FIDIC 1999 Redbook - Integrity of arbitral proceedings and the fundamental principles of natural justice

The case of DJP, DJQ, and DJR v. DJO (ICC Case No. 26733/HTG, [2024] SGHC(I) 24) raises significant concerns about the integrity of arbitral proceedings and the fundamental principles of natural justice. The primary issue revolved around the alleged unfairness in the arbitration process due to the extensive reliance on the CP-301 arbitration award as a template for the Singapore-seated Arbitration. Given that the presiding arbitrator, Judge C, was involved in all three parallel proceedings, there was an inherent risk of bias and pre-judgment. The judgment highlights a critical intersection between efficiency in arbitration and the duty of the tribunal to ensure a fair hearing. While consistency across similar cases is desirable, the degree to which Judge C incorporated elements from CP-301 into the Arbitration award without properly tailoring it to the unique facts and arguments presented in the Arbitration was problematic.

One of the most striking aspects of the case was DJO’s assertion that the tribunal failed to confine itself to the arguments and evidence presented in the Arbitration. By considering submissions from the Indian-seated arbitrations and even drawing upon authorities not cited in the Arbitration, the tribunal arguably introduced extraneous elements into its decision-making process. Furthermore, the reliance on contractual provisions from the CP-301 contract that were absent in the CPT-13 contract compounded the perception of unfairness. The failure to apply the correct lex arbitri in assessing interest and costs further demonstrated a lack of due diligence in ensuring procedural integrity. These missteps collectively undermined the legitimacy of the arbitral award.

DJO’s claims of four breaches of natural justice were compelling, particularly the argument that the tribunal had impermissibly pre-judged the case. The copious copy-pasting suggested that the tribunal may not have given independent consideration to the specifics of the Arbitration. This not only deprived DJO of its right to a fair, independent, and impartial decision but also breached the principle that each party is entitled to have its case heard on its own merits. The tribunal’s failure to provide an opportunity for the parties to respond to factual or legal reasoning imported from the parallel proceedings was a fundamental flaw that could not be ignored.

On the other hand, Consortium X’s defense, which emphasized that the tribunal had indeed applied its mind to the essential issues, lacked persuasive force given the extent of the borrowing from the CP-301 award. The question was not merely whether the tribunal considered the key issues but whether it did so in a manner that was procedurally fair and transparent. The Singapore International Commercial Court’s (SICC) decision to set aside the award underscores the judiciary’s role in ensuring that arbitral tribunals uphold the principles of natural justice, even in the face of practical efficiencies that might arise from parallel proceedings.

This case serves as a cautionary tale for arbitrators who preside over multiple related disputes. While consistency and efficiency are valuable, they cannot come at the expense of a party’s right to a fair hearing. Arbitrators must exercise great care in ensuring that each case is considered independently, with due regard to the unique arguments and evidence presented. The SICC’s ruling reinforces the need for procedural rigor in arbitration and highlights the importance of safeguarding parties against perceived or actual bias. In sum, this decision reaffirms Singapore’s strong stance on upholding arbitration as a fair, just, and impartial dispute resolution mechanism while ensuring that efficiency does not compromise fundamental legal principles.