Introduction
One significant advantage of arbitration is the absence of a general right to appeal the tribunal’s decision. This typically results in faster enforcement of arbitral awards compared to court judgments, which can undergo multiple appeals. In exceptional circumstances, a party may seek to have an arbitral award set aside by the courts at the seat of arbitration. However, courts have consistently held that such relief is only granted in rare instances, such as where there has been a significant breach of natural justice or procedural improprieties. Generally, arbitral awards are upheld.
In a recent legal battle between Swire Shipping Pte Ltd (“Swire”) and Ace Exim Pte Ltd (“Ace Exim”), both Singapore-based companies, where a dispute emerged over the sale of a vessel. The disagreement centred on whether Swire had properly followed the contract terms when notifying Ace Exim that the vessel was ready for delivery.
Background of the Case
Swire and Ace Exim entered into a contract for the sale of the vessel. As per the contract, Swire was supposed to deliver the vessel to “1 safe anchorage at the Port of Alang, West Coast of India.” However, due to COVID-19 restrictions imposed by the Indian government, this location became inaccessible. Swire then attempted to deliver the vessel at the Jafarabad Waiting Place, a move that Ace Exim rejected, arguing that this was not the proper delivery location as stipulated in the contract.
The Arbitration Process
The dispute was taken to arbitration, which was seated in Singapore and conducted under the Singapore Chamber of Maritime Arbitration Rules (3rd Ed, 2015). The substantive law governing the dispute was English law. The arbitrator ruled in favour of Ace Exim, concluding that Swire had not delivered the vessel to the correct location. Specifically, the arbitrator determined that the Jafarabad Waiting Place, where Swire had attempted to deliver the vessel, was not the “Customary Waiting Place” as defined by the contract.
Swire’s Application to Set Aside the Award
Unsatisfied with the arbitrator’s decision, Swire applied to the Singapore court to set aside the award. Swire argued on two primary grounds:
- the arbitrator exceeded his jurisdiction by making a finding about the Jafarabad Waiting Place that was not part of the dispute submitted for arbitration; and
- the arbitrator breached the rules of natural justice in how he assessed the evidence presented by a key expert witness, Mr Agrawal.
Ground 1: The Jafarabad Finding
Swire contended that the arbitrator’s finding that Jafarabad Waiting Place was only for heavily laden vessels exceeded his jurisdiction. Swire argued that this issue was not specifically addressed during the arbitration. However, the court found that the arbitrator’s decision was within his jurisdiction because it was a logical extension of the issues the parties had submitted for arbitration. The court emphasised that Swire had ample opportunity to present its case during the arbitration process. Ultimately, the court ruled that the arbitrator did not exceed his jurisdiction, and there was no breach of natural justice.
Ground 2: The Agrawal Evidence Finding
Swire also argued that the arbitrator’s assessment of an expert witness, Mr Agrawal’s evidence was a significant departure from what was argued during the arbitration and that it was inconsistent with the evidence on record. The court dismissed this argument, stating that the arbitrator’s finding was reasonably connected to the parties’ submissions and that Swire had not demonstrated any real prejudice resulting from the arbitrator’s conclusions. The court also made it clear that challenging an arbitrator’s findings is generally not a valid ground to setting aside and arbitral award.
Conclusion
The Singapore court ultimately dismissed Swire’s application to set aside the arbitral award. The court reiterated the principle of minimal curial intervention in arbitration matters, emphasising that courts should not interfere with arbitral awards unless there is a clear significant breach of natural justice or if the award was made in excess of jurisdiction.
This case serves as a reminder of the limited scope of judicial review in arbitration and underscores the importance of clearly framing issues during the arbitration process. It also highlights that dissatisfaction with an arbitrator’s factual findings is not sufficient grounds to overturn an arbitral award. Parties engaging in arbitration, usually by agreement at the outset, then ought to be prepared to accept the finality of the arbitrator’s decision, even if it may not turn in their favour.
