September 23rd, 2024 | by Sanjay H. Sethiya and Varun Jain
Introduction
In the realm of international arbitration, awards issued by arbitral tribunals are generally considered final and binding on the parties. However, there are circumstances under which an arbitral award can be challenged or set aside. One such instance is when an award is issued by means that undermine the legitimacy and fairness of the arbitral process, such as copying substantial parts of an award passed in an earlier proceeding into the current award —commonly referred to as “copy-paste awards.” The Singapore International Commercial Court (SICC) has set a landmark precedent by setting aside such awards and raising important legal questions about the sanctity of the arbitral process, procedural fairness, and the scope of judicial intervention in arbitration.
This article will explore the legal implications of the SICC’s decision to set aside “copy-paste” arbitration awards, focusing on the potential impact on arbitral integrity, the grounds for setting aside awards under Singaporean law, the role of judicial review, and the wider international arbitration landscape.
Background of the Decision Given by the SICC
DJO, a special purpose vehicle that is responsible for operating and maintaining freight corridor in India, entered into a contract for the Western Dedicated Freight Corridor in India with a Consortium of 3 companies referred to as Consortium X in the award, out of which 2 were Indian and 1 was a Japanese Company. Certain disputes arose between the parties regarding the pay to the employees, and the matter was referred to Arbitration, which was to be seated in Singapore and governed by the ICC Arbitration Rules, 2021. The dispute was referred to a tribunal of 3 arbitrators. One of the arbitrators of the current proceeding was also an arbitrator in two other proceedings with similar facts and circumstances as the matter at hand. The arbitration concluded, and the award was passed by the Arbitral Tribunal. However, DJO challenged the said award before the Singapore International Commercial Court, stating that substantial award was copied from awards passed in the other 2 proceedings presided over by the said Arbitrator. The SICC held that more than 200 paragraphs of the 451-paragraph award were copied from the other awards, and the Arbitral tribunal failed to consider the uniqueness of the present matter in hand and set aside the award, deeming it to be a “Copy-Paste” award, which is against public policy and the principals of natural justice.
Reasoning and Analysis Behind the Setting Aside of the Award
Arbitration is a private dispute resolution mechanism often chosen for its speed, finality, and expertise in specialized matters. The authority of arbitral tribunals arises from the consent of the parties, but their legitimacy is contingent on the principles of fairness, independence, and impartiality. These principles ensure that the tribunal’s decisions are based on an impartial evaluation of the facts and arguments presented by both parties. The award passed by the tribunal is generally considered final and binding on both parties, and there is very little scope for the intervention of the courts in such awards.
Under the Singapore International Arbitration Act (Section 24), which incorporates the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration (Article 34), an arbitration award can be set aside on specific grounds. The grounds for setting aside any arbitral award include:
A “copy-paste” award—where large sections of a prior award are copied into the final arbitral award without proper independent analysis—threatens these foundational principles. In the case of a “copy-paste” award, the most relevant grounds for setting aside would likely be procedural irregularity and the award being contrary to public policy. The tribunal’s role is to assess the evidence impartially and issue an award based on a reasoned, independent evaluation of the issues. Copying extensive portions of an earlier passed award without adequate reasoning may give the impression that the tribunal failed to carry out this role.
In setting aside such an award, the SICC has reinforced the belief that an arbitral tribunal must not only be impartial but must also be seen to be impartial. This distinction is critical; justice must not only be done but also be seen to be done, especially in an international commercial environment where parties from different jurisdictions seek neutral adjudication of their disputes. The SICC’s decision serves as a reminder that even though arbitration is intended to be a final and self-contained process, the integrity of that procedure must be preserved, or the courts may intervene.
Impact on International Arbitration
The SICC’s decision to set aside a “copy-paste” award has significant implications for international arbitration. First, it underscores the importance of procedural integrity in arbitration, reminding arbitrators to conduct a thorough and independent assessment of each case separately without venturing into past awards, as each case has its own unique element. Second, it sends a message to parties involved in arbitration that courts will intervene if the arbitral process is fundamentally flawed.
However, the decision also raises concerns about the potential for increased challenges to arbitral awards on procedural grounds. Parties dissatisfied with the outcome of an arbitration may be tempted to seek judicial review by alleging that the tribunal has substantially reproduced parts of an earlier award. While the SICC has sought to limit judicial intervention to extreme cases, there is a risk that the decision could encourage more challenges to arbitral awards, particularly in cases where parties feel that the tribunal has copied substantial parts of an award into another without applying its mind on the matter at hand.
Conclusion
The SICC’s decision to set aside a “copy-paste” arbitration award has far-reaching legal implications for both the arbitration community and the broader commercial world. It highlights the importance of arbitral tribunals conducting their duties impartially and fairly, ensuring that awards reflect independent consideration of the parties’ submissions and the materials on record rather than mere repetition of portions of another award. While judicial intervention in arbitration should remain limited, the SICC’s decision serves as a vital reminder that the courts have a critical role to play in safeguarding the integrity of the arbitral process.
Ultimately, the SICC’s ruling strengthens Singapore’s position as a leading jurisdiction for international arbitration by reaffirming its commitment to both finality and fairness in the arbitral process. However, it also serves as a warning to arbitrators and parties alike: the independence and impartiality of the arbitral process must be scrupulously maintained or risk the possibility of judicial intervention.
~ Sanjay Sethiya is the Managing Partner at Law Square, Advocates & Solicitors.
~ Varun Jain is an Associate at Law Square, Advocates & Solicitors.