View from Singapore: The independence of arbitration, natural justice and arbitrators' standards

In two recent judgments, the Singapore High Court has affirmed its non-interventionist and pro-arbitration stance, whilst providing some useful clarity about the standards to which international arbitrators should be held.

In TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186 (TMM) Chan J declined to set aside an arbitral award as there had been no breach of the rules of natural justice, whilst in BLB and another v BLC and another [2013] SGHC 196 (BLB) Ang J remitted one narrow aspect of an award for consideration by a new tribunal, having reached the opposite conclusion.

A key feature of these two judgments is the strong emphasis on the limited supervisory role that the courts should play. In TMM the judge opined that the "integrity and efficacy of arbitration as a parallel dispute resolution system will be subverted if the courts appear unable or unwilling to restrain themselves from entering into the merits of every arbitral decision that comes before it". Also, the judge in BLB opined that, "implicit in the reasoning of Chan J [in TMM] was the finding that curial recourse against the award had been improperly used to invite the court to judge the full merits and conduct of the arbitration”. These comments are a welcome acknowledgment that the Singaporean courts are guarded against abuse of the court's curial jurisdiction.

In both cases, the judges also acknowledged that it is the challenge of the court to "sieve out" the "genuine challenges" to arbitral awards from those which are "appeals on the merits". Ang J's comment that, "in a borderline case the benefit of doubt would invariably favour the tribunal", is of particular relevance to this distinction and underlines the Singapore courts' pro-arbitration stance.

It is also pleasing to see that a practical approach to the relationship between arbitral tribunals and the courts pervades both judgments. In TMM, Chan J reiterated that the court's role is limited, in order to ensure that "arbitrations are […] an efficient alternative to court litigation", not a supplement. The court in BLB demonstrated pragmatism with its flexible approach; having found a breach of natural justice in respect of a particular aspect of the award, the court remitted it to a new tribunal on the narrow issue only and did not find it necessary to set aside the entire award.

Although the court in TMM acknowledged that the content of the rules of natural justice are generally "lacking in precision", it helpfully highlighted four sub-rules giving rise to standards by which arbitrators should be held (and which were cited with approval in BLB) and it offered guidance on the rigour with which those standards should be applied:

1. Duty not to look beyond submissions: The court acknowledged that commercial parties appoint arbitrators for their expertise and experience so they cannot be straightjacketed to only adopting in their conclusions the premises put forward by the parties.
2. Duty to deal with every argument presented: The court observed that an arbitral tribunal need not deal with every argument but only "all essential issues", with arbitral tribunals to be given fair latitude as to the meaning of "essential".
3. Duty to attempt to understand submissions: The court reasoned that an arbitral tribunal must have demonstrably at least attempted to comprehend the parties' arguments on essential issues, but that the inquiry should not be side-tracked by the explicability of a decision alone. The central inquiry is whether the award reflects the fact that the tribunal had applied its mind to the critical issues and arguments.
4. Duty to give reasons and explanations: The court summarised that arbitrators are not obliged to set out each step by which they reached their conclusion. The crux is whether the contents of the award, taken as a whole, inform the parties of the bases on which the tribunal has reached its decision on the material or essential issues.

These cases demonstrate the continuing strong pro-arbitration approach of the Singapore courts and their dedication to developing the jurisdiction as the preeminent destination for international dispute resolution. The court's attempt to bring some clarity to the standards by which arbitrators should be held is welcome addition to a growing area of jurisprudence and recognises the practical realities and benefits of arbitration over court litigation.

For more information, please contact Alastair Henderson or Daniel Waldek.