CVV and others v CWB

CVQ, a Singapore fund manager, engaged CWB, a real estate advisory firm, as asset advisor for two funds under two advisory agreements governed by Singapore law with SIAC arbitration clauses. CWB was to receive half of the management and performance fees that CVQ earned from each fund. Relations soured, and both agreements were terminated in 2019.

On 12 March 2020 CVQ and the funds' subsidiaries began an arbitration alleging breaches by CWB, which counterclaimed unpaid fees. The claimants said the Fund 1 fees were not yet due because the fund had not reached the end of its life, and objected to CWB's figures without offering their own. In its award of 20 June 2022 the tribunal dismissed the claims and allowed the counterclaims, adopting the calculations of CWB's Head of Finance (Mr B). It ordered CVQ to pay, among other sums, a Fund 1 performance fee of US$1.01m and pre- and post-termination management fees of US$313,734 and US$1,193,674.

A judge of the Singapore International Commercial Court refused to set the award aside for breach of natural justice and dismissed a related summons resisting enforcement. The claimants appealed in Civil Appeal No 6 of 2023, no longer pursuing bias.

1. Whether the tribunal failed to apply its mind to essential issues, including whether the performance fee was due, the end date of Fund 1 and the objections to Mr B's figures.
2. Whether a tribunal's failure to give adequate reasons is a ground for setting aside, and how reasons bear on a natural justice challenge.
3. Whether the claimants had reasonable notice that the tribunal would decide the quantum of the performance fee.
4. Whether the arbitral procedure departed from the parties' agreement.

The court restated that a natural justice challenge must identify the rule breached, how, its link to the award and the resulting prejudice, and that failure to apply the mind is found only as a clear and virtually inescapable inference from the award. It left open whether inadequate reasons can alone justify setting aside, but disagreed that judicial standards of reasoning apply to arbitrators, since arbitration is confidential and not reviewed on the merits. Where missing reasons are relied on to infer that a tribunal ignored submissions, the omission must be glaring.

On the facts, the award expressly dealt with deferral and found Fund 1's life ended on 2 September 2020. By adopting Mr B's figures as the most cogent evidence, against the background of the claimants' refusal to disclose documents or offer their own calculations, the tribunal had in effect found the payment conditions met; whether that was right was a merits question. Using his figures despite a different end date was explicable because they were the only calculations before it. A possible misstatement about when his figures were first challenged was at most an error of fact, and the objections on the management fees were never put to him in cross-examination. The debt-or-damages point was not argued before the tribunal.

The tribunal had invited further submissions on quantifying the performance fee, and the claimants filed them on 15 April 2022 without objection, so they had notice. The procedural ground, a new argument resting on the same complaints, failed with them.

The Court of Appeal (Steven Chong JCA delivering the judgment, with Judith Prakash JCA and Robert French IJ) dismissed the appeal, finding no breach of natural justice and no ground to set aside the award. The claimants were ordered to pay costs fixed at S$100,000 plus disbursements of S$7,650.