When arbitral awards may be challenged

Though Singapore is renowned as an extremely pro-arbitration jurisdiction, the Singapore courts will not hesitate to refuse enforcement or set aside an arbitral award under specific limited circumstances. Under Singapore law, some common grounds on which a court may refuse to enforce an arbitral award include:

Shanghai Xinan Screenwall Building & Decoration Co, Ltd ("Xinan") is a Chinese company which had successfully obtained an arbitral award made in China against Great Wall Technology Aluminium Industry Pte Ltd ("Great Wall"), a Singaporean company. The award dated 27 November 2020 was made in respect of claims brought under two contracts between the parties involving the supply of materials for the construction of a façade for a housing project in Singapore, and the installation of a glass curtain wall mock-up for the same project ("Contracts"). Under the award, Great Wall had been ordered to pay to Xinan outstanding sums, as well as interest and costs. Amongst other things, the Contracts provided that disputes be submitted to the "China International Arbitration Center".

After Xinan successfully obtained an order from the Singapore High Court (SGHC) granting Xinan permission to enforce the award ("Xinan Enforcement Order"), Great Wall attempted to set aside the Xinan Enforcement Order on several of the grounds listed above. Notably, Great Wall sought to argue that the arbitration agreement was not valid under Chinese law, because there is no arbitral institution by the name of "China International Arbitration Center" (as opposed to the China International Economic and Trade Arbitration Commission (CIETAC)).

SGHC's decision - award enforced

Great Wall's argument did not find favour with the SGHC. In its judgment, the SGHC explained with a simple analogy:

When I bump into my childhood friend Ben and call him Bill, I am not inventing an imaginary friend but simply mistaking his name.

In short, the SGHC took an objective approach in interpreting "China International Arbitration Center". The SGHC found that the parties intended to resolve their dispute by arbitration in China, and that rational commercial parties would not deliberately choose a non-existent institution to administer the arbitration. The SGHC took into account the fact that "China International Arbitration Center" shared many common or similar words with CIETAC, and concluded that parties in fact agreed on CIETAC despite the inaccuracy in the name used.

CVH was CVG’s franchisee in Singapore. After disputes arose between the parties, CVH terminated the franchise agreements. In response, CVG commenced emergency arbitration proceedings to enforce post-termination provisions in the agreements. After an emergency hearing was held, the parties submitted post-hearing submissions. However, in its post-hearing submissions, CVG – for the first time – claimed that it did not consider the agreements to have been terminated (“New Case”). After the tribunal made an award in favour of CVG, CVG successfully obtained an order from the SGHC granting CVG permission to enforce the award (“CVG Enforcement Order”). In response, CVH made an application to set aside the CVG Enforcement Order on the basis that it was denied the opportunity to respond to CVG’s New Case before the tribunal made its award.

SGHC's decision - award refused enforcement because defendant was unable to present its case

The SGHC set aside the CVG Enforcement Order and refused to enforce the award on the basis that CVH was unable to present its case in the arbitration proceedings.

Given that CVG had only raised its New Case in its post-hearing submissions, and the tribunal made the award without giving CVH the opportunity to resist the New Case, the SGHC held that CVH had been prejudiced and the tribunal’s decision could have reasonably been different if CVH had the opportunity to present its arguments in response to the New Case.

The SGHC however clarified that the court will be slow to intervene in arbitral proceedings and the grounds for curial intervention are narrowly circumscribed. In this case, the court did not hesitate to intervene because the tribunal’s decision cannot be said to be what the parties to the arbitration had agreed to submit to. This is because while parties to an arbitration do not have the right to a “correct” decision from an arbitral tribunal, they have the right to a decision that is within the ambit of their agreement to arbitrate.

Conclusion

Singapore's reputation for its pro-arbitration approach, including the courts' track record of enforcing arbitral awards, means that the risk of arbitral awards being set aside or refused enforcement can be reliably managed. As long as proper care is taken in ensuring that the arbitration is conducted in full compliance with the procedural requirements, the common pitfalls which can render an arbitral award unenforceable can be safely avoided.

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