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Arbitration remains one of the preferred dispute resolution mechanisms for cross-border investors and states, but the integrity of the process depends on strict adherence to procedural fairness.
Courts in leading arbitration hubs such as London and Singapore continue to balance respect for tribunal autonomy with the need to safeguard due process. The recent English High Court ruling in The Republic of Kazakhstan v. World Wide Minerals Ltd [2025] EWHC 452 (Comm) illustrates how far courts are prepared to go when fundamental issues are overlooked.
In a ruling that reinforces the crucial "due process" safeguards of the UK Arbitration Act 1996, the English High Court upheld Kazakhstan's challenge to a major arbitral award, finding that the tribunal committed a "serious irregularity" by failing to address a central issue put before it.
This case serves as a critical reminder of the high standards of procedural fairness required in London-seated arbitrations and demonstrates the Court's willingness to intervene when those standards are not met, even in complex, long-running investor-state disputes.
Factual and Procedural Background
The dispute originates from a 1996 agreement where World Wide Minerals Ltd (WWM) was to manage a state-owned uranium processing facility in Kazakhstan. The relationship soured, and in 1997, Kazakhstan terminated the agreement, citing WWM's failure to make contractually required payments.
WWM initiated arbitration in 2013, alleging multiple breaches of the Canada-USSR Bilateral Investment Treaty by Kazakhstan, including an improper refusal to grant an export license for uranium (the "Export License Breach"). In a 2019 award, the arbitral tribunal rejected most of WWM's claims and upheld Kazakhstan's right to terminate the agreement. However, it found Kazakhstan liable for the Export License Breach and awarded WWM approximately US$13.7 million (plus substantial interest) in "sunk costs."
Critically, this "sunk costs" theory of loss had not been argued by either party. Kazakhstan successfully challenged that award in the English High Court under Section 68 of the Arbitration Act 1996. In 2020, the Court found a serious irregularity had occurred because Kazakhstan had no opportunity to address the damages theory the tribunal adopted. The issues of causation and loss were remitted back to the same tribunal for reconsideration.
The Remitted Proceedings and Kazakhstan's Central Argument
Following the successful challenge, the parties engaged in extensive new proceedings, culminating in a five-day hearing with expert evidence on Kazakh law, accountancy, and the uranium market.
At the heart of these new proceedings was Kazakhstan's central defence on causation, which it termed the "Counterfactual Case." Kazakhstan argued that the Export License Breach caused WWM no loss at all. Its position was that, even if the export license had been granted, WWM's investment was doomed to fail regardless. WWM was already in significant financial default under the Management Agreement, and Kazakhstan would have lawfully terminated the agreement for non-payment anyway. Therefore, in this counterfactual scenario, WWM would have lost its investment irrespective of the breach, meaning the breach itself caused no quantifiable loss. This argument was the "centrepiece" of Kazakhstan's case and was supported by extensive expert evidence and submissions.
The 2024 Award and the Second High Court Challenge
In March 2024, the tribunal issued its second award. It once again found in favour of WWM, holding that the Export License Breach was a "decisive factor" in the investment's demise and re-awarded the US$13.7 million in sunk costs.
Astoundingly, the 174-page award contained no analysis, or even mention, of Kazakhstan's "Counterfactual Case." The tribunal did not engage with the extensive evidence or arguments that the Management Agreement would have been terminated for non-payment in any event.
Kazakhstan launched a second challenge under Section 68(2)(d) of the Arbitration Act 1996, arguing the tribunal had failed to deal with an essential issue put to it, resulting in substantial injustice.
The High Court's Legal Analysis and Decision
Mr Justice Bryan agreed with Kazakhstan and upheld the challenge, providing a clear application of the principles governing Section 68.
- The High Threshold for Section 68: The Court reiterated that Section 68 is a "long stop" for challenges and is reserved for "extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected." The focus is on the fairness of the process, not the correctness of the outcome.
- Failure to Deal with an "Issue" (Section 68(2)(d)): The Court applied the established three-part test for this specific ground:
- Was it an "issue"? The Court distinguished between a mere "argument" and a foundational "issue." It found that Kazakhstan's Counterfactual Case was undeniably an "issue" because it was a complete defence to the claim for loss. If accepted, it would have been fatal to WWM's entire damages claim.
- Was it "put to" the tribunal? It was common ground that the issue was put to the tribunal "at length" and was the "centrepiece" of Kazakhstan's case during the five-day hearing.
- Did the tribunal "deal with" it? This was the core of the dispute. The Court conducted a careful reading of the award and concluded that the tribunal had completely failed to deal with the issue. WWM's attempt to argue the issue was addressed implicitly was rejected. The Court affirmed that it is not sufficient for a tribunal to consider crucial issues "in pectore" (privately, in their minds); it must be apparent from the award itself that the issue has been confronted and determined.
- Substantial Injustice: The Court found that the failure caused Kazakhstan "substantial injustice." This threshold was easily met because, had the tribunal properly considered and accepted Kazakhstan's argument, the outcome of the arbitration "might well have been different"—WWM would have been awarded nothing. The failure to address a central, dispositive issue was deemed an irregularity so serious that substantial injustice was "inherently likely."
Conclusion and Implications for Clients
This decision provides a powerful illustration of the procedural safeguards available to parties in London-seated arbitrations. It underscores that an arbitral tribunal's fundamental duty is not just to reach a conclusion, but to do so by transparently engaging with the essential issues and arguments advanced by the parties.
For our clients involved in or contemplating arbitration, this case highlights two key points:
- The Arbitration Act 1996 provides a remedy, albeit a high bar to clear, for fundamental failures in due process. A party is entitled to have its core arguments heard and addressed.
- An award must demonstrate, on its face, that the tribunal has grappled with the key pillars of each party's case. A failure to do so, particularly on a potentially decisive issue, exposes the award to a successful challenge for serious irregularity.
The English High Court has once again remitted the matter back for reconsideration.
Comparison with the Singapore Position
The outcome in this case invites a comparison with the legal position in Singapore, another leading international arbitration hub. Singaporean law, governed by the International Arbitration Act (IAA) which incorporates the UNCITRAL Model Law, does not have a direct equivalent to the UK's "serious irregularity" ground under Section 68. Instead, challenges to awards must be brought under the much narrower grounds set out in Article 34 of the Model Law.
Despite the different statutory frameworks, a similar result would likely have been reached in Singapore. The tribunal's failure to address Kazakhstan's "Counterfactual Case" would almost certainly be framed as a breach of the rules of natural justice. This is a well-established ground for setting aside an award in Singapore, falling either under a party's inability to "present his case" (Article 34(2)(a)(ii)) or as a violation of Singapore's public policy (Article 34(2)(b)(ii)).
The Singapore courts, like their English counterparts, maintain a staunchly pro-arbitration and non-interventionist stance, setting an exceptionally high bar for any challenge. A party must demonstrate not only that a breach of natural justice had occurred, but also that the breach caused actual prejudice and was connected to the making of the award. This prejudice requirement is analogous to the UK's "substantial injustice" test. The Singapore Court of Appeal in DKT vDKU [2025] 1 SLR 806has clarified the framework to successfully mount an inter petita challenge (i.e., in situations where the tribunal had not carried out its mandate by considering all material issues determinative of the outcome that were raised in the arbitral proceedings), where the following four conditions must be satisfied:-
- First, the point must have been properly brought before the tribunal for its determination.
- Second, the point must have been essential to the resolution of the dispute.
- Third, the tribunal must have completely failed to consider the point.
- Finally, even if the tribunal failed to consider an essential point placed before it, there must have been real and actual prejudice occasioned by this breach of natural justice (must be more than a mere failure to consider a specific argument).
Given that Kazakhstan's "Counterfactual Case" was a complete, case-dispositive defence, a Singapore court would very likely find that the tribunal's failure to engage with it at all constituted a fundamental breach of procedural fairness that caused real prejudice, warranting the setting aside of the award. This reinforces the point for parties arbitrating in Singapore: while the statutory framework differs from the UK, the principle that tribunals must grapple openly with the central issues of each case is just as strictly policed.
Safeguarding fairness in Singapore
For businesses and investors operating across borders, especially those with disputes seated in Singapore, the message is clear. Courts will intervene only in exceptional cases, but when they do, it is to ensure that no party is denied a fair opportunity to have its core issues addressed.
This decision in London echoes Singapore's own jurisprudence on natural justice and prejudice, reminding parties that while arbitral autonomy is respected, the right to a fair hearing remains paramount. Those with Singapore connections should take comfort that the city-state's courts remain aligned with global best practice in upholding the integrity of arbitration proceedings.
If you would like to better understand how these developments may affect your arbitration strategy in Singapore or globally, please do not hesitate to reach out to our team of experts.
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