In China Machine New Energy Corp v Jaguar Energy Guatemala LLC and anor  SGCA 12, the Singapore Court of Appeal dismissed an appeal against the High Court’s decision declining to set aside an award on the grounds of breach of natural justice.
CMNC was the contractor of a power generation plant in Guatemala. Following delays to completion, Jaguar, the employer, terminated the contract and engaged others to complete the works. Jaguar commenced arbitration proceedings under the relevant EPC Contract, and claimed, inter alia, the cost of completing the works. The substantive dispute between the parties centred on the quantum of the cost of completion, and the parties’ preparations for the arbitration proceedings focused on the production of contracts, invoices and other supporting documents evidencing the costs of completion, as well as the preparation of expert reports on the issue of quantum.
CMNC’s case was that the tribunal’s mismanagement of the arbitral proceedings – in particular, its procedural decisions relating to the document production process and the submission of expert evidence – resulted in its being denied a reasonable opportunity of presenting its case. In broad terms, the complaints related to:
- restrictions were placed on the disclosure of sensitive documents, which CMNC considered had severely hindered its ability to assess and therefore address Jaguar’s case on the quantum of Jaguar’s case.
- access to project documents documenting the work CMNC had completed before Jaguar’s termination of the EPC Contract which were considered necessary so that CMNC might value the completed work, and thereby assess and challenge CMNC’s claim for the cost of completing the work that remained uncompleted.
- production of documents evidencing the cost of completion.
The High Court
The High Court dismissed CMNC’s application to set aside the Award. The Court rejected CMNC’s submission that the Tribunal’s management of the process of document disclosure was a breach of CMNC’s right to be heard, and held, in any case, that CMNC did not suffer any prejudice that justified setting aside the Award.
The Court of Appeal
The Court of Appeal dismissed CMNC’s appeal, and declined to set aside the Award on grounds of breach of natural justice.
The Court observed that the right to be heard – which refers to each party’s right to present its case and respond to the case against it – was a fundamental rule of natural justice enshrined in Art 18 of the Model Law. However, the Art 18 right to a “full opportunity” of presenting one’s case was not an unlimited one, and was impliedly limited by considerations of reasonableness and fairness. The CA stated :
(a) The parties’ right to be heard in arbitral proceedings finds expression in Art 18 of the Model Law, which provides that each party shall have a “full opportunity” of presenting its case. An award obtained in proceedings conducted in breach of Art 18 is susceptible to annulment under Art 34(2)(a)(ii) of the Model Law and/or s 24(b) of the IAA.
(b) The Art 18 right to a “full opportunity” of presenting one’s case is not an unlimited one. It is impliedly limited by considerations of reasonableness and fairness.
(c) What constitutes a “full opportunity” is a contextual inquiry that can only be meaningfully answered within the specific context of the particular facts and circumstances of each case. The overarching inquiry is whether the proceedings were conducted in a manner which was fair, and the proper approach a court should take is to ask itself if what the tribunal did (or decided not to do) falls within the range of what a reasonable and fair-minded tribunal in those circumstances might have done.
(d) In undertaking this exercise, the court must put itself in the shoes of the tribunal. This means that: (i) the tribunal’s decisions can only be assessed by reference to what was known to the tribunal at the time, and it follows from this that the alleged breach of natural justice must have been brought to the attention of the tribunal at the material time; and (ii) the court will accord a margin of deference to the tribunal in matters of procedure and will not intervene simply because it might have done things differently.
The CA rejected the complaint that restrictions were placed on the disclosure of sensitive documents, observing  that the Tribunal had to be satisfied that there was a sufficient basis for the making of such an order and that that was a reasonable view for the Tribunal to have taken.
Further, the CA rejected CMNC’s submission that the cumulative effect of the Tribunal’s management of the arbitration resulted in the arbitration becoming hopelessly and irretrievably lost. CMNC never said that it considered the arbitration irretrievably lost (or, alternatively, that the scheduled evidentiary hearing could not proceed). On the contrary, CMNC had, by its continued engagement as a party in the arbitration, consistently expressed its intention to forge ahead with the main evidentiary hearing. At [171-172], the CA stated:
If indeed CMNC believed that proceeding with the hearing in July 2015 in the circumstances it was presented with was impossible, then it was incumbent on CMNC to make that abundantly clear to the Tribunal. Specifically, CMNC had to bring home its concern that proceeding with the main evidentiary hearing at that time would be futile because it would be on terms that denied it a fair and reasonable opportunity of preparing its case and this resulted in a fatally flawed process. However, … not only was this not done, CMNC never requested a vacation of the July 2015 hearing dates. On the contrary, CMNC persisted in maintaining that it wished to press on with the main evidentiary hearing in July 2015.
In our judgment, this puts the lie to CMNC’s submission that the Tribunal had “lost control” or allowed proceedings to become “dysfunctional” or to descend into a “free-for-all”. Instead of seeking an adjournment of the July 2015 hearing, CMNC seemed intent on keeping the hearing dates, obtaining an extension for itself to file further evidence on the eve of the hearing, and, if anything, letting the breach of natural justice go the other way.
See also the Case Summary produced by the Court of Appeal.