Palm Grove Beach Hotels Pvt. Ltd. v Hilton Worldwide Manage Limited and another

Palm Grove Beach Hotels Pvt Ltd owned a luxury hotel in Pune, India, which Hilton Worldwide Manage Limited and Hilton Hotels Management India Private Limited managed as Conrad Pune under a Management Agreement dated 5 December 2013. The agreement required the managers to act as a prudent international hotel operator, provided for annual budgets with a budget expert to resolve disagreements, and allowed termination if a performance test was failed.

Disputes went to three tranches of Singapore-seated SIAC arbitration before the same tribunal. In the 2nd Partial Award dated 3 July 2023, the tribunal allowed the managers' claims for unpaid affiliate fees, failure to inject working capital, wrongful suspension of the hotel and interference, and dismissed the owner's counterclaim that the managers had underperformed and prepared inappropriate budgets. In the 3rd Partial Award dated 26 October 2023, it appointed Prognosis Global Consulting as budget expert. The owner applied to set aside parts of both awards for breach of natural justice and for failing to decide issues put to the tribunal. The High Court dismissed the application, and the owner appealed in Civil Appeal No 45 of 2024, focusing on the counterclaim.

1. Whether the tribunal adopted an unforeseeable chain of reasoning or denied a hearing in dismissing the underperformance counterclaim
2. Whether the tribunal failed to consider the owner's budget-preparation case and its defences to the managers' claims, making the award infra petita
3. Whether the appointment of the budget expert in the 3rd Partial Award breached natural justice

The court began by criticising attempts to comb through the arbitral record to mount backdoor appeals on the merits. It clarified that a complaint that a tribunal failed to deal with an issue is properly a natural justice challenge, which must be clear on the face of the record and requires prejudice.

On underperformance, the tribunal dismissed the counterclaim because the owner had led no evidence, including expert evidence, of what a prudent international hotel operator would have done; industry rankings compared hotel results, not operator conduct. The owner claimed both sides had agreed the issue would turn on those industry reports, but the court found no such common position: the managers' primary case was that only the contractual performance test mattered, and they had consistently challenged the owner's failure to define the standard. The tribunal's reasoning was therefore foreseeable and connected to the arguments. Any error in weighing evidence was at most an error of fact. The owner's own expert addressed damages, not breach, and the owner had ample opportunity to address the standard, which the tribunal specifically raised.

The budget-preparation case had shifted in form several times and was first framed as deliberate lowball budgets only in oral argument on appeal. Read as a whole, the pleadings used the budgets as evidence of underperformance, not as a standalone claim, and in any event the lack of evidence on the standard would have defeated it, so there was no prejudice. The challenges on affiliate fees, working capital and suspension amounted to complaints of misunderstanding, inadequate reasons or defences not properly raised. On the budget expert, the tribunal applied the same independence test as in the 1st Partial Award to different candidates and evidence, and both parties made extensive submissions.

The Court of Appeal dismissed the appeal, holding that none of the grounds for setting aside either partial award was established, and ordered the appellant to pay costs of $60,000 all-in.