In recent years, there has been a marked increase in the prevalence of challenges to arbitral awards based on alleged breaches of “natural justice” or “due process”. Some observers have noted a corresponding impact on the conduct of tribunals, who are increasingly unwilling to deny requests for extensions of time and rights of reply, rejoinder and rebuttal. This phenomenon has been described as “due process paranoia” and can have a potentially detrimental effect on the time and cost efficiency that was once a distinguishing feature of international arbitration, as well as undermining the real importance of due process.
In China Machine New Energy Corporation v Jaguar Energy Guatemala LLC and another,[1] the Singapore Court of Appeal expressed concern at the cynical misuse of due process and natural justice complaints in the context of arbitration proceedings. In order to address this issue and to reduce the opportunity for abuse, the Court of Appeal provided guidance on the balance to be struck between genuine due process concerns and the tribunal’s legitimate duty to ensure a prompt and efficient resolution of the dispute at hand.
The Court of Appeal considered the scope of Section 24(b) of the International Arbitration Act (the “IAA”), which provides for an award to be set aside where “a breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party have been prejudiced”. The Court of Appeal also considered Articles 18 and 34 of the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”), which have the force of law in Singapore pursuant to Section 3 of the IAA, and which provide for the parties to an arbitration to be treated with equality and to be given a full opportunity to present their respective cases.
Following an analysis of legal authorities from Singapore, England, New York and New Zealand, the Court of Appeal distilled the following key principles:
This guidance from the Court of Appeal should hopefully provide some comfort to tribunals and should enable them to exercise their discretion with more confidence, without fear of opportunistic and cynical challenges. This may be all the more relevant in the context of the COVID-19 pandemic, where an increasing number of procedural and merits hearings are being held remotely. The Court of Appeal’s guidance suggests that any objection to remote hearings or other procedural devices adopted by the tribunal should be raised clearly and promptly, because a simply reservation of rights it unlikely to be sufficient.
A copy of the full judgment can be obtained from the Supreme Court website using the following link: China Machine New Energy Corp v Jaguar Energy Guatemala LLC [2020] SGCA 12