Bagadiya Brothers v Ghanashyam Misra: Remission of Arbitral Award for Natural Justice Breach
In Bagadiya Brothers (Singapore) Pte Ltd v Ghanashyam Misra & Sons Pte Ltd, the High Court of Singapore addressed an application to set aside an arbitral award. The plaintiff, Bagadiya Brothers, challenged the award, alleging breaches of natural justice. The court found that the arbitrator breached natural justice by failing to allow the parties a reasonable opportunity to be heard on the issue of a 'reasonable price' under the Sale of Goods Act. Instead of setting aside the award entirely, the court suspended the setting aside proceedings and remitted the award to the arbitrator for further consideration.
1. Case Overview
1.1 Court
General Division of the High Court of the Republic of Singapore1.2 Outcome
Setting aside proceedings suspended; Award remitted to the Tribunal.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court remitted an arbitral award due to a breach of natural justice, concerning the determination of a reasonable price under the Sale of Goods Act.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Bagadiya Brothers (Singapore) Pte Ltd | Plaintiff | Corporation | Setting aside proceedings suspended | Stayed | |
| Ghanashyam Misra & Sons Pte Ltd | Defendant | Corporation | Award remitted to the Tribunal | Remanded |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| S Mohan | Judge | Yes |
4. Counsels
4. Facts
- Parties entered into two contracts in February 2017 for the sale of iron ore fines.
- The contracts contained a price adjustment clause for deviations in iron content.
- The contracts contained an arbitration agreement referring disputes to SIAC.
- The iron ore fines did not meet the contractually specified minimum iron content.
- Parties agreed to addenda to revise the final price based on actual sales.
- Disputes arose regarding obligations under the contracts and addenda.
- Defendant commenced arbitration proceedings against the plaintiff.
- The arbitrator found the plaintiff breached the contracts and addenda.
- The arbitrator found the Price Adjustment Mechanism was vague and ambiguous.
- The arbitrator applied s 8 of the Sale of Goods Act to determine a reasonable price.
5. Formal Citations
- Bagadiya Brothers (Singapore) Pte Ltd v Ghanashyam Misra & Sons Pte Ltd, Originating Summons No 1115 of 2021, [2022] SGHC 246
6. Timeline
| Date | Event |
|---|---|
| Sale and purchase contract (Tiger Shanxi Contract) executed. | |
| Sale and purchase contract (Asia Ruby Contract) executed. | |
| Defendant loaded Iron Ore Fines onto the Asia Ruby III. | |
| Defendant loaded Iron Ore Fines onto the Tiger Shanxi. | |
| Asia Ruby III arrived at port of discharge in Shandong, China. | |
| Tiger Shanxi arrived at port of discharge in Tangshan, China. | |
| Parties agreed to addendum to each of the Contracts. | |
| Iron Ore Fines supplied under the Asia Ruby Contract were sold to third parties. | |
| Iron Ore Fines supplied under the Tiger Shanxi Contract were sold to third parties. | |
| Plaintiff made a Provisional Payment of US$417,555.06 to the defendant. | |
| Defendant commenced two sets of arbitration proceedings against the plaintiff. | |
| Hearing of the Arbitration took place. | |
| Final Award issued by sole arbitrator. | |
| Plaintiff filed OS 1115 seeking to set aside the Award. | |
| Hearing before S Mohan J. | |
| Orders made to suspend the setting aside proceedings and remit the Award to the Tribunal. | |
| Full grounds of decision issued. |
7. Legal Issues
- Breach of Natural Justice
- Outcome: The court found that the arbitrator breached the rules of natural justice by failing to allow the parties a reasonable opportunity to be heard on the issue of a 'reasonable price' under the Sale of Goods Act.
- Category: Procedural
- Sub-Issues:
- Failure to provide reasonable opportunity to be heard
- Adoption of a chain of reasoning without notice
- Applicability of Section 8(2) of the Sale of Goods Act
- Outcome: The court found that the arbitrator erred in applying s 8(2) of the Sale of Goods Act without giving the parties an opportunity to be heard on the issue of what constitutes a reasonable price.
- Category: Substantive
- Sub-Issues:
- Determination of a reasonable price
- Absence of agreed price
- Remission of Arbitral Award
- Outcome: The court found that it was appropriate to remit the award to the arbitrator for further consideration of the issue of a reasonable price.
- Category: Procedural
- Sub-Issues:
- Appropriateness of remission
- Remediability of error
8. Remedies Sought
- Setting aside of Arbitral Award
- Remission of Arbitral Award
9. Cause of Actions
- Breach of Contract
- Breach of Fiduciary Duty
10. Practice Areas
- Commercial Arbitration
- International Arbitration
- Commercial Litigation
11. Industries
- Commodities Trading
- Mining
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| AKN and another v ALC and others and other appeals | Court of Appeal | Yes | [2016] 1 SLR 966 | Singapore | Cited for the principle that the power to remit an arbitral award enables a court to forestall the drastic consequence of setting aside the award when there has been some defect in the arbitral process. |
| BZW and another v BZV | Court of Appeal | Yes | [2022] 1 SLR 1080 | Singapore | Cited to distinguish the present case from circumstances where the breaches of natural justice were fundamental and woven deeply into the Award, making remission inappropriate. |
| BTN and another v BTP and another and other matters | High Court | Yes | [2021] SGHC 271 | Singapore | Cited for the principle that the affidavit in support of a setting aside application must reasonably contain all the facts, evidence and grounds relied upon in support of the application. |
| CNQ v CNR | High Court | Yes | [2021] SGHC 287 | Singapore | Cited as an example of a case where the court allowed a ground of challenge to be considered even though it was not prominently featured in the initial affidavit. |
| JVL Agro Industries Ltd v Agritrade International Pte Ltd | Court of Appeal | Yes | [2016] 4 SLR 768 | Singapore | Cited for the principles regarding breach of the fair hearing rule and the requirement to establish prejudice. |
| L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd | Court of Appeal | Yes | [2013] 1 SLR 125 | Singapore | Cited for the principle that the applicant must demonstrate that the breach of the fair hearing rule caused prejudice. |
| Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd | Court of Appeal | Yes | [2007] 3 SLR(R) 86 | Singapore | Cited for the principle that an arbitrator is entitled to embrace a middle path so long as it is based on evidence that is before him. |
| 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 arbitrator can reach a conclusion different from the parties' positions if it is a reasonable follow-through from the findings. |
| Phoenixfin Pte Ltd and others v Convexity Ltd | Court of Appeal | Yes | [2022] 2 SLR 23 | Singapore | Cited for the principle that the extent to which a tribunal must afford a party an opportunity to be heard depends on the nature of the issue involved. |
| CJA v CIZ | Court of Appeal | Yes | [2022] SGCA 41 | Singapore | Cited for the principle that there is no breach of the fair hearing rule even if the tribunal adopts an interpretation of the contract that neither party had expressly pleaded. |
| BZV v BZW and another | High Court | Yes | [2022] 3 SLR 447 | Singapore | Cited for the reasons why the court declined to remit the award. |
| Sai Wan Shipping Ltd v Landmark Line Co, Ltd | High Court | Yes | [2022] SGHC 8 | Singapore | Cited to distinguish the present case from circumstances where the failure to accord one side a reasonable opportunity to be heard was the product of haste. |
| CKG v CKH | High Court | Yes | [2021] 5 SLR 84 | Singapore | Cited for the principle that the distinction of a tribunal is, at best, a consideration in determining whether to remit an award. |
| CAJ and another v CAI and another appeal | Court of Appeal | Yes | [2022] 1 SLR 505 | Singapore | Cited for the principle that remission would be inappropriate if, in doing so, the tribunal would be asked to deal with an issue outside the scope of its jurisdiction. |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (2014 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| International Arbitration Act (Cap 143A, 2002 Rev Ed) | Singapore |
| Sale of Goods Act 1979 (c 54) (UK) | United Kingdom |
15. Key Terms and Keywords
15.1 Key Terms
- Iron Ore Fines
- Price Adjustment Mechanism
- UNCITRAL Model Law
- SIAC Arbitration
- Reasonable Price
- Addenda
- Cargo Defects
- Glencore
- Tiger Shanxi Contract
- Asia Ruby Contract
- Remission
15.2 Keywords
- Arbitration
- Remission
- Natural Justice
- Sale of Goods Act
- Iron Ore
- Singapore
- SIAC
- International Arbitration
17. Areas of Law
16. Subjects
- Arbitration
- Contract Law
- International Trade
- Sale of Goods