CKG v CKH

"It is clear to me that the Tribunal did fail to take into account an issue which was before it, namely the existence and quantum of the Principal Debt and accruing interest, which was common ground between the parties, and which it accepted at the time of the hearing should be taken into account." — Per Jeremy Lionel Cooke IJ, Para 59

Case Information

• Citation: [2021] SGHCI 5 (Para 0)
• Court: Singapore International Commercial Court (Para 0)
• Date of hearing: 8 June 2021; judgment reserved on 18 June 2021 (Para 0)
• Coram: Jeremy Lionel Cooke IJ (Para 0)
• Case number: Originating Summons 3 of 2021 (Para 0)
• Area of law: Arbitration; award; recourse against award; setting aside; remission (Para 0)
• Counsel for the plaintiff: Paul Tan (Cavenagh Law LLP) (instructed), Ong Tun Wei Danny, Yam Wern Jhien, Lai Tze Ren, Jonathan and Mark Teo Tzeh Hao (Rajah & Tann Singapore LLP) (Para 79)
• Counsel for the defendant: Hee Theng Fong, Toh Wei Yi, Poon Pui Yee and Leong Shan Wei Jaclyn (Harry Elias Partnership LLP) (Para 79)
• Judgment length: Not answerable from the extraction (not stated in the provided material)

Summary

This was an application to set aside parts of an arbitral award arising out of a timber concessions and log supply dispute between the parties, in which the Tribunal had found liabilities on both sides but had not expressly quantified or dealt with the Principal Debt Issue in the final award. The court identified the central complaint as the Tribunal’s failure to take into account the existence and quantum of the Principal Debt and accruing interest, which had been common ground and material to the parties’ netting exercise. (Para 1) (Para 13) (Para 17) (Para 18)

The court accepted the plaintiff’s complaint on the Principal Debt Issue and held that the omission amounted to a breach of natural justice because the Tribunal failed to bring its mind to bear on an important issue before it. By contrast, the court rejected the Freight Interest Issue, holding that the Tribunal had dealt with that issue in the Award, even if the reasoning was sparse or unpersuasive. The court therefore treated the Principal Debt Issue as the only successful basis for setting aside, subject to remission. (Para 59) (Para 62) (Para 76)

Rather than immediately setting aside the affected parts of the Award, the court ordered suspension of the setting aside proceedings so that the Tribunal could be given the opportunity to determine the Principal Debt Issue and eliminate the grounds for setting aside. The court considered that the Tribunal could be trusted to do so notwithstanding its earlier views, and indicated that costs would likely follow the plaintiff’s partial success. (Para 69) (Para 77) (Para 78)

What Was the Arbitration About, and Why Did the Principal Debt Matter?

The dispute arose from an agreement under which the defendant was to sell all of its interests in certain timber concessions in Indonesia to the plaintiff in exchange for US$8 million and a three-year supply of round logs for use in the defendant’s plywood factory. The award later found that the plaintiff was liable to the defendant in damages of US$8,512,789.88 and IDR15,126,969,785, while the defendant was liable to the plaintiff in the lesser sum of IDR29,918,809,545.86. The court’s concern was that the Tribunal’s damages calculus had to reflect the financial consequences of the parties’ rights and obligations under the underlying arrangements, including the Principal Debt. (Para 13) (Para 1) (Para 38)

"The dispute which led to the Arbitration concerned an agreement for the defendant to sell all of its interests in certain timber concessions in Indonesia to the plaintiff in exchange for US$8m and a three-year supply of round logs for use in the defendant’s plywood factory." — Per Jeremy Lionel Cooke IJ, Para 13

The Principal Debt Issue concerned a sum said to be owing in respect of past debts due under the MOA, including PSDH/DR, freight, and related amounts. The 8 April Meeting Minutes recorded that the defendant was to repay the plaintiff the “sum of IDR 75 Billion for its outstanding debt (PSDH/DR, Freight) and future shipment’s PSDH/DR and freight”, and the court treated that as a central feature of the parties’ financial relationship. The court emphasised that this was not a peripheral matter but a common-ground premise that had to be taken into account when the Tribunal assessed the parties’ respective liabilities. (Para 14) (Para 18) (Para 38)

"The defendant was to repay the plaintiff the “sum of IDR 75 Billion for its outstanding debt (PSDH/DR, Freight) and future shipment’s PSDH/DR and freight”, as set out in Clause 1 of the 8 April Meeting Minutes." — Per Jeremy Lionel Cooke IJ, Para 14

The court also noted that the Tribunal never again referred to the Principal Debt in the context of the claims made by the defendant against the plaintiff. That omission mattered because the parties’ submissions, expert reports, and opening presentations all proceeded on the basis that the Principal Debt existed and had to be brought into the overall accounting exercise. The court therefore treated the issue as one that should have been expressly determined, rather than left out of the dispositive section of the Award. (Para 17) (Para 46) (Para 47) (Para 49)

"The Tribunal never again referred to the Principal Debt in the context of the claims made by the defendant against the plaintiff." — Per Jeremy Lionel Cooke IJ, Para 17

How Did the Court Frame the Legal Framework for Setting Aside and Remission?

The court began by identifying the statutory and Model Law framework governing the application. The plaintiff relied on Article 34(2)(a)(iii) of the UNCITRAL Model Law, read with section 3 of the International Arbitration Act, and also on section 24(b) of the IAA, which permits setting aside where a breach of natural justice occurred in connection with the making of the award and prejudiced a party’s rights. The court also referred to Article 34(4), which empowers the court, where appropriate and requested, to suspend setting aside proceedings to allow the tribunal to resume proceedings or take other action to eliminate the grounds for setting aside. (Para 2) (Para 3) (Para 4)

"The basis of the application for the setting aside of the Award is that the Tribunal failed to exercise the authority that the parties had granted to it pursuant to Article 34(2)(a)(iii) of the UNCITRAL Model Law on International Arbitration (“the Model Law”) read with section 3 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”) (which provides that the Model Law shall have the force of law in Singapore) and/or that a breach of natural justice occurred in connection with the making of the Award by which the rights of the plaintiff had been prejudiced, in breach of section 24(b) of the IAA." — Per Jeremy Lionel Cooke IJ, Para 2

The court also set out the text of Article 34(2)(a)(iii), which concerns awards dealing with disputes not contemplated by or beyond the scope of the submission to arbitration, and Article 34(4), which allows suspension of setting aside proceedings for remission. Those provisions framed both the plaintiff’s challenge and the court’s eventual remedial approach. The court’s analysis therefore moved in two stages: first, whether the Tribunal had failed to determine a material issue; and second, if so, whether the court should suspend the proceedings to permit the Tribunal to cure the omission. (Para 3) (Para 4) (Para 61)

"(4) The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal and opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside." — Per Jeremy Lionel Cooke IJ, Para 3

In addressing the setting aside standard, the court emphasised the pro-arbitration principle of minimal curial intervention. It observed that awards should be read without seeking to construe them as statutes or adopting an overly technical stance, because arbitration is intended to bring finality. The court also reiterated the familiar natural justice framework: the applicant must identify the rule breached, the manner of breach, the causal connection to the award, and the prejudice caused. (Para 7) (Para 8)

"The policy which the court adopts is one of minimal curial intervention, and an essentially pro-arbitration approach which reads awards without seeking to construe them as a statute or adopting an overly technical stance, with a view to according them the finality that an arbitration is intended to bring about" — Per Jeremy Lionel Cooke IJ, Para 7

"It is common ground that, where a party challenges an award on the ground of a breach of natural justice, four questions arise, namely: which rule of natural justice was breached; how that rule was breached; the connection between the breach and the making of the award; and how the breach prejudiced the challenging party’s rights" — Per Jeremy Lionel Cooke IJ, Para 8

Why Did the Court Treat the Principal Debt Issue as a Breach of Natural Justice?

The court’s reasoning on the Principal Debt Issue turned on whether the Tribunal had an issue before it that it was required to decide, and whether its failure to do so caused prejudice. The court rejected the defendant’s attempt to characterise the matter narrowly as only a “set-off”, “defence”, “cross-claim” or “counterclaim”, holding that labels were not determinative. What mattered was whether there was an issue that the Tribunal should have determined and, by failing to do so, prejudiced a party. (Para 36)

"The characterisation of the issue as a “set-off”, a “defence”, a “cross-claim” or a “counterclaim” is nothing to the point. The question is whether there was an issue which the Tribunal should have determined and, by failing to do so, prejudiced a party in so doing." — Per Jeremy Lionel Cooke IJ, Para 36

The court found that the Principal Debt and accruing interest were common ground between the parties and had been accepted by the Tribunal at the hearing as matters to be taken into account. The omission was therefore not a mere failure to give reasons, but a failure to address a material issue that formed part of the parties’ financial accounting. The court stated in terms that the Tribunal failed to take into account an issue before it, and that this failure amounted to a breach of natural justice. (Para 59) (Para 18) (Para 38)

"It is clear to me that the Tribunal did fail to take into account an issue which was before it, namely the existence and quantum of the Principal Debt and accruing interest, which was common ground between the parties, and which it accepted at the time of the hearing should be taken into account." — Per Jeremy Lionel Cooke IJ, Para 59

The court linked that conclusion to the damages analysis. If the Tribunal’s decision that the Debt-to-Log Conversion did not operate meant that the Principal Debt remained due and owing with interest accruing, then the Tribunal was bound to take the financial implications of that decision into account when calculating damages and other sums due between the parties. The court therefore treated the omission as affecting the substantive outcome of the award, not merely its form. (Para 38) (Para 59)

"If, as is the case here, the inevitable result of the Tribunal’s decision that the Debt-to-Log Conversion did not operate to reduce the plaintiff’s obligation to supply logs, was that the Principal Debt remained due and owing with interest accruing, the Tribunal was bound to take the financial implications of its own decision into account when calculating damages and other sums due between the parties." — Per Jeremy Lionel Cooke IJ, Para 38

What Evidence Showed That the Principal Debt Was Always in Issue?

The court relied on the pleadings, the Agreed List of Issues, expert reports, opening and closing submissions, and the Tribunal’s own later decision on the Additional Award Application. These materials showed that the Principal Debt was not an afterthought raised only at the end of the case, but a live and recurring issue throughout the arbitration. The court considered the Tribunal’s own response on the Additional Award Application to be particularly illuminating. (Para 29) (Para 46) (Para 47)

"The Tribunal’s response dated 5 November 2020 (“the Decision on the Additional Award Application”) is illuminating." — Per Jeremy Lionel Cooke IJ, Para 29

In the expert evidence, calculations appeared showing that the parties were proceeding on the basis that the Principal Debt and related interest had to be accounted for. The plaintiff’s counsel’s opening presentation also referred to the position if no conversion was allowed and to the liability for the Principal Debt and compound interest that would result. The court noted that at no point did the defendant challenge those observations, save for the plaintiff’s entitlement to exercise the Debt-to-Log Conversion. (Para 46) (Para 47) (Para 49)

"In the Experts’ Reports, calculations appear which show that the parties were proceeding on this basis." — Per Jeremy Lionel Cooke IJ, Para 46

"In the plaintiff’s Counsel’s opening presentation at Slides 4 and 47, reference is again made to the position if no conversion is allowed and to the liability for the Principal Debt and compound interest which would result." — Per Jeremy Lionel Cooke IJ, Para 47

"At no point did the defendant challenge these observations, save for the plaintiff’s entitlement to exercise the Debt-to-Log Conversion." — Per Jeremy Lionel Cooke IJ, Para 49

The court also observed that it had always been common ground and a fundamental premise of the parties’ arguments on the construction of the 8 April Meeting Minutes that there was a significant sum owing in respect of past debts due under the MOA. That factual premise undercut the defendant’s attempt to recast the issue as something outside the Tribunal’s remit. The court’s analysis therefore treated the omission as a failure to decide a matter that was plainly before the Tribunal and materially relevant to the award. (Para 18) (Para 36) (Para 59)

"It was always common ground and a fundamental premise of all the parties’ arguments relating to the construction of the 8 April Meeting Minutes that there was a significant sum owing in respect of past debts due under the MOA." — Per Jeremy Lionel Cooke IJ, Para 18

How Did the Court Deal with the Freight Interest Issue?

The plaintiff also complained that the Tribunal failed to decide an issue as to the rate of interest to be awarded on the plaintiff’s counterclaim for freight due after 21 December 2011. The defendant responded that the Tribunal had in fact determined the issue by granting interest, albeit not at the contractual rate sought by the plaintiff but at the alternative rate the plaintiff had also advanced. The court accepted the defendant’s position and held that the Freight Interest Issue failed. (Para 1) (Para 5(d)) (Para 62) (Para 76)

"The plaintiff also submits that, not only did the Tribunal fail to determine the amount of the Principal Debt (“the Principal Debt Issue”) but it also failed to decide an issue as to the rate of interest to be awarded on the plaintiff’s counterclaim for freight due after 21 December 2011(“the Freight Interest Issue”)." — Per Jeremy Lionel Cooke IJ, Para 1

The court reasoned that, whether right or wrong, contractually justifiable or unjustifiable, reasoned or unreasoned, it could not be said that the Tribunal failed to deal with the issue of interest due on the Freight Interest payments counterclaim because the Award did refer to that claim. The court’s focus was therefore on whether the issue had been addressed at all, not whether the reasoning was satisfactory or whether the result was correct. On that basis, the court concluded that the Tribunal had dealt with the issue sufficiently to defeat the setting aside challenge. (Para 62) (Para 76)

"Whether right or wrong, contractually justifiable or unjustifiable, reasoned or unreasoned, I am unable to see how it can be said that the Tribunal failed to deal with the issue of interest due on the Freight Interest payments counterclaim, because the Award did refer to this claim." — Per Jeremy Lionel Cooke IJ, Para 62

The court therefore distinguished between a tribunal’s failure to decide a material issue and a tribunal’s allegedly inadequate reasoning on an issue it did decide. Only the former could support the relief sought on the facts of this case. The Freight Interest Issue did not meet that threshold, so the plaintiff’s application failed on that ground. (Para 62) (Para 76)

Why Did the Court Reject the Defendant’s “No Prejudice” and “Not Pleaded” Arguments?

The defendant argued that the Principal Debt had not been pleaded as a counterclaim and had only been raised as a defence to the Debt-to-Log Conversion, and further that there was insufficient evidence to support the Principal Debt so the plaintiff suffered no prejudice. The court rejected that approach because the real question was not how the issue was labelled, but whether it was an issue the Tribunal should have determined. The court also found that the issue was common ground and materially affected the accounting between the parties. (Para 37) (Para 5(c)) (Para 36)

"The defendant submitted that the only issue put before the Tribunal in relation to the Principal Debt was the Debt-to-Log Conversion and nothing else." — Per Jeremy Lionel Cooke IJ, Para 37

The court’s prejudice analysis was tied to the financial consequences of the Tribunal’s own findings. Once the Tribunal decided that the Debt-to-Log Conversion did not operate to reduce the plaintiff’s obligation to supply logs, the remaining Principal Debt and accruing interest had to be taken into account in the overall damages and set-off exercise. The omission therefore had the potential to alter the final outcome in a meaningful way, which satisfied the prejudice concern inherent in the natural justice analysis. (Para 38) (Para 8) (Para 59)

"The defendant further submits that there was no sufficient evidence to support the Principal Debt and that, as the defence would have failed, there was no prejudice to the plaintiff in the matter not being decided." — Per Jeremy Lionel Cooke IJ, Para 5(c)

The court’s treatment of prejudice was consistent with the authorities it cited. It referred to the need for actual or real prejudice and the requirement that the breach must have actually altered the final outcome in some meaningful way. On the facts, the failure to address the Principal Debt Issue was capable of affecting the net balance between the parties and therefore could not be dismissed as harmless. (Para 8) (Para 38) (Para 59)

How Did the Court Use the Authorities on Natural Justice and Infra Petita Awards?

The court relied on Soh Beng Tee and John Holland for the four-part natural justice framework, and on AKN for the proposition that failure to consider an important pleaded issue is a breach of natural justice because the arbitrator does not bring his or her mind to bear on an important aspect of the dispute. It also cited CRW for the proposition that a failure to decide matters submitted to the tribunal can amount to a failure to exercise the authority granted by the parties and may breach Article 34(2)(a)(iii). These authorities supplied the doctrinal basis for treating the Principal Debt omission as reviewable. (Para 8) (Para 9)

"To fail to consider an important issue that has been pleaded is a breach of natural justice because, in such a case, the arbitrator would not bring his or her mind to bear on an important aspect of the dispute before the tribunal (AKN v ALC [2015] 3 SLR 488 (“AKN”) at [46])." — Per Jeremy Lionel Cooke IJ, Para 9

"In CRW, the Singapore Court of Appeal expressly stated that a failure on the part of a tribunal to decide matters submitted to it, was a failure to exercise the authority that the parties had granted and could therefore be a breach of Article 34(2)(a)(iii)." — Per Jeremy Lionel Cooke IJ, Para 9

The court also referred to BLC and others v BLB and another for the proposition that one must look at pleadings, lists of issues, and written and oral submissions to determine what was truly in issue between the parties. That approach was central to the court’s conclusion that the Principal Debt Issue was before the Tribunal even if the defendant sought to characterise it differently. The court’s reasoning was therefore grounded in a contextual assessment of the arbitration record rather than a formalistic pleading analysis. (Para 10) (Para 18) (Para 36)

"In the Singapore Court of Appeal decision in BLC and others v BLB and another [2014] 4 SLR 79, the court considered the pleadings, the lists of issues and the parties’ written submissions in order to determine what was truly in issue between the parties, and it may be necessary to look at the way in which the case is put in opening and closing oral submissions also." — Per Jeremy Lionel Cooke IJ, Para 10

Why Did the Court Order Suspension Rather Than Immediate Setting Aside?

Having found a breach on the Principal Debt Issue, the court turned to remedy. It asked whether it should suspend the setting aside proceedings to remit the matter to the Tribunal so that the quantum of the Principal Debt could be determined. The court answered that question in the affirmative, concluding that the Tribunal should be given the opportunity to put matters right. (Para 61) (Para 69)

"The question arises however as to whether or not this court should suspend the setting aside in order to remit the matter to the Tribunal for it to determine the quantum of the Principal Debt which falls to be taken into account." — Per Jeremy Lionel Cooke IJ, Para 61

The court expressly stated that it had come to the conclusion that the Tribunal should be given the opportunity to correct the omission and that it could be trusted to do so notwithstanding the views it had previously expressed. The court also considered that the Tribunal should be capable of recognising its omission and the imprudence or inaccuracy of the Decision on the Additional Award Application, and of approaching the Principal Debt Issue and the available evidence in an open-minded manner. This was the basis for remission rather than immediate final setting aside. (Para 69)

"I have come to the conclusion that this Tribunal should be given the opportunity to put matters right and that it can be trusted to do so notwithstanding the views it has previously expressed." — Per Jeremy Lionel Cooke IJ, Para 69

"I consider that this Tribunal should be capable of recognising its omission and the imprudence/inaccuracy of the Decision on the Additional Award Application, in order to approach the Principal Debt Issue and the available evidence in an open-minded manner." — Per Jeremy Lionel Cooke IJ, Para 69

The court therefore ordered that the setting aside proceedings be suspended for a period to be determined after consultation by the parties jointly with the Tribunal, so that the Tribunal could determine the Principal Debt Issue and any consequential matters. The court’s approach reflects the remedial flexibility built into Article 34(4), which allows the court to preserve the arbitration while giving the tribunal a chance to cure the defect. (Para 77) (Para 3)

"The order will be for the setting aside of these proceedings to be suspended for a period of time to be determined by the court, following the consultation by the parties jointly with the Tribunal in order to ascertain what period is needed for the Tribunal to determine the Principal Debt Issue and interest thereon and other matters consequent upon that determination." — Per Jeremy Lionel Cooke IJ, Para 77

What Did the Court Decide on Costs?

The court indicated that, unless special circumstances applied, the plaintiff should be entitled to its costs of the application notwithstanding its failure on the less important Freight Interest Issue. That observation followed from the plaintiff’s success on the Principal Debt Issue, which the court regarded as the more significant and substantive point in the application. The judgment provided this indication but did not, on the extracted material, set out a final quantified costs order. (Para 78)

"unless there are special circumstances which apply, it appears to me that the plaintiff should be entitled to its costs of the application to this court, notwithstanding its failure on the less important Freight Interest Issue." — Per Jeremy Lionel Cooke IJ, Para 78

What Was the Final Outcome of the Application?

The plaintiff succeeded on the Principal Debt Issue to the extent that the affected parts of the Award would be set aside if the Tribunal was unable to eliminate the grounds for setting aside, but failed on the Freight Interest Issue. The court’s order was not an immediate and unconditional setting aside; instead, it suspended the setting aside proceedings to allow remission and possible cure by the Tribunal. This preserved the arbitration while recognising the seriousness of the omission. (Para 76) (Para 77)

"The plaintiff’s application in relation to the Freight Interest Issue therefore fails." — Per Jeremy Lionel Cooke IJ, Para 76

"The plaintiff’s application in relation to the Principal Debt Issue succeeds to the extent that all the Dispositive Section of the Award, as well as those parts specifically affected by the failure to determine the Principal Debt Issue and interest thereon should be set aside, if the Tribunal is unable to eliminate the grounds for setting them aside." — Per Jeremy Lionel Cooke IJ, Para 76

In practical terms, the court’s order meant that the Tribunal was given a further opportunity to determine the Principal Debt and related interest, and the setting aside application would remain suspended during that process. The court’s approach balanced finality with fairness: it recognised a material omission, but preferred remission to immediate destruction of the award where the tribunal could still cure the defect. (Para 69) (Para 77)

Why Does This Case Matter?

This case matters because it clarifies that an arbitral tribunal may commit a reviewable breach of natural justice by failing to deal with a common-ground issue that materially affects the net balance between the parties, even where the issue is framed as a defence or set-off rather than a pleaded counterclaim. The court made clear that labels are not decisive; what matters is whether the tribunal had an issue before it that it should have determined. (Para 36) (Para 59)

It also matters because it demonstrates the Singapore International Commercial Court’s willingness to use the remission mechanism under Article 34(4) rather than immediately setting aside an award in full. The court was prepared to trust the same tribunal to recognise and correct its omission, showing that setting aside is not always the only or best remedy where the defect can still be cured within the arbitral process. (Para 3) (Para 69) (Para 77)

For practitioners, the case is a reminder to ensure that all material accounting issues are expressly captured in the arbitral record and, where necessary, in the dispositive section of the award. It also underscores the importance of building a clear record showing that an issue was common ground and was actually before the tribunal, because that record may later determine whether a failure to address the issue is treated as a breach of natural justice. (Para 18) (Para 46) (Para 47) (Para 59)

Cases Referred To

Legislation Referenced

• UNCITRAL Model Law on International Commercial Arbitration, Article 34(2)(a)(iii) (Para 2) (Para 3)
• UNCITRAL Model Law on International Commercial Arbitration, Article 34(4) (Para 3)
• International Arbitration Act (Cap 143A, 2002 Rev Ed), section 3 (Para 2) [CDN] [SSO]
• International Arbitration Act, section 24(b) (Para 2) (Para 4) [CDN] [SSO]

Source Documents

• Original Judgment — Singapore Courts
• Archived Copy (PDF) — Litt Law CDN

This article analyses [2021] SGHCI 5 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.