross two remaining hurdles, namely, to show that there was a causal nexus between the breach and the making of the arbitral award, and that the breach prejudiced the aggrieved party’s rights. |
| GD Midea Air Conditioning Equipment Co Ltd v Tornado Consumer Goods Ltd and another matter | High Court | Yes | [2018] 4 SLR 271 | Singapore | Article 34(2)(a)(iii) of the Model Law applies where the arbitral tribunal improperly decided matters that had not been submitted to it or failed to decide matters which had been submitted to it. |
| CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK | Court of Appeal | Yes | [2011] 4 SLR 305 | Singapore | Article 34(2)(a)(iii) of the Model Law applies where the arbitral tribunal improperly decided matters that had not been submitted to it or failed to decide matters which had been submitted to it. |
| Sui Southern Gas Co Ltd v Habibullah Coastal Power Co (Pte) Ltd | Court of Appeal | Yes | [2010] 3 SLR 1 | Singapore | In determining the scope of the parties’ submission to arbitration, the pleadings filed in the arbitration provide a convenient way to define the jurisdiction of the tribunal. |
| Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd | Court of Appeal | Yes | [1985] 2 EGLR 14 | England and Wales | 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. |
| TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd | High Court | No | [2013] 4 SLR 972 | Singapore | Memoranda of issues may contain catch-all provisions which give arbitral tribunals the discretion to decide on matters which are not expressly listed. |
| Prometheus Marine Pte Ltd v King, Ann Rita | Court of Appeal | Yes | [2018] 1 SLR 1 | Singapore | While pleadings in arbitral proceedings can provide a convenient reference point to determine the scope of an arbitrator’s jurisdiction, that jurisdiction is by no means limited by the pleadings because a practical view has to be taken regarding the substance of the dispute being referred to arbitration. |
| Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd | Court of Appeal | Yes | [2019] 2 SLR 131 | Singapore | The ‘plea’ or objection to jurisdiction which Art 16(3) refers to does not need to be in any specific form or worded in any specific manner. |
| BWG v BWF | Court of Appeal | Yes | [2020] 1 SLR 1296 | Singapore | The foundation of the doctrine of approbation and reprobation is that the person against whom it is applied has accepted a benefit from the matter that he now reprobates. |
| First National Bank Plc v Walker | Court of Appeal | Yes | [2001] FLR 505 | England and Wales | Illustrates the doctrine of approbation and reprobation. |
| European Grain and Shipping Ltd v Johnston | Court of Appeal | No | [1983] 1 QB 520 | England and Wales | The doctrine of approbation and reprobation applies to prevent parties from having defective awards set aside in circumstances where those parties have taken the benefit of the award. |
| CBX and another v CBZ and others | Singapore International Commercial Court | Yes | [2020] SGHC(I) 17 | Singapore | Where part of an award has been set aside, other parts may consequentially be set aside where they are ‘inextricably linked’ to or ‘flow from’ the tribunal’s findings which have been set aside. |
13. Applicable Rules
| Rule Name |
|---|
| ICC Rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| International Arbitration Act | Singapore |
| UNCITRAL Model Law on International Commercial Arbitration | N/A |
15. Key Terms and Keywords
15.1 Key Terms
- Mechanical Completion
- Liquidated Damages
- Extension of Time
- Piecemeal Rectification Works
- Abnormal Vibrations
- General Conditions
- Admitted Instruction
- EOT Defence
- Estoppel Defence
15.2 Keywords
- arbitration
- construction
- breach of natural justice
- excess of jurisdiction
- extension of time
- liquidated damages
16. Subjects
- Arbitration
- Construction Dispute
- Breach of Contract
- Natural Justice
- Excess of Jurisdiction
17. Areas of Law
- Arbitration Law
- Construction Law
- Civil Procedure