CZT v CZU

Facts

CZT, the plaintiff, applied in Originating Summons No 1 of 2023 to set aside an arbitral award made in a Singapore-seated arbitration under the ICC Rules 2017. Under a Provisional Contract, the plaintiff agreed to supply material packages to a contractor that the defendant, CZU, would later appoint to build certain products for the defendant. The plaintiff, the defendant and the contractor later signed a Transfer Agreement moving the defendant's rights and obligations to the contractor, except those identified in an attachment. The attachment was a table listing contract articles on the left with comments on the right; for Art 1.1, the comments mentioned only training and declarations of final destination.

The defendant alleged that parts of the packages were defective. A court in its home country held the contractor liable for 30% of the defendant's damages but dismissed the claim against the plaintiff because of the arbitration clause. The defendant began arbitration on 25 April 2019. The tribunal's majority found that the defendant had a right to delivery under Art 1.1 that survived the Transfer Agreement, and ordered the plaintiff to pay damages, interest and costs. The plaintiff's nominee arbitrator dissented. The plaintiff filed this application on 17 December 2021 in the General Division of the High Court; it was transferred to the Singapore International Commercial Court on 31 March 2023, after which the court refused its applications for the arbitrators' deliberation records in CZT v CZU [2023] SGHC(I) 11.

Issues

1. Whether the majority failed to consider critical arguments made by the plaintiff, in breach of the fair hearing rule.
2. Whether the majority based its decision on matters the parties never argued, breaching natural justice or exceeding its jurisdiction.
3. Whether the award, the dissent, or a co-arbitrator's calls and email after the award gave rise to a reasonable suspicion of bias.

Holding

The Singapore International Commercial Court dismissed the plaintiff's application to set aside the final award. The parties were directed to file submissions on costs, limited to five pages, within 14 days of the judgment.

Reasoning

On the first issue, an error of law or fact is not a breach of natural justice, and a tribunal need only deal with the essential issues, not every argument. The majority had set out the plaintiff's reliance on Art 2.2.1 and its point about the defendant's stance in the foreign litigation; the essential issue of what remained with the defendant under the Transfer Agreement was plainly decided. The court noted these complaints were not even raised in the plaintiff's supporting affidavit. Neither point could reasonably have changed the result, and the defendant's earlier stance had in any case been made subject to the Transfer Agreement. The majority's description of a point as "uncontentious" meant only that it should not cause disagreement, not that it was undisputed, and the majority had recorded the defendant's rejection of the plaintiff's position.

On the second issue, the overall question decided was within the submission to arbitration, so the complaints concerned natural justice. The majority's reliance on other articles of the Supply Contract was the same kind of comparison the plaintiff itself had made. The finding that both the defendant and the contractor held delivery rights under their separate contracts flowed from the defendant's argument and in any event did not drive the result. The court accepted that the majority's insolvency reasoning was not pleaded or argued, but it was one of several reasons and rebutting it would have made no difference. The complaint that the majority treated the attachment as amending the Supply Contract took a statement out of context. The majority itself said it did not need to decide ownership.

On bias, the dissent's unparticularised allegations, which the court called bare and subjective, were not enough. The co-arbitrator's calls to both sides' solicitors and his email showed unhappiness that the dissent had been circulated, came after the award was issued, and did not suggest bias. The procedural order relied on bound the parties, not the tribunal, and the alternative ground based on agreed procedure fell away.

From the judgment