Natural justice is a well-established concept that informs procedural protections available under common law systems.1 It therefore comes as no surprise that, notwithstanding the cross-cultural nature of arbitration and the variety of systems from which it derives its principles, natural justice continues to inform the manner in which arbitrations must be carried out – including, most prominently, with respect to procedural fairness and due process.
In that regard, Singaporean courts have frequently distinguished themselves by providing valuable guidance on a variety of arbitration topics, including natural justice and procedural fairness, for the benefit of other jurisdictions around the world.
In Siddiqsons Tin Plate Ltd v New Metallurgy Hi-Tech Group Co Ltd, [2024] SGHC 272("Siddiqsons Tin"), the Singapore High Court was presented with another opportunity to provide guidance regarding the elements of a breach of natural justice in the context of an international commercial arbitration. There, the High Court was faced with a set-aside application based on a number of arguments relating to the alleged denial of the applicant's right to be heard, providing valuable reaffirmation as to the timing of raising arguments underlying set-aside applications, and the extent to which a tribunal can control its proceedings.
Below, we discuss the case and consider potential takeaways for Canadian practitioners.
Factual Background
Siddiqsons Tin Plate Ltd ("Siddiqsons") was a public company established under the laws of the Republic of Pakistan. New Metallurgy Hi-Tech Group Co Ltd ("New Metallurgy") was a company registered under the laws of the People's Republic of China.
The parties entered into two contracts whereby New Metallurgy would supply goods and services related to two projects in Pakistan. Both contracts provided that all disputes, controversies, or differences arising from the contracts were to be "settled amicably" (presumably via negotiation), failing which the parties would proceed to arbitration.
For reasons not identified in the Court's judgment, the parties fell into dispute under both contracts. New Metallurgy filed a single Notice of Arbitration with the Singapore International Arbitration Centre in August 2020 in respect of both contracts, following which the arbitrations under each contract were consolidated into a single arbitration. The parties then proceeded according to the arbitration procedure called for by the contracts, which included submissions on the applicable substantive law. The tribunal decided that the United Nations Convention on Contracts for the International Sale of Goods ("CISG") and the UNIDROIT Principles of International Commercial Contracts ("PICC") would govern.
The tribunal delivered its final award and held, in part, that Siddiqsons was liable to pay New Metallurgy damages and costs. However, Siddiqsons applied to the Singapore High Court for set-aside under Singapore's International Arbitration Act ("IAA"), arguing that the award was made in breach of natural justice. Siddiqsons relied upon Section 24(b) of the IAA, which stipulates that the High Court may set aside an award 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."2
Specifically, Siddiqsons argued that the tribunal failed to consider its arguments, and that it was denied its right to present its case and respond to the case against it because the tribunal:
- allowed New Metallurgy to make further arguments on the substantive law issue without leave of the tribunal, but did not direct Siddiqsons to provide a further response (the "Substantive Law Complaint");
- directed the proceedings to continue despite the Memorandum of Issues (the "MOI") not being finalized at the material time (the "MOI Complaint");
- failed to consider material issues proposed by Siddiqsons (the "Omitted Issues Complaint");
- failed to invite Siddiqsons to make and/or expand its submissions on whether Siddiqsons' acts constituted wilful misconduct (the "Wilful Misconduct Complaint"); and
- on several occasions, interrupted the hearing of the evidence such that it "descended into the arena", adversely affecting Siddiqsons' presentation of its case (the "Interruptions Complaint").
The High Court Decision
The High Court began by reviewing the law on setting aside an award on grounds of a breach of natural justice. An applicant must establish: (1) which rule of natural justice was breached; (2) how it was breached; (3) how the breach was connected to the making of the award; and (4) how the breach did or could prejudice the applicant's rights.
The High Court noted that the threshold for finding a breach of natural justice was high, and would only be found on an exceptional basis.
Unsurprisingly, the High Court identified the right to be heard as a fundamental rule of natural justice, which would include a party's right to present its case and respond to the case against it. This right meant that a party must: (1) have notice of the case to which it was expected to respond; (2) be permitted to present evidence and advance the propositions of law necessary to respond to it; and (3) have the right to be heard on, and have the tribunal consider, all pleaded issues.
However, for an award to be set aside, a breach of natural justice alone was insufficient in the view of the High Court. Rather, the court should only intervene where the breach altered the tribunal's decision in some meaningful way, which meant that the applicant was also required to show actual or real prejudice.
As well, the High Court observed that a party would not be allowed to hedge its position by complaining onlyafterreceiving an adverse award that its hopes for a fair trial had been prejudiced by the tribunal's acts.
In light of the above, the High Court found that Siddiqsons' complaints (both individually and collectively) failed to meet the high threshold for establishing a breach of the right to be heard and the right to a fair hearing.
The Substantive Law Complaint
Siddiqsons argued that the tribunal had allowed New Metallurgy to make further arguments, while not directing Siddiqsons to provide a further response with regard to the applicable substantive law for the arbitration. However, the High Court remarked that this complaint was a "non-starter".
At the time of the arbitration, Siddiqsons did not object to these further arguments, even after the tribunal ruled on the applicable substantive law, nor did it ask the tribunal for leave to respond. In fact, the tribunal only issued its decision on the applicable substantive law 17 days after the further arguments were made. Thus, Siddiqsons had ample time to object to the further arguments, or ask to file a response. Siddiqsons did neither.
While Siddiqsons believed that the tribunal should have issued directions regarding the further arguments, the High Court placed the onus on Siddiqsons to object or apply for leave to respond.
Finally, the High Court noted that Siddiqsons had expressly accepted the tribunal's decision on the substantive law. Thus, this complaint was "inexplicable".
The MOI Complaint
Siddiqsons claimed that the tribunal rushed through finalizing the MOI without allowing a pause in the proceedings, meaning that the parties could not make complete document requests, nor could they fully "ventilate" their arguments regarding the MOI. The High Court found this complaint more misconceived than the Substantive Law Complaint for the following reasons:
- The tribunal gave the parties an opportunity to submit their respective issues, and further opportunity to provide comments on the draft MOI, an opportunity of which Siddiqsons availed itself;
- The tribunal expressly allowed for the parties to raise further issues; and
- Siddiqsons' request for a pause would have only been for a day at best – failure to pause proceedings for a single day could not result in any prejudice, and Siddiqsons' counsel agreed.
Accordingly, this complaint was also dismissed.
The Omitted Issues Complaint
Siddiqsons claimed that it was wrongly prevented by the tribunal from raising relevant issues. For Siddiqsons to succeed on this complaint, the High Court explained that it would have to be shown that it was clear and virtually inescapable that the tribunal had failed to consider an issue which was pleaded.
However, the High Court found that some of these purportedly omitted issues were simply rehashed matters which were considered and decided upon by the tribunal, and that prior to finalizing the MOI, Siddiqsons had not raised at least three of the six issues. As well, Siddiqsons did not explain why it was entitled to raise these issues, and there was insufficient context provided by Siddiqsons regarding how these issues related to the dispute between the parties. Thus, this complaint did not succeed either.
The Wilful Misconduct Complaint
One issue in the final MOI was whether some of Siddiqsons' acts were allegedly fraudulent or acts of wilful misconduct.
In finding that these acts did constitute wilful misconduct, the tribunal referred to the English decision of De Beers UK Ltd v Atos Origin IT Services UK Ltd ("De Beers"), but was unclear as to the extent to which they were actually relying on that decision (if at all). In that regard, Siddiqsons argued that the tribunal relied on and applied the test from De Beers and that this was not in line with the tribunal's earlier decision regarding the applicable substantive law being the CISG and PICC.
However, the High Court noted that it was unclear how the tribunal had relied on De Beers, and that Siddiqsons had failed to demonstrate how or where De Beers was used by the tribunal. Also, while Siddiqsons was expressly given the opportunity to address De Beers and wilful misconduct in its submissions, they did not do so. By not making submissions on the relevant legal principles for this issue, or at the very least objecting to New Metallurgy's reliance on De Beers at the time this issue arose, the High Court found that it was not open to Siddiqsons to later take the position that the tribunal ought to have asked it to respond to De Beers, or to respond on the law of wilful misconduct generally.
This was precisely the kind of hedging cautioned against by the High Court, and the High Court was therefore resolute that this type of conduct could not be accepted.
The Interruptions Complaint
Finally, Siddiqsons identified eight instances where the tribunal allegedly interfered in the conduct of cross-examinations, and thirteen instances where the tribunal allegedly interfered in the witnesses' answers.
However, the High Court observed that an arbitral tribunal, as master of the proceedings before it, was to be given wide discretion in how it controlled proceedings. The tribunal's power to conduct and manage proceedings included supervising the conduct of examinations and cross-examinations, and ensuring that proceedings would be conducted without unreasonable delay.
Based on these principles, the High Court found no merit to this complaint. All the alleged interruptions were within the tribunal's general power to control proceedings. Most of the alleged interruptions were directed toward ensuring that questions were put to witnesses concisely, and preventing counsel from inserting lengthy submissions or observations into their examination questions. For example, the tribunal directing Siddiqsons' counsel to rephrase a question without a lengthy argumentative preamble (which direction was followed by the counsel) could not constitute an interference amounting to "descending into the arena".
The High Court concluded that it was unnecessary to deal with all the purported interruptions in detail, as none of them raised any doubt as to whether the tribunal properly conducted itself. There was also no evidence that Siddiqsons had objected to these interruptions, nor that it had expressed any concern to the tribunal that it was unable to present its case due to the alleged interruptions by the tribunal. In the High Court's view, this was simply another instance of Siddiqsons' engaging in after-the-fact "hedging".
Furthermore, the High Court indicated that for all the complaints, Siddiqsons had failed to prove prejudice. This was fatal to their claim.
As such, Siddiqsons' application was dismissed.
Commentary
The result in Siddiqsons Tin is, to a large extent, unsurprising in light of the timing and nature of the applicant's grounds for seeking set-aside of the tribunal's award. However, it is a helpful reaffirmation of various fundamental principles of natural justice that are equally applicable to arbitrations in Canada.
For example, it is not uncommon for a party to hedge its position by complaining only after receiving an adverse award (except in the case of a challenge to the arbitrator, which must be brought within statutorily-defined timelines). In the context of a labour arbitration, the Ontario Divisional Court was critical of a party who employed such a strategy, concluding that the party was "obligated to raise its natural justice issue with the Arbitrator, rather than staying silent and only complaining once it did not get the result it wanted."3 Unsurprisingly, the party failed in its application to challenge the arbitral award.4
Similarly, set-aside case law from Ontario also emphasizes the importance of considering whether the error(s) in question prejudiced the applicant, although it considers prejudice within the broader context of whether there has been "real unfairness" or "real practical injustice"5 – including the potential prejudice flowing from the need to redo the arbitration if the award were to be set aside.6
That being said, Siddiqsons Tin also raises certain other interesting issues for further consideration.
First is the issue of whether and to what extent a tribunal can consider substantive case law from jurisdictions outside of that identified as the substantive law of the arbitration. Although this issue was moot in this instance because it was unclear to what extent the tribunal actually relied upon the EnglishDe Beersdecision, this nevertheless recalls a live issue in the litigation context of the extent to which it is appropriate for a court (particularly appellate courts) to rely upon foreign case law for guidance. The practice is undoubtedly common in certain areas of law (e.g. insurance law), and is not uncommon at the appellate level,7 in which contexts such judgments are typically treated as persuasive; that being said, it is not without controversy, particularly in the United States.8
In the arbitration context, however, the issue becomes much more potentially sensitive insofar as the arbitration agreement's governing law clause will stipulate the substantive law of the arbitration; it is unclear whether this means recourse to foreign judgments is possible in circumstances where the governing law is ambiguous or silent, particularly in circumstances where those judgments are only persuasive. Perhaps foreign judgments might be thought of in similar terms as soft law instruments like the IBA Guidelines on Conflicts of Interest in that they are not necessarily binding but are nevertheless persuasive; on the other hand, however, instruments such as the IBA Guidelines are fundamentally different in that they are procedural authorities rather than substantive ones. As a result, the answer to this issue would seem to be somewhat unclear.
Second, and more common, is the extent to which the tribunal can "descend into the arena". This is of course somewhat of a fraught topic in the sense that the answer to this question may vary quite significantly based on the legal and cultural background of the reader. While the tribunal's interventions in Siddiqsons Tin appeared to have been relatively mundane, it is worth querying whether a different result might have been arrived at in a jurisdiction that more jealously guards the right of counsel to control examinations. Such a hypothetical would be out of keeping with the general trend of courts showing significant respect for arbitration as a standalone system of dispute resolution, but it would nevertheless seem to be possible. Accordingly, arbitration practitioners would be well-advised to remain mindful of the supervisory court's general attitude towards interventions by the tribunal.
Footnotes
1. Frederick F. Shauer,English Natural Justice and American Due Process: An Analytical Comparison, 18 Wm. & Mary L. Rev. 47 (1976), online: https://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=2419&context=wmlr.
2. Siddiqsons Tin Plate Ltd v New Metallurgy Hi-Tech Group Co Ltd, [2024] SGHC 272 at para 21.
3. Ontario English Catholic Teachers' Association v Toronto Catholic District School Board, 2020 ONSC 5953 at paras 32-33.
4. Ibidat para 6.
5. Popack v Lipszyc, 2016 ONCA 135 at para 36.
6. Vento Motorcycles, Inc v United Mexican States, 2023 ONSC 5964 at para 123.
7. See, for example, Peter McCormick, American Citations and the McLachlin Court: An Empirical Study, 2009 47-1 Osgoode Hall Law Journal 83, 2009CanLIIDocs644; and Rebecca Lefler, A Comparison of Comparison: Persuasive Authority by the United States Supreme Court, the Supreme Court of Canada, and the High Court of Australia, 2001 Southern California Interdisciplinary Law Journal 11:1.
8. The New Yorker, "Annals of Law: Swing Shift" (12 September 2005), online: https://www.newyorker.com/magazine/2005/09/12/swing-shift.
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