Natural Justice And Reasoned Arbitral Awards: Lessons From Two Recent Set-asides By The Singapore Court

DOI V DOJ [2025] SGHC(I) 15

The Singapore International Commercial Court ("SICC") set aside an arbitral award in DOI v DOJ [2025] SGHC(I) 15 for lack of procedural fairness.

Summary of Facts

The dispute arose out of a Singapore-seated ICC arbitration concerning a contract for the construction of a section of a dedicated freight corridor in India (the "CTP-11 Contract"). The Claimant ("DOI") was a special purpose vehicle formed for the construction and operation of dedicated freight corridors, being a network of railways in India for the exclusive use of freight trains. The Defendants ("DOJ") were three contractors in an unincorporated consortium for the works on the freight corridor sections.

DOI had entered into three other contracts for work on other sections of the freight corridor with similar terms to the CTP-11 Contract. It was the respondent to arbitrations commenced by the respective contractors under each contract. The final awards for arbitrations under the three other contracts were issued between 1 July 2023 and 24 November 2023. On 5 June 2024, the award for the arbitration in respect of the CTP-11 Contract was issued, with DOJ largely succeeding in their claims.

DOI applied to set aside this arbitral award on several grounds under the UNCITRAL Model Law on International Commercial Arbitration ("Model Law"), given force of law by the International Arbitration Act 1994 (2020 Rev Ed) ("IAA"). The key issues raised, inter alia, were in respect of an alleged breach of the rules of natural justice ¹. DOI alleged that the majority in the arbitral tribunal ("Majority") had prejudged the issues, failed to independently apply their minds to the evidence and arguments, and relied heavily on arbitral awards involving the other three contracts.

SICC's Decision

The SICC ruled that this award should be set aside, focusing on breaches of the rules of natural justice, finding that the Majority had prejudged the issues, as evidenced by the extensive similarities between this award and prior related awards.

Prejudgment Amounting to Apparent Bias

The SICC found that there was an extensive reproduction of earlier awards, including the Majority's reasoning and analyses across all issues in the Award, with only minor editorial changes. This created a reasonable suspicion of apparent bias and prejudgment. SICC cautioned that the same tribunal in related arbitrations should be "scrupulous" ² in deciding on the evidence and arguments. Given the finding of apparent bias, the breach of the rules of natural justice prejudiced DOI's rights to due process.

Failure to Give a Fair Hearing

The SICC also found that the Majority had failed to give DOI a fair hearing. The extensive reproduction was indicative that the Majority decided the issues with a "closed mind" ³ . DOI was also denied the opportunity to respond to new arguments and authorities cited in the Majority's decision (which had been taken from prior arbitrations and were not raised by either party in this arbitration). This was another breach of the rules of natural justice, further justifying the setting aside of the award.

Overall, the court emphasised that impartiality and independent decision-making are fundamental to arbitration.

DOM v DON [2025] SGHC 103

In DOM v DON [2025] SGHC 103, the Singapore High Court partially set aside an arbitral award due to breaches of the rules of natural justice. This case involved a construction dispute over defects and rectification costs in a 4-storey factory building, with key issues concerning the tribunal's finding on consultants' fees.

Summary of Facts

DOM was the main contractor engaged to provide addition and alteration works to a factory belonging to DON. DOM applied to set aside the arbitral award on rectification costs for building defects, alleging that the tribunal adopted unforeseeable chains of reasoning or failed to give DOM a reasonable opportunity to present its case ⁴.

High Court's Decision

The court found that the tribunal had breached the rules of natural justice by awarding 50% of the fees claimed for three consultants (Consultant B, Consultant D, and Consultant E). Such fees were awarded despite the tribunal expressly finding that it was unnecessary to hire Consultant B. There was also no evidence that the services of Consultant D and E were necessary for the rectification works. As such, the court found that the tribunal's award of fees was unforeseeable.

Further, the tribunal's chain of reasoning for awarding fees despite finding the consultants' services were unnecessary had insufficient nexus to parties' arguments. Therefore, the court set aside that portion of the award due to a breach of the rules of natural justice. DOM's rights were prejudiced as it was denied the opportunity to respond to the tribunal's approach of applying a discount to the claim for fees. This decision affirms that courts will assess whether a tribunal's chain of reasoning is foreseeable and sufficiently connected to parties' arguments.

The court did not set aside the other portions of the award as the tribunal's award was not incongruent with the evidence and there was no breach of the rules of natural justice. The court emphasised that incongruency or "manifest incoherence" ⁵ must be tied to a demonstrable breach of an established rule of natural justice. Alleging inadequate provision of reasons and explanations is, without more, a mere error of law and not a ground for challenging an award.

Key Takeaways

Both decisions, issued within a short timeframe, are consistent with the Singapore courts' approach to ensuring procedural fairness in arbitration. The following are key implications to be considered.

1. Procedural Fairness and Arbitration
   Both DOI v DOJ and DOM v DON reaffirm Singapore's commitment to procedural fairness as a fundamental principle. There is an emphasis on the need to stringently uphold due process rights. Parties should be given the opportunity to present their case and respond to all issues that may influence the tribunal's reasoning.
2. 2 Apparent Bias and the Importance of Impartiality
   The decision in DOI v DOJ underscores that impartiality is non-negotiable in arbitration. Apparent bias, including prejudgment or undue reliance on prior awards, undermines the legitimacy of the arbitral process. Arbitrators are expected to independently evaluate evidence and arguments, without allowing prior decisions to improperly influence their reasoning. This is particularly significant in cases involving related disputes or multiple arbitrations with overlapping facts. Heightened caution should be exercised in ensuring that decisions are free from prejudgment or improper influence by prior awards.
3. Foreseeability and the Fair Hearing Rule
   The court in DOM v DON also emphasised that arbitral decisions should be grounded in the arguments and evidence presented by the parties. Departures from the parties' submissions or the tribunal's own findings (without affording the parties the opportunity to address such issues) may lead to a breach of the fair hearing rule.
4. Impact on Arbitrators' Drafting Practices
   The findings in DOI v DOJ demonstrates the risks associated with reproducing reasoning from earlier decisions. Practitioners and arbitrators alike should view this as a cautionary tale: the use of prior awards as templates must be approached with extreme care to avoid giving rise to allegations of prejudgment or apparent bias.

The Singapore courts continue to carefully balance minimal curial intervention with the need to safeguard the integrity of arbitration. The threshold for establishing a breach of natural justice is intentionally high, save for exceptional cases ⁶. Courts generally avoid being overly critical of arbitral decisions to preserve this balance, while also ensuring that challenges to awards are not misused as disguised appeals on the merits ⁷. The focus is on fairness in the arbitral process, regardless of whether the tribunal's decision was right or wrong. At the same time, Singapore courts will not hesitate to intervene when there is a departure from fundamental principles of natural justice, reaffirming their commitment to upholding high standards of procedural fairness. This dual approach enhances Singapore's reputation as a trusted and reliable seat for arbitration.

Footnotes

1. In addition to these, the court also decided on issues relating to arbitral procedure, public policy, and an alleged inability to present its case, which are not the focus of this update.

2. [115] of DOI v DOJ and others and another matter [2025] SGHC(I) 15.

3. [106] of DOI v DOJ and others and another matter [2025] SGHC(I) 15.

4. In addition, DOM also alleged that (i) the tribunal failed to apply its mind to essential issues or made decisions that were incongruent with its findings; (ii) it was deprived of the opportunity to inspect certain defects or rectification works, which prejudiced its ability to defend itself; (iii) parts of the award were induced or affected by procedural fraud arising out of perjury by DON's expert witness; and (iv) that parts of the award were contrary to public policy, including the award of pre-award interest and portions of the award allegedly induced by fraud. However, these issues are not the focus of our update and in any event the court had dismissed these claims on the basis that DOM had not demonstrated any grounds for setting aside under the rules of natural justice or public policy.

5. [24] of DOM v DON [2025] SGHC 103.

6. [110] of DOI v DOJ and others and another matter [2025] SGHC(I) 15.

7. [110] of DOI v DOJ and others and another matter [2025] SGHC(I) 15.