Phoenixfin Pte Ltd v Convexity Ltd: Setting Aside Arbitral Award for Breach of Natural Justice

Phoenixfin Pte Ltd, Mek Global Ltd, and Phoenixfin Ltd appealed against the High Court's decision to set aside part of an arbitral award in favor of Convexity Ltd. The Court of Appeal of Singapore, comprising Sundaresh Menon CJ, Judith Prakash JCA, and Steven Chong JCA, dismissed the appeal on 26 October 2021, with full grounds given on 7 March 2022. The dispute arose from a Services Agreement and subsequent arbitration proceedings concerning the enforceability of a 'Make-Whole Clause' and an 'Interest Clause'. The court found a breach of natural justice, as Convexity Ltd did not have a full opportunity to address the Penalty Issue.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Arbitration

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal dismissed. The court found a breach of natural justice in setting aside part of an arbitral award due to the tribunal's handling of the penalty issue.

1.7 Decision Date

6 March 2022

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Phoenixfin Pte Ltd	Appellant	Corporation	Appeal Dismissed	Lost	Gregory Vijayendran, Lester Chua, Ng Shu Wen, Sathinathan s/o M R Karuppiah, Jhogasundram Jayanthi
Mek Global Ltd	Appellant	Corporation	Appeal Dismissed	Lost	Gregory Vijayendran, Lester Chua, Ng Shu Wen, Sathinathan s/o M R Karuppiah, Jhogasundram Jayanthi
Phoenixfin Ltd	Appellant	Corporation	Appeal Dismissed	Lost	Gregory Vijayendran, Lester Chua, Ng Shu Wen, Sathinathan s/o M R Karuppiah, Jhogasundram Jayanthi
Convexity Ltd	Respondent	Corporation	Appeal Upheld	Won	Daniel Chia Hsiung Wen, Ker Yanguang, Wong Ru Ping Jeanette

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Chief Justice	No
Judith Prakash	Justice of the Court of Appeal	Yes
Steven Chong	Justice of the Court of Appeal	No

4. Counsels

Counsel Name	Organization
Gregory Vijayendran	Rajah & Tann Singapore LLP
Lester Chua	Rajah & Tann Singapore LLP
Ng Shu Wen	Rajah & Tann Singapore LLP
Sathinathan s/o M R Karuppiah	Lincoln’s Law LLC
Jhogasundram Jayanthi	Lincoln’s Law LLC
Daniel Chia Hsiung Wen	Morgan Lewis Stamford LLC
Ker Yanguang	Morgan Lewis Stamford LLC
Wong Ru Ping Jeanette	Morgan Lewis Stamford LLC

4. Facts

Convexity Ltd and Phoenixfin Pte Ltd entered into a Services Agreement on 18 December 2018.
Phoenixfin Pte Ltd purported to terminate the agreement on 30 September 2019, alleging breach of contract.
Convexity Ltd commenced arbitration proceedings against Phoenixfin Pte Ltd on 14 October 2019.
The arbitration was conducted under the SIAC Rules, with English law as the governing law.
The Tribunal dismissed Convexity's claim, finding the Make-Whole Clause an unenforceable penalty.
Phoenixfin Pte Ltd applied to amend its Defence & Counterclaim to include the 'penalty clause' defense, but the application was disallowed.
The Tribunal unilaterally re-introduced the Penalty Issue after the Oral Reply Hearing.

5. Formal Citations

Phoenixfin Pte Ltd and others v Convexity Ltd, Civil Appeal No 31 of 2021, [2022] SGCA 17

6. Timeline

Date	Event
2018-12-18	Services Agreement entered into
2019-09-30	Phoenixfin Pte Ltd purported to terminate the Services Agreement
2019-10-14	Arbitration proceedings commenced
2020-01-02	Ms Maria Chedid appointed as sole arbitrator
2020-04-28	Phoenixfin Pte Ltd sent an e-mail to the Tribunal enclosing an amended list of witnesses
2020-05-06	Phoenixfin Pte Ltd applied for leave to adduce expert evidence
2020-05-13	Telephonic session held
2020-05-18	Phoenixfin Pte Ltd applied to amend its Defence & Counterclaim
2020-05-20	Convexity Ltd made its full submissions objecting to the Amendment Application
2020-05-26	Tribunal reserved its decision on whether the Amendment Application should be granted
2020-05-27	Evidentiary hearing began
2020-05-29	Tribunal disallowed the Amendment Application
2020-06-02	Evidentiary hearing concluded
2020-06-12	Parties’ closing submissions were submitted to the Tribunal
2020-06-17	Tribunal conducted an Oral Reply Hearing
2020-07-16	Tribunal informed the parties that she would require “more complete submissions” on the enforceability of the Make-Whole Clause and the Interest Clause
2020-07-21	Convexity Ltd repeated its objection about the non-pleading of the Penalty Issue
2020-07-23	Tribunal responded, stating that she had ruled at the 13 May Teleconference that the first appellant could make submissions through counsel on English law issues identified in its application dated 6 May 2020
2020-08-03	Tribunal directed Convexity Ltd to file supplemental submissions
2020-08-10	Tribunal ruled that it would “afford the [respondent’s] witnesses, Mr Grebnev and Mr Mangazeev, such opportunity at [the] resumed hearing date, and opposing counsel will be afforded opportunity for appropriate cross-examination”
2020-08-12	Convexity Ltd replied asking that the Tribunal “reconsider” her position
2020-08-13	Tribunal rejected Convexity Ltd’s request
2020-08-19	Tribunal issued Procedural Order No 3
2020-08-28	Convexity Ltd objected to the directions made in PO3
2020-08-31	Tribunal stated that her rulings “as set forth in detail in [PO3] and in prior related rulings” were “clear”
2020-09-01	Convexity Ltd replied that the two witnesses would not be attending the hearing
2020-09-02	Convexity Ltd stated that it was of the view that there was “no need” for the witnesses to attend “what essentially would be the final day of closing submissions”
2020-09-04	Hearing fixed
2020-10-02	Tribunal issued her final Award
2020-01-01	Originating Summons No 1158 of 2020 filed
2021-10-26	Appeal dismissed
2022-03-07	Full grounds of decision given

7. Legal Issues

Breach of Natural Justice
- Outcome: The court found that there had been a breach of natural justice, as the respondent was denied the opportunity to address its objections to the introduction of the Penalty Issue.
- Category: Procedural
- Sub-Issues:
  - Denial of opportunity to address objections
  - Failure to consider objections to the introduction of new issues
Scope of Submission to Arbitration
- Outcome: The court found that the Penalty Issue was outside the scope of submission to arbitration.
- Category: Procedural
- Sub-Issues:
  - Introduction of unpleaded issues
  - Tribunal exceeding the scope of submission
Breach of Arbitral Procedure
- Outcome: The court found that the procedure adopted in the arbitration proceedings was contrary to the parties’ agreed procedure.
- Category: Procedural
- Sub-Issues:
  - Failure to adhere to agreed procedure
  - Unilateral alteration of procedure by the tribunal

8. Remedies Sought

Setting aside of arbitral award

9. Cause of Actions

Breach of Contract

10. Practice Areas

Arbitration
Commercial Litigation

11. Industries

Information Technology

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Convexity Ltd v Phoenixfin Pte Ltd and others	High Court	Yes	[2021] SGHC 88	Singapore	The High Court's decision to set aside part of the arbitral award was appealed in this case.
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 an issue known to all parties in arbitration is considered submitted even if not pleaded.
CBX and another v CBZ and others	Court of Appeal	Yes	[2022] 1 SLR 47	Singapore	Referenced to explain the limits on introducing new claims in arbitration and the importance of fair opportunity to address issues.
PT Prima International Development v Kempinski Hotels SA and other appeals	Court of Appeal	Yes	[2012] 4 SLR 98	Singapore	Cited to clarify that new facts or changes of an ancillary nature, known to all parties, are part of the dispute and need not be specifically pleaded.
GD Midea Air Conditioning Equipment Co Ltd v Tornado Consumer Goods Ltd and another matter	High Court	Yes	[2018] 4 SLR 271	Singapore	Cited for the requirements to set aside an arbitral award on the ground of breach of agreed procedure under Art 34(2)(a)(iv) of the Model Law.
AMZ v AXX	Court of Appeal	Yes	[2016] 1 SLR 549	Singapore	Cited regarding the failure to raise an objection during the proceedings before the tribunal.
China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another	Court of Appeal	Yes	[2020] 1 SLR 695	Singapore	Cited for the principle that while a tribunal is the master of its own procedure, due process is an essential limitation on this autonomy.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

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

15. Key Terms and Keywords

15.1 Key Terms

Arbitral Award
Breach of Natural Justice
Penalty Clause
Make-Whole Clause
SIAC Rules
UNCITRAL Model Law
Arbitral Procedure
Scope of Submission
Amendment Application
Oral Reply Hearing

15.2 Keywords

arbitration
natural justice
penalty clause
singapore
contract

16. Subjects

Arbitration
Contract Law
Civil Procedure

17. Areas of Law

Arbitration Law
Contract Law
Civil Procedure