3 November, 2012
Legal News & Analysis – Asia Pacific – Singapore – Dispute Resolution
LW INFRASTRUCTURE PTE LTD V LIM CHIN SAN CONTRACTORS PTE LTD [2012] SGCA 57
In this recent case, an arbitral tribunal had issued an initial award. The defendant then made an application for an additional award to be made, in order to deal with matters not covered in the first award. Three days later, and without first waiting for the plaintiff to make submissions, the arbitrator made his additional award.
The Court of Appeal had to consider whether the arbitrator had violated the plaintiff’s fundamental right to be heard when making the additional award.
The Court of Appeal affirmed that rules of natural justice are immutable fundamental principles that should apply to any tribunal acting in a judicial capacity. Parties have a right to be effectively heard on every issue that may be relevant to the resolution of their dispute – the Court of Appeal cited its earlier decision in Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 2 SLR(R) 86 in holding that the best rule of thumb for arbitrators to apply is to treat the parties equally and allow them a reasonable opportunity to present their cases as well as to respond.
In this regard, the Court of Appeal stated that when one party gives the other party notice of its request to the tribunal to make an additional award, this envisages that that the other party be afforded an opportunity and sufficient time to respond to the request. The plaintiff was entitled to be heard on two distinct issues: first, whether the defendant was entitled to make the application for an additional award in the first place, and second, on the substance of the application itself (in this case, whether the defendant was entitled to be awarded pre-award interest). As to the first issue, the Court of Appeal held that the plaintiff’s right to be heard had been breached: the arbitrator should have given the plaintiff the right to be heard on the applicability of the relevant provisions of the Arbitration Act. The short period of time (3 days) given for the plaintiff to respond was unreasonable. This in itself was sufficient basis for the Court of Appeal to set aside the additional award.
However, for completeness, the Court of Appeal continued to examine the second question, namely whether the plaintiff had been deprived of its right to be heard on the substantive question of whether pre-award interest should have been awarded. The Court of Appeal found that the plaintiff had suffered prejudice because there was a possibility that some of the arguments that the plaintiff may have made could reasonably have affected the outcome of the arbitrator’s decision. The arbitrator was denied the benefit of arguments or evidence that had a real (as opposed to fanciful) chance of impacting on its deliberations. As a result, the Court of Appeal affirmed the decision of the High Court in setting aside the arbitrator’s additional award.
