Singapore International Commercial Court Sets Aside ICC Tribunal

In a case characterized by the Singapore International Commercial Court ("SICC") as "unusual and troubling," the SICC set aside an International Chamber of Commerce ("ICC") Arbitration Tribunal's award on the grounds of a breach of natural justice. The SICC determined that an assertion of apparent bias against one of the ICC Tribunal's arbitrators was substantiated, compromising the aggrieved party's right to a fair, independent, and impartial decision. This ruling emphasizes the critical importance of selecting arbitrators who are fair, independent, and neutral.

In the case of DJO v DJP and others [2024] SGHC(I) 24, the Claimant sought an order from the SICC to set aside the final award issued by the arbitral tribunal in ICC Arbitration Case No. 26733/HTG (the "Arbitration") in its entirety, invoking, among other provisions, section 24(b) of the International Arbitration Act 1994, which pertains to breaches of natural justice.

The Claimant, DJO, acted as the respondent in the Arbitration and was responsible for the operation of a network of railway lines in India, exclusively serving freight trains. In 2015, DJO engaged in negotiations for various contracts related to this network. The claimants in the Arbitration comprised a consortium of three companies ("Consortium X") that sought to tender for one such contract. The parties entered into a contract on 18 August 2015.

Consortium X initiated arbitration proceedings on 16 December 2021, seeking an adjustment to labor costs under the terms of the contract, based on a Notification issued by the Indian Ministry of Labour on 19 January 2017 that raised daily minimum wages (the "Notification").

The Tribunal, consisting of three arbitrators identified as Judges A, B, and C, all of whom were distinguished retired Indian judges, issued an award in favor of Consortium X on virtually all claims on 24 November 2023. The Arbitration was seated in Singapore.

At the same time, DJO was also a respondent in two parallel arbitrations involving different consortia, but addressing similar issues related to the Notification's impact on contracts concerning the same railway network. Awards in these parallel arbitrations were rendered on 1 August 2023 and 27 August 2023.

Judge C presided over all three arbitrations. According to the SICC, the Tribunal used the awards from the two parallel arbitrations as templates when drafting the award in the Arbitration. The SICC found that Judge C heavily relied on knowledge obtained from these prior arbitrations when preparing the award. Specifically, the ICC Tribunal:

• Gave weight to submissions made in the earlier arbitrations, rather than restricting itself to those presented in the Arbitration;

• Relied on legal authorities cited in the earlier arbitrations, which were not cited in the Arbitration;

• Referred to provisions in a contract from one of the earlier arbitrations, despite differences from the contract at issue in the Arbitration; and

• Failed to appropriately consider issues of limitation, waiver, and estoppel based on the specific facts and arguments raised in the Arbitration.

The SICC concluded that there was apparent bias on the part of Judge C because the Award attributed submissions from an earlier arbitration almost verbatim to counsel in the Arbitration. This gave a fair-minded, informed, and reasonable observer reason to believe that Judge C may have approached the case with a closed mind.

Furthermore, the SICC found that the Award did not represent an independent decision of the Tribunal based solely on the material and submissions presented in the Arbitration. By drawing heavily on facts and arguments from prior cases without clearly distinguishing between them and the issues in the instant case, and by failing to allow the parties to address the Tribunal on these prior awards, the Tribunal deprived the parties of their right to a fair, independent, and impartial outcome.

The SICC, therefore, held that the Award was marred by breaches of natural justice due to apparent bias and the absence of a fair, impartial adjudication. Accordingly, the Award was set aside, underscoring the paramount need for arbitrators to be fair, independent, and neutral, and for their decisions to be beyond reproach.