CEB v CEC

"The plaintiff is not entitled to have the CEE Award or CEC Award set aside on either of the grounds relied upon. The Originating Summonses will therefore be dismissed." — Per Simon Thorley IJ, Para 78

Case Information

• Citation: [2020] SGHC(I) 11 (Para 0)
• Court: Singapore International Commercial Court (Para 0)
• Date of Judgment: 6 April 2020; judgment reserved on 4 May 2020 (Para 0)
• Coram: Simon Thorley IJ, International Judge (Para 0)
• Case Numbers: Originating Summons No 2 of 2020; Originating Summons No 3 of 2020 (Para 0)
• Counsel for the Plaintiff: Andre Darius Jumabhoy and Low Ying Ning Elaine (Peter Low & Choo LLC) (Para 0)
• Counsel for the Defendants: Bazul Ashhab bin Abdul Kader, Prakaash s/o Paniar Silvam, Tanya Thomas Vadaketh and Tay Lin Qian (Oon & Bazul LLP) (Para 0)
• Area of Law: International arbitration; setting aside arbitral awards; natural justice; public policy (Paras 20, 45, 48, 49)
• Judgment Length: The extraction does not state the page count or word count, and that is not answerable from the provided material.

Summary

This judgment concerned two related applications to set aside two arbitral awards, one in the CEE arbitration and one in the CEC arbitration, both arising out of commodity-sale disputes governed by Indian law and seated in Singapore. The plaintiff’s principal complaint was that the arbitrator had failed to deal with its pleaded consequential-loss claims, which it characterised as a breach of natural justice, and it also argued that the awards were contrary to public policy because the commercial result was allegedly so harsh that it shocked the conscience of the court. (Paras 20, 21, 45, 48, 49)

The court accepted that the consequential-loss issue had not been expressly dealt with in the awards, but it held that this omission did not justify setting the awards aside. The reasoning turned in significant part on the availability of the statutory mechanism for an additional award under s 33(4) of the Indian Arbitration and Conciliation Act 1996, the limited role of the court under Singapore’s arbitration framework, and the fact that the omitted claims were very small in relation to the overall sums in dispute. (Paras 52, 59, 61, 63)

The public policy challenge also failed. The court held that the arbitrator’s treatment of the cancellation issue and the resulting commercial consequences did not cross the high threshold required for public policy intervention. The court emphasised that it was not its function to revisit the merits of the arbitral reasoning, and it concluded that the outcome, though commercially disadvantageous to the plaintiff, did not shock the conscience. Both originating summonses were therefore dismissed, with costs to the defendants. (Paras 72, 76, 77, 78)

What Were the Commercial Disputes That Led to the Two Arbitrations?

The first dispute, involving CEE, arose from a sequence of contracts for the sale of palm oil and canola oil. In November 2015, the plaintiff and CEE entered into four contracts, and later, in June 2016, they entered into six further contracts. The plaintiff’s case was that CEE failed to pay sums due under the initial four contracts, and on 31 March 2017 the plaintiff unilaterally cancelled the later six contracts on that basis. The court recorded that the net sum due to the plaintiff under the first set of contracts was US$316,658 rather than the much larger amount originally owing. (Paras 9, 10, 19)

"In November 2015, the plaintiff and CEE entered into four contracts for the sale by the plaintiff and the purchase by CEE of palm oil and canola oil." — Per Simon Thorley IJ, Para 9

"On 31 March 2017, the plaintiff unilaterally cancelled the later six contracts on the ground that CEE had failed to pay the sums due under the initial four contracts." — Per Simon Thorley IJ, Para 10

The second dispute, involving CEC, was broader. Between September 2015 and July 2016, the plaintiff and CEC entered into 25 contracts for the sale and purchase of various commodities, including castor oil. The plaintiff received only a part payment of US$300,000 in relation to the earlier contracts, and on 31 March 2017 it cancelled three outstanding contracts on the ground that no further payment had been received. The arbitration award in that matter was substantial: the claimant was awarded US$83,177,017.01 plus interest, and the respondent obtained US$11,900,000 plus interest on counterclaim/set-off. (Paras 23, 25, 31)

"Between September 2015 and July 2016, the plaintiff and CEC entered into 25 contracts for the sale and purchase of various commodities including castor oil." — Per Simon Thorley IJ, Para 23

"On 31 March 2017, the plaintiff unilaterally cancelled these three contracts on the ground that it had not received any further payment beyond the US$300,000 paid in relation to the earlier contracts." — Per Simon Thorley IJ, Para 25

Both disputes were arbitrated in Singapore under agreements governed by Indian law. The court noted that the arbitration clause provided for arbitration in Singapore and that the arbitration was to be governed by and construed in accordance with the laws of India. That choice of law became important when the court considered the statutory mechanism for an additional award under the Indian Arbitration and Conciliation Act 1996 and the relationship between that mechanism and a later setting-aside application in Singapore. (Paras 12, 20, 37, 59)

How Did the Court Frame the Two Issues for Decision?

The court framed the case as turning on two issues only. First, whether the arbitrator’s failure to address the plaintiff’s alleged consequential-loss claims amounted to a breach of natural justice sufficient to justify setting aside the awards. Second, whether the arbitrator’s treatment of the cancellation issue, and the commercial consequences that followed, amounted to a breach of public policy. The court stated the issues in direct terms and then proceeded to analyse each separately. (Paras 21, 32)

"In substance therefore two issues arise, the first pertaining to the failure of the Arbitrator to address the issue relating to the plaintiff’s alleged consequential loss, and the second based upon an alleged breach of public policy in respect of the holding that the plaintiff could not unilaterally cancel the six contracts." — Per Simon Thorley IJ, Para 21

"The same two issues thus arise." — Per Simon Thorley IJ, Para 32

This framing mattered because it kept the court’s analysis tightly focused on the setting-aside grounds actually advanced. The court did not treat the applications as invitations to re-argue the merits of the arbitrations. Instead, it asked whether the awards were vulnerable on the narrow statutory grounds invoked by the plaintiff, namely natural justice and public policy. That approach is consistent with the court’s repeated emphasis on minimal curial intervention in arbitration. (Paras 45, 48, 52)

The court’s structure also reflected the distinction between an omitted issue and an adverse merits outcome. The plaintiff’s complaint about consequential loss was not that the arbitrator had decided the issue wrongly, but that the issue had not been expressly addressed at all. The public policy complaint, by contrast, attacked the commercial effect of the arbitrator’s reasoning on cancellation and breach. The court treated those as analytically distinct and applied different legal tests to each. (Paras 46, 49, 72, 76)

Why Did the Natural Justice Challenge Based on Consequential Loss Fail?

The plaintiff argued that the awards were in breach of natural justice because the tribunal failed to consider its pleaded consequential-loss claims, which were estimated at US$150,000. The court accepted that the issue had not been expressly set out in the awards, but it examined the arbitration record and the statutory framework before concluding that the omission did not justify setting aside. The court’s reasoning was not that the issue was unimportant in the abstract, but that the plaintiff had an available procedural route to seek an additional award and had not shown why that route should be bypassed. (Paras 20, 45, 53, 54, 59, 63)

"The Award is in breach of the rules of natural justice in that the Tribunal failed to consider the Plaintiff’s Company pleaded issue of consequential losses (estimated at USD 150,000)." — Per Simon Thorley IJ, Para 20

"To fail to consider an important issue that has been pleaded in an arbitration is a breach of natural justice because in such a case, the arbitrator would not have brought his mind to bear on an important aspect of the dispute before him." — Per Simon Thorley IJ, Para 46

The court relied on the awards themselves to show that the consequential-loss issue had in fact been identified as an issue for decision. In the CEE award and the CEC award, the arbitrator identified whether the claimant could prove entitlement to the consequential loss claimed. The defendants also filed affidavits saying that the issue had been addressed at the hearing, even if it was not expressly discussed in the written awards. The court therefore did not accept the plaintiff’s submission that the issue had simply been ignored in the arbitral process. (Paras 53, 54)

"In para 57 of the CEE Award and para 52 of the CEC Award, the Arbitrator identified one of the issues that arose for decision to be whether the claimant (ie, the plaintiff) could prove that it was entitled to the consequential loss claimed." — Per Simon Thorley IJ, Para 53

"The issue of consequential loss, while not expressly set out in the Award, had been duly considered and addressed by the Tribunal at the hearing." — Per Simon Thorley IJ, Para 54

The decisive point, however, was procedural. The court held that the plaintiff should have invoked the additional-award mechanism under s 33(4) of the Indian Arbitration and Conciliation Act 1996, which permits a party to request an additional award within thirty days of receipt of the award in respect of claims presented but omitted from the award. The court considered that the plaintiff had not given good reasons for failing to use that route, and it declined to treat the omission as a basis for setting aside under the Singapore setting-aside regime. (Paras 59, 61, 63)

"In common with many arbitration rules, s 33(4) of the 1996 Indian Act contains the following provision: (4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award." — Per Simon Thorley IJ, Para 59

"I consider that such a de facto extension should not lightly be given where no good reasons are given for the failure to act within that period." — Per Simon Thorley IJ, Para 63

The court also placed the case within the framework of AKN and Soh Beng Tee. It said the facts fell squarely within the observations in AKN and met the first three of the four criteria in Soh Beng Tee. Those criteria require the applicant to identify the rule of natural justice breached, explain how it was breached, show the connection to the making of the award, and demonstrate prejudice. The court’s conclusion was that, even if there had been an omission, the plaintiff had not shown a basis for curial intervention in light of the statutory correction mechanism and the limited prejudice caused by the omission. (Paras 47, 58)

"The facts of these cases therefore fall squarely within the observations in [46] of AKN ([46] supra) and meet the first three of the four criteria set out in [29] of Soh Beng Tee ([47] supra)." — Per Simon Thorley IJ, Para 58

What Natural Justice Test Did the Court Apply?

The court restated the Singapore law on natural justice in arbitration by quoting the principle that a failure to consider an important pleaded issue can amount to a breach because the arbitrator would not have brought his mind to bear on an important aspect of the dispute. It then linked that principle to the four-part framework from Soh Beng Tee, which requires the applicant to identify the breached rule, explain the breach, connect it to the making of the award, and show prejudice. The court used those authorities not as abstract propositions, but as the lens through which it assessed the plaintiff’s complaint about consequential loss. (Paras 46, 47)

"which rule of natural justice was breached; (b) how it was breached; (c) in what way the breach was connected to the making of the award; and (d) how the breach prejudiced its rights." — Per Simon Thorley IJ, Para 47

The court also emphasised the institutional restraint required in arbitration. It quoted AKN for the proposition that parties choose their adjudicators and that courts must not interfere in the merits of an award. That principle was central to the court’s refusal to convert a complaint about an omitted issue into a merits review. The court’s analysis therefore did not ask whether the plaintiff’s consequential-loss claim was strong or weak; it asked whether the omission, in context, justified the exceptional remedy of setting aside. (Paras 52, 58)

"A critical foundational principle in arbitration is that the parties choose their adjudicators." — Per Simon Thorley IJ, Para 52

"The courts do not and must not interfere in the merits of an arbitral award and, in the process, bail out parties who have made choices that they might come to regret, or offer them a second chance to canvass the merits of their respective cases." — Per Simon Thorley IJ, Para 52

That approach explains why the court gave weight to the availability of an additional award under s 33(4). The court treated that mechanism as part of the arbitral process itself, not as an optional extra. If a claim has been presented but omitted, the proper first step is to ask the tribunal to complete its work. Only in exceptional circumstances would a court allow a party to bypass that route and seek setting aside directly. (Paras 59, 61, 63)

Why Did the Public Policy Challenge Fail?

The plaintiff’s second ground was that the awards were contrary to public policy because the result was so commercially harsh that it shocked the conscience of the court. The court rejected that submission. It held that the arbitrator’s conclusion on the cancellation issue was open to him under either the Indian law governing the contracts or the Singapore law of anticipatory breach, and that the court would not review that conclusion on a setting-aside application. The court further held that the financial consequences, though stark, were part of ordinary trading risk and did not meet the exceptional public policy threshold. (Paras 49, 70, 72, 76, 77)

"The Award is in breach of public policy of the State in that the result of the Award is so manifestly unjust that it shocks the conscience of the court." — Per Simon Thorley IJ, Para 20

"it should only operate in instances where the upholding of an arbitral award would ‘shock the conscience’ … or is ‘clearly injurious to the public good or … wholly offensive to the ordinary reasonable and fully informed member of the public’ … or where it violates the forum’s most basic notion of morality and justice …" — Per Simon Thorley IJ, Para 49

The court’s analysis began with the legal threshold. It quoted PT Asuransi for the proposition that public policy intervention is reserved for exceptional cases where enforcement would shock the conscience or be clearly injurious to the public good. It also referred to BAZ v BBA for the proposition that the court must consider the subject matter of the public policy, the degree of violation, and the consequences of the violation. Those authorities set a very high bar, and the court found that the plaintiff’s complaint did not come close to meeting it. (Paras 49, 51)

"In determining whether the balance tilts towards the countervailing public policy, it is important to consider both the subject nature of the public policy, the degree of violation of that public policy and the consequences of the violation." — Per Simon Thorley IJ, Para 51

The court then examined the arbitrator’s reasoning on cancellation and anticipatory breach. It held that the conclusion was open to the arbitrator under either law. The court also relied on the principle from The STX Mumbai that where a party has evinced a clear intention not to perform, the innocent party may rescind and/or claim damages for anticipatory breach. That authority was used to show that the arbitrator’s legal approach was not aberrant or contrary to basic legal principle. (Paras 70, 72)

"If the defendant has evinced a clear intention that it will not perform its obligations under the contract, then it is only just and fair that the plaintiff be permitted, in law, to rescind the contract (if it so chooses) and/or claim damages on the basis of an anticipatory breach of contract – regardless of whether the contract is executed or executory." — Per Simon Thorley IJ, Para 70

"The conclusion was open to the Arbitrator under either law and is not one which the court will review on an application to set aside the award." — Per Simon Thorley IJ, Para 72

Finally, the court addressed the plaintiff’s “shock the conscience” submission directly. It held that the plaintiff’s case reduced to the proposition that the awards were financially disproportionate and gave the defendants a large advantage. The court rejected that as a basis for public policy intervention, observing that such outcomes are part of normal trading and do not, without more, offend public morality or justice. The court’s language was emphatic: the result did not shock its conscience. (Paras 76, 77)

"The plaintiff’s case on this issue therefore boils down to this: the result of the awards is, in financial terms, so disproportionate and gives each defendant such a financial advantage that the result “shocks the conscience” of the court." — Per Simon Thorley IJ, Para 76

"This is part and parcel of normal trading. There is nothing which “shocks the conscience” about this." — Per Simon Thorley IJ, Para 77

How Did the Court Deal With the Indian Arbitration Statute and the Singapore Setting-Aside Regime?

A significant part of the judgment was devoted to the interaction between the Indian Arbitration and Conciliation Act 1996 and Singapore’s International Arbitration Act. The court noted that the arbitration was governed by Indian law and that the relevant Indian statutory provisions included s 33(4) and s 34(3). It also set out the Singapore setting-aside provision in s 24(b) of the International Arbitration Act and the Model Law provisions in Art 34(2)(b)(ii) and Art 34(3). The court’s task was to determine whether the plaintiff could use the Singapore court to set aside awards for an omission that the Indian statute itself allowed the tribunal to correct. (Paras 45, 48, 59)

"Court may set aside award 24. Notwithstanding Article 34(1) of the Model Law, the High Court may, in addition to the grounds set out in Article 34(2) of the Model Law, set aside the award of the arbitral tribunal if – (a) the making of the award was induced or affected by fraud or corruption; or (b) a breach of the rules of natural justice occurred in connection with the making of the award by which the rights of any party have been prejudiced." — Per Simon Thorley IJ, Para 45

"Article 34. Application for setting aside as exclusive recourse against arbitral award (1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this Article." — Per Simon Thorley IJ, Para 48

The court’s treatment of s 33(4) was especially important. It quoted the provision and treated it as a meaningful procedural safeguard against the very kind of omission alleged by the plaintiff. The court reasoned that where a party has a route to ask the tribunal to make an additional award on omitted claims, it should not lightly be allowed to bypass that route and seek to set aside the award instead. This was not merely a technical point; it went to the structure of arbitral finality and the division of functions between tribunal and court. (Paras 59, 61, 63)

"Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award." — Per Simon Thorley IJ, Para 59

"This is the case even if the applicant might think that the award is unsalvageable (see the English High Court decision of Sinclair v Woods of Winchester Ltd [2005] EWHC 1631 (QB) at [38])." — Per Simon Thorley IJ, Para 61

The court’s conclusion was therefore procedural as well as substantive. It did not say that an omitted claim can never amount to a natural justice breach. Rather, it said that in the circumstances of these cases, the omission was not enough to justify setting aside because the plaintiff had not used the statutory correction mechanism and because the omitted claims were tiny in relation to the overall disputes. That combination of factors led the court to reject the natural justice challenge. (Paras 58, 63)

How Large Were the Omitted Claims Compared With the Overall Disputes?

The court considered the scale of the omitted consequential-loss claims as part of its prejudice analysis. Counsel for the defendants calculated that the plaintiff’s consequential-loss claims constituted less than 0.3% of the overall claim in the CEC arbitration and less than 0.6% of the overall claim in the CEE arbitration. The court did not treat those percentages as dispositive in themselves, but they reinforced the conclusion that the omission, even if real, was minor in the context of the overall disputes. (Para 63)

"Counsel for the defendants calculated that the plaintiff’s consequential loss claims constituted less than 0.3% of the overall claim by the plaintiff in the CEC Arbitration and less than 0.6% of the overall claim by the plaintiff in the CEE Arbitration." — Per Simon Thorley IJ, Para 63

That proportionality analysis mattered because the court was not dealing with a case in which an entire head of substantial relief had been ignored. Instead, the omitted claims were comparatively small, and the court was unwilling to treat the omission as so serious that it required the drastic remedy of setting aside the awards. The court’s reasoning therefore linked prejudice, proportionality, and procedural choice. (Paras 58, 63)

In practical terms, the court’s approach signals that a party seeking to set aside an award for failure to address a claim must do more than point to an omission. It must show why the omission is materially prejudicial, why the tribunal’s correction mechanism was unavailable or inadequate, and why the court should intervene despite the strong policy in favour of finality. The plaintiff did not satisfy that burden here. (Paras 46, 47, 59, 63)

What Did the Court Say About the Arbitrator’s Cancellation Analysis?

The public policy challenge focused on the arbitrator’s conclusion that the plaintiff could not unilaterally cancel the six later CEE contracts. The court held that the conclusion was open to the arbitrator under either Indian law or Singapore law and that it was not for the court to review that conclusion on a setting-aside application. The court’s reasoning was that the arbitrator had made a legal determination within the scope of his mandate, and even if the plaintiff disagreed with it, that disagreement did not amount to a public policy violation. (Paras 21, 70, 72)

"The conclusion was open to the Arbitrator under either law and is not one which the court will review on an application to set aside the award." — Per Simon Thorley IJ, Para 72

The court also drew support from The STX Mumbai, where the Court of Appeal had explained that if a defendant evinces a clear intention not to perform, the innocent party may rescind and/or claim damages for anticipatory breach. The citation served to show that the legal landscape was not hostile to the kind of cancellation analysis the arbitrator had undertaken. The court did not say that the arbitrator had necessarily applied that authority directly; rather, it used the authority to demonstrate that the arbitrator’s conclusion was legally defensible. (Para 70)

"If the defendant has evinced a clear intention that it will not perform its obligations under the contract, then it is only just and fair that the plaintiff be permitted, in law, to rescind the contract (if it so chooses) and/or claim damages on the basis of an anticipatory breach of contract – regardless of whether the contract is executed or executory." — Per Simon Thorley IJ, Para 70

The court’s treatment of this issue is important because it distinguishes between an allegedly wrong contractual interpretation and a public policy breach. Even if the plaintiff believed the arbitrator had misread the contracts or the governing law, that would not, without more, justify setting aside. The court insisted on the exceptional nature of public policy relief and refused to convert a merits complaint into a jurisdictional or moral objection. (Paras 49, 72, 76, 77)

What Was the Court’s Final Order and What Costs Consequences Followed?

The court dismissed both Originating Summons No 2 of 2020 and Originating Summons No 3 of 2020. It held that the plaintiff was not entitled to have either the CEE Award or the CEC Award set aside on the grounds advanced. The court also ordered the plaintiff to pay each defendant’s costs, with costs to be assessed if not agreed. (Para 78)

"The plaintiff will pay each of the defendant’s costs, to be assessed if not agreed." — Per Simon Thorley IJ, Para 78

The result reflects the court’s overall approach to arbitral finality. The plaintiff had attempted to use the setting-aside process to challenge both an alleged omission and a commercially unfavourable outcome, but the court found neither ground sufficient. The awards therefore stood, and the defendants were entitled to their costs of resisting the applications. (Paras 52, 63, 77, 78)

For practitioners, the costs order reinforces the practical risk of bringing setting-aside applications without a strong statutory basis. The court’s reasoning suggests that where a party has not used the arbitral correction mechanism and the complaint is essentially about the merits or the commercial result, the application may not only fail but also expose the applicant to adverse costs. (Paras 59, 61, 78)

Why Does This Case Matter?

This case matters because it is a clear illustration of Singapore’s restrained approach to setting aside international arbitral awards. The court reaffirmed that it will not interfere merely because an award is commercially unattractive or because a party believes an issue should have been dealt with differently. The judgment is especially useful on the relationship between an omitted claim, the statutory additional-award mechanism, and the high threshold for proving a breach of natural justice. (Paras 46, 52, 59, 63)

"The courts do not and must not interfere in the merits of an arbitral award and, in the process, bail out parties who have made choices that they might come to regret, or offer them a second chance to canvass the merits of their respective cases." — Per Simon Thorley IJ, Para 52

The case also matters because it shows how difficult it is to establish public policy as a setting-aside ground in Singapore. The court did not treat a large financial disparity or a harsh commercial outcome as enough. Instead, it required something that truly offended the conscience or basic notions of morality and justice. That is a demanding standard, and this judgment confirms that ordinary commercial disappointment will not satisfy it. (Paras 49, 51, 76, 77)

"This is part and parcel of normal trading. There is nothing which “shocks the conscience” about this." — Per Simon Thorley IJ, Para 77

Finally, the judgment is a practical reminder that parties should use the procedural tools available within the arbitral framework before turning to court. Where the governing arbitration law provides for an additional award on omitted claims, a party that bypasses that route may find it difficult to persuade a court that setting aside is justified. The case therefore has real significance for counsel advising on post-award strategy in cross-border arbitrations. (Paras 59, 61, 63)

Cases Referred To

Legislation Referenced

• International Arbitration Act (Cap 143A, 2002 Rev Ed): s 3; s 19B; s 24(b) (Paras 20, 45) [CDN] [SSO]
• UNCITRAL Model Law on International Commercial Arbitration: Art 34(2)(b)(ii); Art 34(3) (Paras 45, 48)
• Arbitration and Conciliation Act, 1996 (India): s 33(4); s 34(3) (Paras 59, 20)

Source Documents

• Original Judgment — Singapore Courts
• Archived Copy (PDF) — Litt Law CDN
• View in judgment: "This ground for setting aside the..."
• View in judgment: "This ground for setting aside the..."
• View in judgment: "The same two issues thus arise...."
• View in judgment: "I regret that it does not..."

This article analyses [2020] SGHCI 11 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.