DIB v DIC: Setting Aside Arbitral Award for Breach of Natural Justice in Confectionary Product Line Contract Dispute

DIB applied to the General Division of the High Court of Singapore to set aside an arbitral award in favor of DIC, concerning a contract for a confectionary product preparation and sterilisation line. DIB alleged breaches of natural justice. Judicial Commissioner Alex Wong Li Kok dismissed the application, finding no breaches that prejudiced DIB and warranted setting aside the award. The arbitration arose from a dispute over a contract where DIB sought restitution of the purchase price, while DIC denied liability.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Applicant's application to set aside the Award is dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Application to set aside an arbitral award for breach of natural justice is dismissed. The court found no breaches prejudiced the applicant in the confectionary product line contract dispute.

1.7 Decision Date

25 July 2024

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
DIB	Applicant	Corporation	Application Dismissed	Lost	Sim Daryl Larry of Rajah & Tann Singapore LLP Lee Tze En Chrystal of Rajah & Tann Singapore LLP Max Lim of Rajah & Tann Singapore LLP
DIC	Respondent	Corporation	Award Upheld	Won	Tan Jia Xin of Wong & Leow LLC Leck Kwang Hwee Andy of Wong & Leow LLC Tan E-Jynn of Wong & Leow LLC

3. Judges

Judge Name	Title	Delivered Judgment
Wong Li Kok, Alex	Judicial Commissioner	Yes

4. Counsels

Counsel Name	Organization
Sim Daryl Larry	Rajah & Tann Singapore LLP
Lee Tze En Chrystal	Rajah & Tann Singapore LLP
Max Lim	Rajah & Tann Singapore LLP
Tan Jia Xin	Wong & Leow LLC
Leck Kwang Hwee Andy	Wong & Leow LLC
Tan E-Jynn	Wong & Leow LLC

4. Facts

The Applicant and Respondent entered into a contract for the supply of a confectionary product preparation and sterilisation line.
The Contract contained an express condition that the Respondent would supply a Line that could produce 8,000 litres per hour of confectionary product.
The Applicant was required to pay a purchase price of $128,250,000 to the Respondent.
The Applicant terminated the Contract, alleging the Line suffered from defects rendering it unfit for purpose.
The Applicant commenced arbitration at the ICC seeking restitution of the Purchase Price and additional sums.
The Tribunal found that the Line was not in compliance with the express term to produce 8,000 l/h of confectionary product.
The Tribunal concluded that the Applicant was not entitled to the restitution of the Purchase Price.

5. Formal Citations

DIB v DIC, Originating Application No 888 of 2023, [2024] SGHC 194

6. Timeline

Date	Event
2015-03-16	Contract signed for the supply of a confectionary product preparation and sterilisation line.
2017-03-01	Line delivered to the Applicant.
2018-06-01	Substantial production was possible.
2018-10-31	Applicant sent a formal notice to the Respondent regarding defects in the Line.
2020-03-27	Applicant terminated the Contract.
2020-09-21	Applicant commenced arbitration at the ICC.
2021-03-19	Tribunal was constituted.
2023-04-11	Arbitration hearing began.
2023-04-13	Arbitration hearing concluded.
2023-06-02	Tribunal rendered its Award.
2023-09-07	Applicant's Chief Executive Officer's first affidavit.
2023-01-01	HC/OA 888/2023 filed.
2024-02-29	Respondent’s Regional Sales Manager’s affidavit.
2024-06-12	Judgment reserved.
2024-07-26	Judgment issued.

7. Legal Issues

Breach of Natural Justice
- Outcome: The court found no breaches of natural justice that prejudiced the Applicant.
- Category: Procedural
- Sub-Issues:
  - Denial of reasonable opportunity to respond to unpleaded issue
  - Failure to consider Applicant's case
  - Ruling on issue outside the scope of arbitration
  - Failure to pay attention to materials placed before the Tribunal
Failure of Consideration
- Outcome: The Tribunal concluded that there was no total failure of consideration.
- Category: Substantive
Acceptance of Goods
- Outcome: The Tribunal found that the Applicant had accepted the Line by undertaking modifications and by the passage of time.
- Category: Substantive
Authority of Employee
- Outcome: The Tribunal found that Employee-R lacked the authority to bind the Respondent.
- Category: Substantive

8. Remedies Sought

Setting aside of arbitral award
Restitution of Purchase Price

9. Cause of Actions

Breach of Contract
Unjust Enrichment

10. Practice Areas

Arbitration
Commercial Litigation

11. Industries

Manufacturing
Food and Beverage

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Sanum Investments Ltd and another v Government of the Lao People’s Democratic Republic and others and another matter	Court of Appeal	Yes	[2022] 4 SLR 198	Singapore	Cited for the key principles for setting aside an arbitral award under the breach of natural justice ground.
Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd	Court of Appeal	Yes	[2007] 3 SLR(R) 86	Singapore	Cited for the requirements a party must meet to challenge an award on the ground of breach of natural justice.
China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another	High Court	Yes	[2020] 1 SLR 695	Singapore	Cited for the contextual inquiry of whether the proceedings were conducted in a manner which was fair.
AKN and another v ALC and others and other appeals	Court of Appeal	Yes	[2015] 3 SLR 488	Singapore	Cited for the principle that a breach of natural justice is only occasioned when the arbitral tribunal fails to even consider a party’s argument.
Pacific Recreation Pte Ltd v S Y Technology Inc and another appeal	High Court	Yes	[2008] 2 SLR(R) 491	Singapore	Cited for the principle that there would be a breach of natural justice if the tribunal decided a case on a basis that has not been raised or contemplated by the parties.
Stocznia Gdanska SA v Latvian Shipping Co and others	Court of Appeal	Yes	[1998] 1 WLR 574	England and Wales	Cited for the proposition that any performance of the actual thing promised, as determined by the contract, is fatal to recovery on the grounds of a complete failure of consideration.
JVL Agro Industries Ltd v Agritrade International Pte Ltd	High Court	Yes	[2016] SLR 768	Singapore	Cited for explaining that a tribunal denies a party a reasonable opportunity to present its case if it follows a chain of reasoning which has no nexus to the case advanced by the parties.
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 arbitrators should not be so straightjacketed as to be permitted to only adopt in their conclusions the premises put forward by the parties.
AQU v AQV	High Court	Yes	[2015] SGHC 26	Singapore	Cited for the principle that purported errors of law cannot be relied upon to prove a breach of natural justice.
Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd	High Court	Yes	[2010] SGHC 80	Singapore	Cited as an example where the arbitrator had breached the rule of natural justice by inexplicably concluding that the applicant only relied upon one of three misrepresentations and abandoned its reliance on the rest.
AKM v AKN and another and other matters	High Court	Yes	[2014] 4 SLR 245	Singapore	Cited as an example where the arbitral tribunal had wrongly found that the secured creditors had accepted that there was no prospect of them being able to make a transfer, although no such concession was made.
CVV and others v CWB	Court of Appeal	Yes	[2024] 1 SLR 32	Singapore	Cited for the principle that if a tribunal’s purported failure to address a party’s point in its reasons is relied on to assert that a tribunal failed to apply its mind, the tribunal’s omission to give reasons must logically be so grave or so glaring as to point to the inescapable inference that the tribunal did not even attempt to comprehend the essential issues in the arbitration.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
International Arbitration Act 1994	Singapore
UNCITRAL Model Law on International Commercial Arbitration	N/A

15. Key Terms and Keywords

15.1 Key Terms

Arbitral Award
Breach of Natural Justice
Failure of Consideration
Acceptance of Goods
Confectionary Product Line
Restitution
International Chamber of Commerce
UNCITRAL Model Law
Employee Authority
Defect Notification

15.2 Keywords

arbitration
breach of natural justice
contract
Singapore
award
setting aside
confectionary
failure of consideration

17. Areas of Law

Area Name	Relevance Score
Natural justice	85
Arbitration	75
Breach of Contract	60
Commercial Disputes	50
Unjust Enrichment	40
Contractual terms	30
Formation of contract	30
Estoppel	25
Jurisdiction	20

16. Subjects

Arbitration
Contract Law
Civil Procedure