BRQ and another v BRS and another and another matter [2019] SGHC 260

Before me are two applications to set aside the same arbitral award. The award is largely, but not entirely, in the claimants’ favour. The earlier of the two applications before me is the claimants’ application seeking to set aside that part of the award which is in the respondent’s favour. One of the respondents in the arbitration brings the later of the two applications before me, seeking to set aside those parts of the same award which are in the claimants’ favour.

I heard both applications together. I have dismissed both applications, thereby leaving the award intact. The parties have appealed against my decision. I now provide my reasons.

Facts

The parties

The arbitration was between BRQ and BRR as the first and second claimants and BRS and BRT as the first and second respondents. To avoid confusion, I shall refer to the parties by their positions in the arbitration rather than by their anonymised names or by their positions in the cross-applications before me. I shall therefore refer to BRQ and BRR as the first and second claimants respectively and to BRS and BRT as the first and second respondents respectively.

All four parties to the arbitration are companies incorporated in the same country. All sums of money relevant to the parties’ dispute are denominated in the currency of that country. In order to preserve the parties’ anonymity, I shall call that country “Lemuria” and refer to all sums of money in their Singapore dollar equivalents, rounded off.

The first claimant owns and operates power plants in Lemuria and is a wholly-owned subsidiary of an international energy and water company. The second claimant is a special purpose vehicle established for the sole purpose of pursuing a government concession to build and operate a hydroelectric power plant (“the Project”) along a major river in Lemuria. The second claimant is now a wholly-owned subsidiary of the first claimant.

The first respondent constructs and develops infrastructure and power projects. The second respondent is the parent company of the first respondent. Until the first claimant acquired the entire share capital of the second claimant in 2012, the first and second respondents together owned 95% of the second claimant.

The first respondent is the only substantive party to both applications now before me. As a result of the claimants’ discontinuance against the second respondent, the first respondent is the sole remaining defendant to the claimants’ application. The first respondent is also the sole plaintiff in its own application. The second respondent is therefore not a party in substance to either application. Any reference to “the respondent” (in the singular) in these grounds is therefore a reference to the first respondent only.

The Securities Purchase Agreement

The second claimant carried on work on the Project between 2007 and 2010. By the end of 2011, however, it had run out of funds. The respondents, its controlling shareholders at the time, were not in a position to inject more funds into the second claimant. They therefore sought an external investor to fund the Project to completion.

The first claimant came in as that external investor. Under a Securities Purchase Agreement (“SPA”) entered into in 2012, the first claimant agreed to buy the entire share capital of the second claimant from the respondents.

The Project was still under construction when the parties entered into the SPA. The SPA therefore anticipated that the Project would be completed and commissioned in the near future. Under the SPA, the first claimant agreed to acquire the second claimant – and through it, a completed and commissioned Project – at a price of $70m. This feature of the parties’ transaction is the backdrop for a number of interconnected terms in the SPA. It is necessary to introduce these terms now to understand the parties’ dispute:

(a) Under cl 9.1.1, the parties recorded that the various payments under the SPA were based on the express assumption that the Project would be certified by the first claimant’s engineer as being fully operational, and therefore able to supply electricity for sale and to generate revenue, no later than 31 March 2013. This event is referred to as “wet commissioning”. The date on which it actually took place is referred to as the wet commissioning date (“WCD”).

(b) Under cl 9.1.4, the respondent undertook to be solely liable for any Cost Overrun in the Project so that neither claimant would have to bear any overrun. “Cost Overrun” is defined in the SPA as “any and all Project Costs in excess of” a stated figure.

(c) The respondent’s obligation to bear the Cost Overrun was reiterated in cl 10.2.4, in which the respondent undertook to “bear and contribute or indemnify and hold harmless” the claimants against any and all Cost Overrun as required by cl 9.1.4.

(d) Under cl 6.4.1(b)(iv), the first claimant agreed to pay $5.1m of the purchase consideration directly to the second claimant, to be recorded in the second claimant’s books as a loan due from the second clamant to the respondent (as the seller under the SPA). The SPA defines this loan as the “seller’s subordinated loan” or “SSL”.

(e) Under cl 9.7, if the respondent failed to pay any Cost Overrun despite being obliged to do so, the second claimant was entitled to reduce the SSL in its books against the unpaid Cost Overrun.

(f) Under cl 6.4.7, the respondent was obliged to furnish to the first claimant an unconditional irrevocable bank guarantee valid until 30 April 2013 in the amount of $6.9m (“Security Bond I”).

(g) Under cl 9.3, if the WCD was after 7 April 2013, the first claimant had the right to call on Security Bond I.

(h) Under cl 9.11, the first claimant was entitled to monitor the development and construction of the Project until the WCD. This included the right to have access to the work site and a right to information and documents.

(i) Under cl 9.10(a), if the WCD was after 31 March 2013, the first claimant was entitled to require the respondent to cede control of the construction and commissioning of the Project to the first claimant. But if the first claimant exercised this right, it was obliged “to undertake the construction and commissioning of the Project in the most prudent and cost effective manner” [emphasis added].

There is a separate contract, the Bulk Power Transmission Agreement (“BPTA”), which is also relevant to the parties’ dispute. In 2009, while the respondents still controlled the second claimant, the second claimant executed the BPTA with the company which runs the power grid in Lemuria (“the Grid Company”). Under the BPTA, the second claimant agreed to pay transmission charges to the Grid Company in exchange for access to its power grid for 25 years. Access to the grid was necessary for the second claimant to transmit electricity generated by the Project to consumers and thereby to earn revenue.

The BPTA obliged the second claimant to begin paying transmission charges to the Grid Company even before wet commissioning. As the first claimant was paying the entire consideration under the SPA up front, it wanted to secure itself against the second claimant’s potential liabilities under the BPTA if wet commissioning was delayed. Accordingly, cl 11.4 of the SPA obliged the respondent (together with another party whose identity is not material) to indemnify the second claimant for any transmission charges which the second claimant became obliged to pay the Grid Company on or before the WCD.

Delays in the Project

It is undisputed that the Project failed to achieve wet commissioning on 31 March 2013 as contemplated in cl 9.1.1 of the SPA. One reason for this was the failure of the penstock. The penstock is a pipe which transports water at high pressure to the turbines. A section of the penstock known as the “Y-piece” was found to be defective. The Y-piece failed twice under hydrostatic testing, in March and June 2013. It passed hydrostatic testing only in October 2013. But, during further hydrostatic testing in early November 2013, cracks developed in other sections of the penstock.

From November 2013, the first claimant began to oversee the Project more closely. But it did so without formally exercising its right to take control of the Project under cl 9.10(a) of the SPA (see [10(h)] above). Finally, in March 2014, the first claimant did exercise that right and issued a takeover notice taking full control of the Project.

The first claimant’s first order of business was to address the penstock failure. It did so by, amongst other things, re-lining a substantial section of the penstock with steel. At the same time, it also took steps to rectify defects in other areas of the Project such as the transmission line.

A discrete part of the Project was eventually wet commissioned, but only on 31 October 2015. The claimants continued work on the remainder of the Project. The Project as a whole, however, never achieved wet commissioning. It was eventually abandoned when the penstock ruptured and tragically killed three people.

For purposes of the arbitration and these applications, the parties have proceeded on the basis that the Project achieved wet commissioning on 31 October 2015, ie, the date on which the first discrete part of the Project was wet commissioned.

The arbitration

Clause 14 of the SPA provides for disputes to be arbitrated in Singapore under the SIAC Rules. On 31 December 2014, while the Project was still under construction, the claimants initiated the arbitration under cl 14 by filing a notice of arbitration with the Singapore International Arbitration Centre (“the SIAC”).

The claims and counterclaims

In the arbitration, the claimants sought to recover from the respondent the following principal sums:

(a) The entire Cost Overrun up to the WCD, ie, 31 October 2015, amounting to $70.8m (“the Cost Overrun claim”); and

(b) The transmission charges which the second claimant paid to the Grid Company under the BPTA up to the WCD, amounting to $13.7m (“the BPTA Charges claim”).

The respondent also brought a counterclaim in the arbitration seeking to recover the SSL, ie, the sum of $5.1m.

The tribunal’s award

The tribunal issued its final award on 24 January 2018.

The tribunal’s specific findings on the claimants’ claim were as follows:

(a) Under cl 10.2.4 read with cl 9.1.4 of the SPA, the respondent’s liability to indemnify the claimants for the Cost Overrun arose even if the respondent was not in breach of the SPA.

(b) The quantum of the Cost Overrun was to be determined by taking the actual Project cost and deducting from that figure the cost of the Project with the original features and design parameters that the respondent had undertaken to carry out under the SPA.

(c) If, after exercising its right to take over control of the Project, the first claimant had “undertaken the construction and commissioning of the Project in the most prudent and cost effective manner” as it was obliged to (see [10(i)] above), the Project would have achieved wet commissioning by 30 June 2014. Accordingly, the tribunal found that the respondent’s liability on both the Cost Overrun claim and the BPTA Charges claim ceased on 30 June 2014.

(d) The tribunal limited the respondent’s liability for the Cost Overrun to $17.3m comprising: (a) time-dependent components of the Cost Overrun quantified only up to 30 June 2014, and (b) all other components of the Cost Overrun, ie, components which were not time-dependent.

(e) The tribunal likewise limited the respondent’s liability for the BPTA Charges to $5.5m, being the BPTA Charges incurred up to 30 June 2014.

The tribunal dismissed the respondent’s counterclaim to recover the SSL.

The setting aside applications

Both the claimants and the respondent were therefore dissatisfied with the award. The claimants applied on 30 April 2018 to set aside parts of the award, alternatively to remit those parts of the award to the tribunal. The respondent applied on 22 June 2018 to set aside other parts of the award.

Because the claimants were largely successful in the arbitration, the respondent’s challenge to the award is far wider than the claimants’ challenge. I shall therefore start by setting out the gist of the respondent’s challenge.

The respondent seeks to set aside the following findings in the award under Arts 34(2)(a)(ii) and 34(2)(a)(iii) of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”) and under s 24(b) of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“IAA”):

(a) the finding that the respondent is liable to pay the Cost Overrun;

(b) the finding that the respondent is liable to pay the BPTA Charges; and

(c) the rejection of the respondent’s counterclaim for repayment of the SSL.

Should its application on any of these issues succeed, the respondent submits further that the tribunal’s award on interest and costs should be set aside to that extent.

Like the respondent, the claimants brings its application under Art 34(2)(a)(ii) of the Model Law and s 24(b) of the IAA. Unlike the respondent, the claimants do not rely on Art 34(2)(a)(iii) of the Model Law.

(a) the tribunal’s finding that the respondent is not liable to indemnify the claimants under cl 10.2.4 of the SPA for the Cost Overrun from 1 July 2014 to 31 October 2015;

(b) the finding that the respondent is not liable to indemnify the claimants under cl 11.4 of the SPA for the BPTA Charges from 1 July 2014 to 31 October 2015; and

(c) the tribunal’s rejection, as the inevitable consequence of these findings, of the second claimants’ claim for interest on these sums.

The respondent’s application

I shall first dispose of the respondent’s setting-aside application before turning to the claimants’ application starting at [167] below.

The preliminary point

I begin by dealing with the claimants’ preliminary point on the respondent’s application. The claimants argue that the respondent’s application should be dismissed because the respondent filed it more than three months after receiving the award, contrary to the strict three-month time limit stipulated in Art 34(3) of the Model Law.

The Model Law provisions and the chronology

Article 33 of the Model Law allows a party, after receiving an award, to make a request to the tribunal within 30 days of receipt: (a) to correct computational, clerical, typographical or similar errors in the award; (b) to interpret a specified point or part of the award; or (c) to make an additional award on claims submitted to the tribunal but omitted in the award.

Art 34(3) of the Model Law requires an aggrieved party to apply to set aside an award within a three-month period. That three-month period commences either on: (i) the date on which the parties receive the award; or (ii) the date on which the tribunal disposes of a request for correction under Art 33:

The weight of authority in Singapore is that this three-month time limit is strict and cannot be extended: ABC Co v XYZ Co Ltd [2003] SLR 546 at [9]; PT Pukafu Indah and others v Newmont Indonesia Ltd and another [2012] 4 SLR 1157 at [30]. Most recently, it has been held that Art 34(3) is “written law relating to limitation” within the meaning of s 18(2) read with paragraph 7 of the First Schedule to the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed). Therefore the three-month time limit cannot be extended under the court’s general power to extend time: BXS v BXT [2019] SGHC(I) 10 at [39]. Whether a particular case comes within the first limb or the second limb of Art 34(3) is therefore of critical importance.

The chronology of the respondent’s application is as follows. The award is dated 24 January 2018. The parties received the award on 31 January 2018. The respondent applied to the tribunal under Art 33 of the Model Law to correct the award on 1 March 2018. The tribunal dismissed that application on 23 March 2018. The respondent filed its application to set aside the award on 22 June 2018.

The parties’ arguments

The respondent argues that it is the second limb of Art 34(3) of the Model Law which applies to its application and that the three-month time limit under Art 34(3) of the Model Law therefore commenced on 23 March 2018.

The claimants argue that it is the first limb of Art 34(3) of the Model Law which applies to the respondent’s application and that the three-month time limit under Art 34(3) therefore commenced on 31 January 2018. The claimants argue, further, that the respondent’s request under Art 33 does not come within the second limb of Art 34(3). According to the claimants, a request under Art 33 postpones the three-month time limit under the second limb of Art 34(3) only if:

(a) the request under Art 33 is genuinely made for one of the purposes set out in Art 33; or

(b) the request under Art 33 is material to the setting aside application which the aggrieved party ultimately brings.

Must the request be genuine?

For the argument at [38(a)] above, the claimants rely primarily on the decision of the Supreme Court of India in State of Arunachal Pradesh v Damani Construction Co (2007) 10 SCC 742 (“Damani”). The Indian Supreme Court in that case had to interpret provisions in the Indian arbitration legislation which are in pari materia with Arts 33 and 34 of the Model Law. The Supreme Court noted in Damani that the request by the appellant ostensibly under the Indian equivalent of Art 33 was not in truth a request for clarification but was “designed as if the appellant was seeking review of the award” and was therefore “wholly misconceived” (at [8]). On this basis, the Supreme Court held that it did not trigger a postponement (at [9]).

The claimants argue, on the authority of Damani, that only a genuine request under Art 33 triggers the postponement of the time limit under Art 34(3) of the Model Law. Any other interpretation, they submit, would allow a party to abuse Art 34(3) by contriving a request under Art 33 to engineer a unilateral extension of time for its setting-aside application. That, the claimants submit, seriously undermines the finality of awards, a fundamental principle in both the Model Law and the IAA.

The respondent responds that Damani should not be followed in Singapore. The plain language of Art 34(3) of the Model Law contains no indication that the “request … made under Art 33” must satisfy a qualitative test in order to trigger a postponement of the commencement of the time limit under the second limb. The respondent also refers to several decisions in other jurisdictions which have taken a position contrary to Damani. In particular, the respondent points to the decision of New Zealand’s Court of Appeal in Todd Petroleum Mining Co Ltd v Shell (Petroleum Mining) Co Ltd [2015] 2 NZLR 180 (“Todd Petroleum”).

In Todd Petroleum, the New Zealand Court of Appeal had to interpret provisions in the New Zealand arbitration legislation which are in pari materia with Arts 33 and 34 of the Model Law. The question in Todd Petroleum, as in the present case, was whether the second limb of Art 34(3) requires a request under Art 33 (in that case, for an additional award) to satisfy a qualitative test. At first instance, the New Zealand High Court held that the second limb of Art 34(3) would not be triggered unless the requesting party had a “reasonable basis” for making the request under Art 33. The High Court considered that that approach was necessary to prevent abuse of Art 33 and a circumvention of the strict time limit in Art 34(3).

The New Zealand Court of Appeal reversed the High Court. It held that the language of Art 34(3) does not require a request under Art 33 to satisfy a qualitative test in order for it to trigger a postponement. Stevens J, delivering the judgment of the Court of Appeal, said (at [37]):

I accept this reasoning. I therefore reject the claimants’ argument that only a genuine request under Art 33 of the Model Law triggers a postponement under the second limb of Art 34(3). It is no doubt a legitimate concern that the lack of a qualitative test will give a party an undesirable and unintended incentive to contrive a request under Art 33 in order to secure more time to bring an application under Art 34(3), particularly given the three-month time limit is strict.

Even so, that concern must not be overstated. Article 33 of the Model Law itself provides fixed timelines within which any request must be made to the tribunal and within which the tribunal must respond to any request. The party must make its request under Art 33 within 30 days of receiving the award. Unless it exercises its power to extend time, the tribunal must dispose of a request for a correction within 30 days of receiving the request and must dispose of a request for an additional award within 60 days.

Requiring a qualitative test to be satisfied before the second limb of Art 34(3) is triggered would introduce great uncertainty post-award. As Stevens J noted in Todd Petroleum (see [43] above), neither party (nor indeed the tribunal or a court) can know whether a request will pass that qualitative test at the time the request is made. It is true, as the claimants suggest, that the qualitative test can be set at a very low threshold to require simply that the request that is not just a disguised plea for the tribunal to reconsider the merits of the award. But, however it is framed, and however low the threshold is set, a qualitative test will remain a subjective test. On the qualitative approach, nobody can ever know with certainty whether the three-month time limit under Art 34(3) has commenced, continues to run or has been halted until and unless that qualitative test is applied to the request. Consequently, nobody can ever know when an award becomes final until the qualitative determination is made. That uncertainty is equally inimical to the fundamental principle of finality of awards. When an award has become or will become final must be capable of ascertainment with certainty, and therefore by reference to objective factors.

Finally, there is no evidence that the drafters of the Model Law intended that the second limb of Art 34(3) be triggered by a qualitative test. On the contrary, the discussion of Art 34(3) in the seventh session of the UNCITRAL Working Group on International Contract Practices (“Report of the Working Group on International Contract Practices on the Work of its Seventh Session”, UNCITRAL, 17th Sess, UN Doc A/CN.9/246 (“Report of the Working Group”) at para 138) shows that the drafters were alive to the risk of abuse without a qualitative test, but considered it a constrained risk and accepted that risk in the current drafting of Art 34(3):

Accordingly, I reject the claimants’ first proposition at [38(a)] above. The commencement of the three-month time limit under Art 34(3) is postponed whenever a party makes a request to the tribunal under Art 33. Whether a request is made under Art 33 is purely a matter of form and does not depend on evaluating the substance of the request by applying any qualitative test.

Must the request be material?

The claimants’ second argument on their preliminary point is that the second limb of Art 34(3) applies only where the request under Art 33 of the Model Law is “material” to the setting aside application which is ultimately made. The key authority cited for this proposition is the decision of the English High Court in Daewoo Shipbuilding & Marine Company Ltd v Songa Offshore Equinox Ltd and anor [2018] EWHC 538 (Comm) (“Daewoo Shipbuilding”).

Daewoo Shipbuilding is clearly distinguishable and does not assist the claimants. In that case, the court was interpreting provisions of the English Arbitration Act 1996 (c 23) (UK) which set out the applicable time limits for bringing a challenge to an award or for filing an appeal on a question of law arising from an award. Section 70(3) of the English Arbitration Act provides that any challenge or appeal against an award must be brought within 28 days of the date of the award “or, if there has been any arbitral process of appeal or review, of the date when the applicant or appellant was notified of the result of that process” [emphasis added]. It was accepted that the words “any arbitral process of appeal or review” under s 70(3) do not prima facie apply to an application to correct the award. However, an established line of English authorities has held that s 70(3), on its true construction, could apply to an application to correct an award where the corrections sought were material to the intended s 70 application (at [53], [60]–[61]). In the court’s view, “the test of materiality is inherent in the structure of section 70(2) and 70(3)”, and this explained why the postponement of the commencement of the time limit in s 70(3) applied only to cases where there was an application for “appeal or review”, and not to applications for corrections of an award (at [63]).

Daewoo Shipbuilding is distinguishable because the legislative starting point in the English Arbitration Act is quite different from that in the Model Law. Under the English Arbitration Act, the commencement of the time limit for challenging an award is not generally postponed by an application to correct the award. Under the Model Law, on the other hand, the commencement of the time limit for challenging an award is postponed by every application to correct an award. Referring again to the Report of the Working Group (cited at [49] above), the drafters believed that postponing the commencement of the three-month time limit was “the reasonable consequence of article 33 which allowed a party to request a correction, interpretation or an additional award”. Thus, while the English cases require that any correction sought must be material before the commencement of the time limit will be postponed by way of exception to the general position, the clear wording of Art 34(3) of the Model Law postpones the commencement of the time limit for any and every type of request under Art 33. Indeed, under Art 33(1)(a), a request could seek correction of any errors from the material (eg, “errors in computation”, which could be material to a setting aside application) to the purely editorial (“any clerical or typographical errors” which could never be material). Daewoo Shipbuilding was therefore based on an English legislative provision that is not only not based on the Model Law, but which adopts a diametrically different scheme for time limits for challenging an award from that adopted in the Model Law. The approach in Daewoo Shipbuilding is not of assistance in the present case.

Accordingly, I reject the claimants’ second proposition at [38(b)] above also. The commencement of the three-month time limit under Art 34(3) is postponed whenever a party makes a request to the tribunal under Art 33. Whether the request is material to the intended setting aside application is immaterial to the postponement of the time limit.

Conclusion on the preliminary point

I therefore accept the respondent’s submission that the three-month time limit to bring its application commenced only on 23 March 2018, under the second limb of Art 34(3) of the Model Law, when the tribunal disposed of the respondent’s request for correction. The respondent’s setting-aside application has therefore been brought within time. The claimants’ preliminary point is rejected.

I turn now to consider the law applicable to a setting-aside application under the IAA and to the respondent’s application on the merits.

The law on setting aside

As grounds for setting aside the parts of the award which they challenge, both the claimants and the respondent rely principally on the ground that the tribunal acted in breach of natural justice. The respondent relies on the additional ground that the tribunal exceeded its jurisdiction. It is therefore useful to begin with a brief summary of the relevant legal principles on these two grounds which will be applicable to both cross-applications.

Breach of natural justice

It is common ground that to challenge an arbitral award for breach of natural justice, the four requirements in Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 (“Soh Beng Tee”) must be established, namely: (a) the of natural justice which 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 the party’s rights.

The rule of natural justice that both parties allege has been breached in this case is the fair hearing rule. Both parties allege that the tribunal failed to consider parts of their respective arguments and evidence in the arbitration, as a result of which they say the tribunal reached a different conclusion on certain issues than it could otherwise have reached.

The fundamental duty of an adjudicator is to apply his mind to the arguments put before him. This has been well-recognised as an essential aspect of the rules of natural justice (see AKN and anor v ALC and anor and other appeals [2015] 3 SLR 488 (“AKN”) at [46]):

Establishing that a tribunal wholly failed to consider an issue, however, is a difficult endeavour. In most cases, the court is asked to infer that a tribunal failed to bring its mind to bear on a particular issue at all from the tribunal’s silence on that issue. But silence may be, and often is, equivocal. For that reason, the inference from the tribunal’s silence that it failed to bring its mind to bear on a particular issue placed before it must be “clear and virtually inescapable”. As the Court in AKN went on to note (at [46]–[47]):

Another aspect of the right to a fair hearing is that a party must be given a reasonable opportunity to present its case. This ground comes within both s 24(b) of the IAA and Art 34(2)(a)(ii) of the Model Law (see ADG and anor v ADI and another matter [2014] 3 SLR 481 (“ADG”) at [118]). In JVL Agro Industries Ltd v Agritrade International Pte Ltd [2016] 4 SLR 768, I observed that giving a party a reasonable opportunity to present its case means not only giving that party the opportunity to present the evidence and to advance propositions of law on which it positively relies to establish its case (“the positive aspect”), but also giving the party a reasonable opportunity to present the evidence and to advance propositions of law necessary to respond to the case made against it (“the responsive aspect”). If a tribunal adopts an important line of reasoning in its award without giving a party a reasonable opportunity to address that line of reasoning, that deprives the party of the responsive aspect of its right to be heard.

Nonetheless, in line with the policy of minimal curial intervention, a tribunal’s failure to solicit submissions from the parties on each and every point for decision is not a ground for setting aside the award. I adopt the guidance of the Court of Appeal in Soh Beng Tee (at [65]):

Finally, the parties also accept that even if a breach of natural justice is proven, it must be further demonstrated that the breach actually caused prejudice to the aggrieved party. In other words, the breach must have deprived the tribunal of arguments or evidence that had “a real as opposed to a fanciful chance of making a difference to the final outcome of the arbitral proceedings in some meaningful way” (ADG at [148], citing L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2013] 1 SLR 125).

Excess of jurisdiction

On an application to set aside an award under Art 34(2)(a)(iii) of the Model Law, the court must undertake a two-step inquiry and determine (PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597 at [40]):

(a) first, what matters were within the scope of submission to the arbitral tribunal; and

(b) second, whether the arbitral award involved such matters, or whether it involved “a new difference … outside the scope of the submission to arbitration and accordingly … irrelevant to the issues requiring determination” [emphasis in original].

In determining the scope of the parties’ submission to arbitration, the pleadings filed in the arbitration provide a convenient way to define the jurisdiction of the tribunal (see PT Prima International Development v Kempinski Hotels SA and other appeals [2012] 4 SLR 98 (“PT Prima”) at [33]). The pleadings must also, of course, be read in the context of the issues raised in the notice of arbitration or in the response to that notice. In general, the court will not take a narrow interpretation of the issues that have been submitted to the tribunal for determination.

I turn now to consider the merits of the respondent’s application. I begin by summarising the parties’ cases on that application.

The respondent’s case

The respondent’s case on its own application can be summarised as follows.

(a) First, the tribunal acted in breach of natural justice in failing to consider the parties’ arguments on why certain correspondence was inadmissible in evidence. The tribunal relied on the correspondence to hold the respondent liable for the Cost Overrun but without ruling on, or indeed even acknowledging, the respondent’s objection to admissibility.

(b) Second, the tribunal acted in breach of natural justice or in excess of jurisdiction in finding the respondent liable for the Cost Overrun even though it was not in breach of the SPA. The claimants’ case in the arbitration had always been that the respondent was liable for the Cost Overrun because of alleged lapses or breaches on the respondent’s part in carrying out the Project. In the claimants’ rebuttal oral submissions in the arbitration, they changed their position and argued for the first time that the respondent could be liable for the Cost Overrun even if it was not in breach of the SPA. Even though the respondent objected to the claimants’ attempt to change their case so fundamentally and at such a late stage, the tribunal added the newly-framed issue to the parties’ agreed list of issues in the arbitration and accepted the claimants’ submissions without giving the respondent an opportunity to respond to the new case against it.

(c) Third, the tribunal acted in breach of natural justice in quantifying the Cost Overrun: (i) without considering the evidence and arguments as to whether the claimants’ claim to recover transmission line costs should also be reduced because they were time-dependent, and (ii) without affording the parties an opportunity to present their respective cases on whether other components of the claimants’ Cost Overrun claim were time-dependent.

(d) Fourth, the tribunal acted in excess of jurisdiction or in breach of natural justice in finding that the respondent’s Cost Overrun liability could not be adjusted or set off against the SSL. The parties agreed that if the respondent were liable for the Cost Overrun, that liability could be adjusted against the SSL. Despite this, the tribunal unilaterally decided that the SSL had already been set off or adjusted when the Project cost increased. That argument was not found in the parties’ submissions and was not one which the parties had any opportunity to address the tribunal on.

The respondent argues that the tribunal’s award on the BPTA Charges should also be set aside for breach of natural justice. The tribunal overlooked the respondent’s argument that the claimants had failed to adduce documentary evidence to support the BPTA Charges claim. Had the tribunal considered the respondent’s argument, it would have rejected this claim in its entirety, even for the period before 30 June 2014.

The claimants’ case

(a) The tribunal did not fail to address the admissibility of the correspondence. It must be taken to have decided the correspondence was admissible without considering it necessary to set out its reasons. In any event, there was no prejudice to the respondent, as the tribunal concluded that the respondent was liable for the Cost Overrun without reference to the correspondence.

(b) The claimants argued from the outset of the arbitration, ie, in their statement of claim, that the respondent’s liability for the Cost Overrun did not depend on the respondent being found in breach of the SPA. Even if it were true that the claimants raised that argument only on the last day of oral submissions in the arbitration, the respondent had ample opportunity to respond to the argument in its final written submissions filed four months later.

(c) The parties had a reasonable opportunity to present their case on which components of Cost Overrun were time-dependent. There was indeed evidence before the tribunal on which it was entitled to base its findings on the issue. Further, the more likely inference from the tribunal’s silence on the other components of the Cost Overrun claim is that the tribunal implicitly found that these components were recoverable because they had been incurred “in the most prudent and cost-effective manner”.

(d) The parties did not have a common and agreed position that any liability for the Cost Overrun should be adjusted against the SSL. The claimants took the position from the start that the second claimant had no obligation to repay the SSL because the conditions precedent for its repayment were never satisfied. In any case, the tribunal was entitled to find, on the basis of the evidence before it, that the SSL was extinguished when Project costs increased.

In response to the respondent’s case on the BPTA Charges claim, the claimants argue that the tribunal had sufficient evidence before it to find the respondent liable for the BPTA charges. Accordingly, the tribunal’s silence on the respondent’s arguments does not warrant an inference that it failed entirely to apply its minds to the respondent’s arguments.

The issues to be determined

The issues to be determined on the merits of the respondent’s application can therefore be resolved as follows:

(a) On the Cost Overrun claim:

(i) Did the tribunal act in breach of natural justice by failing to address the respondent’s argument that the correspondence in question was inadmissible?

(ii) Did the tribunal act in breach of natural justice or in excess of jurisdiction by finding the respondent liable for the Cost Overrun even though it was not in breach of the SPA?

(iii) Did the tribunal act in breach of natural justice by failing to consider the respondent’s arguments and evidence on the transmission line works? In the alternative, was the respondent deprived of an opportunity to present its case on whether other components of the Cost Overrun claim were time-dependent?

(iv) Did the tribunal act in breach of natural justice or in excess of jurisdiction in finding that the SSL could not be adjusted or set off against the respondent’s liability for Cost Overrun?

(b) On the BPTA Charges claim, did the tribunal act in breach of natural justice by failing to consider the respondent’s argument that the claim was unsupported by evidence?

(c) Finally, did the tribunal act in breach of natural justice by awarding pre-award interest from 4 July 2014 when the claimants themselves sought pre-award interest only from a later date?

The Cost Overrun claim

Liability for Cost Overrun

(1) The disputed correspondence

The respondent’s case in the arbitration was that all of this correspondence is covered by the without prejudice privilege and was therefore inadmissible. The tribunal therefore breached the rules of natural justice by relying on this correspondence without addressing in any way the respondent’s objection to admissibility.

The respondent’s arguments can be summarised as follows:

(a) The respondent objected to the claimants’ producing and relying on the correspondence throughout the arbitration, such as in the memorandums and closing submissions. The claimants’ own witnesses acknowledged at various times that the parties exchanged this correspondence in the context of settlement negotiations.

(b) Despite this, the award does not even refer to, let alone analyse, the respondent’s arguments on admissibility. The tribunal thus relied on the correspondence to make a finding against the respondent without addressing the respondent’s objections to admissibility. The only inference to be drawn is that the tribunal failed entirely to apply its mind to the respondent’s objections to admissibility in breach of the rules of natural justice.

(c) The breach caused direct and real prejudice to the respondent. If the tribunal had applied its mind to the respondent’s objections to admissibility, it could have concluded that the correspondence was indeed covered by the without prejudice privilege and ought to be excluded under Art 9(2)(b) of the IBA Rules on the Taking of Evidence in International Arbitration or Rule 24.1(p) of the SIAC Rules 2013. Without this correspondence as evidence, the tribunal could not have found the respondent liable for the Cost Overrun at all.

In response, the claimants argue that the fact that the tribunal admitted the correspondence in evidence without expressly setting out its reasoning for doing so does not, without more, lead to the clear and virtually inescapable inference that the tribunal failed to apply its mind to the respondent’s objections to admissibility.

The claimants accept that the respondent objected on several occasions to the admissibility of the correspondence. But the claimants turn that point against the respondent. They argue that it is unlikely that the tribunal failed entirely to apply its mind to the issue of admissibility precisely because the respondent repeatedly objected to admissibility. In this context, and in light of the tribunal’s statement in the award (see [82] below) that it included in the award only those arguments which it considered “relevant and necessary”, it is likely that the tribunal decided the objection to admissibility was irrelevant and that it was unnecessary to give its reasons for holding the correspondence to be admissible.

The claimants rely on the following paragraph of the award:

I do not place any weight on this paragraph. It is a standard paragraph found in virtually all awards. It is self-serving in nature. That is so no matter how eminent the tribunal. A paragraph to this effect cannot, in itself, either establish or even help to establish that the tribunal has in fact applied its mind appropriately to the essential issues arising from the evidence and arguments which the parties put before the tribunal. That is to be tested and ascertained from an analysis of the award and its structure in all the circumstances of the case after applying the applicable legal principles.

I do, however, accept the remainder of the claimants’ submissions. In my view, it is not a clear or virtually inescapable inference that the tribunal failed to apply its mind to the respondent’s argument that the correspondence was inadmissible. First, the issue of admissibility was not presented to the tribunal as an important point in the arbitration. This is apparent from a review of the record in the arbitration. While the respondent lists nine instances when it expressly objected to the correspondence being admitted in evidence, I note that in most of these instances, the respondent simply raised the objection without argument or elaboration. I take the respondent’s rebuttal submissions as an example. In response to the claimants’ reliance on a letter and an email sent by the respondent in November and December 2013, the respondent merely noted the following among other points:

The claimants, meanwhile, did not consider this point made in passing to have been made with sufficient seriousness of intent as to warrant a response.

It is evident from this that the parties themselves did not regard the objection to admissibility to be of great importance, especially in comparison to the main issues of substance raised in the arbitration. This must be why neither party expended the effort to advance a fully-fledged argument on the admissibility of the correspondence. In these circumstances, I consider it impossible to find, as a clear and virtually inescapable inference, that the tribunal failed to apply its mind to the issue of admissibility. I draw the inference instead that the tribunal made a decision to admit the correspondence in evidence – albeit implicitly rather than explicitly – without seeing a need to articulate its reasons for rejecting the respondent’s objections.

It is useful at this juncture to bear in mind the observations of Chan Seng Onn J in TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972 (“TMM Maritima”) on the scope of a tribunal’s duty to deal with arguments advanced by the parties (at [72]–[77]):

I agree with these observations. A tribunal can legitimately take the view that an evidential issue which a party raises within the context of the many substantive issues before the tribunal and which the party does not develop with any real seriousness of intent, even if it raises the issue in this way repeatedly, is not essential for it to decide and therefore does not require separate or explicit analysis. Taking that view certainly does not amount to a failure to consider the issue entirely or to a deliberate avoidance of the issue, both of which would be grounds for a successful challenge to the award (see ASG v ASH [2016] 5 SLR 54 at [90]). For the reasons already given, there were reasonable grounds on which the tribunal may have arrived at the view that the objection to the admissibility of the correspondence was not an issue which was essential for it to decide. Accordingly, I reject the respondent’s submission that the tribunal, by reason only of its silence on the point in the award, must have failed entirely to apply its mind to the issue of admissibility.

Accordingly, I hold that the tribunal did not breach the rules of natural justice by failing to mention or analyse explicitly in the award the respondent’s objections to the admissibility of the correspondence.

(2) Breach of SPA as condition precedent to Cost Overrun liability

The respondent’s pleaded case, in short, was that whether the Cost Overrun was claimed as damages flowing from a breach of the SPA or as a contractual liability to indemnify arising under the SPA, the claimants had to demonstrate “default or breach which delayed the achievement of Wet Commissioning” on the respondent’s part in order to recover the Cost Overrun.

For the same reason, even if the respondent did misunderstand the claimants’ case and did believe it to be premised on a breach of the SPA, the respondent nonetheless had an adequate opportunity to respond to that case and did respond to that case. There was therefore no prejudice to the respondent.

Even if it had proven necessary to reopen discovery or the evidential phase, the respondent had more than a reasonable opportunity to seek directions from the tribunal to that effect and to be heard on the substance of the issue. The respondent made no attempt to do this. The tribunal proved itself receptive to the second respondent’s request for a further submission in May 2017. That indicates to me that, even in May 2017, the tribunal had not closed its mind to requests by the parties to be heard further on the matters before it.

Quantification of components of Cost Overrun

(a) interest during construction;

(b) establishment cost;

(c) penstock cost; and

(d) land and site development cost, electro-mechanical (“E&M”) works cost, transmission line cost and civil work cost.

The respondent argues that, in not making any adjustments to component (d), the tribunal breached natural justice in two ways. First, the tribunal failed to give the respondent a reasonable opportunity to address it on whether any aspect of component (d) was in fact time-dependent. Second, the tribunal at the very least failed to consider the respondent’s evidence and arguments in relation to the quantum of transmission line charges, a sub-component of component (d). I deal with these two arguments in turn.

(1) Component (d) generally

Nonetheless, on balance, I find that there was no breach of natural justice on this aspect of the challenge. It is true that a tribunal “should not come to decisions which surprise the parties”: AUF v AUG and other matters [2016] 1 SLR 859 (“AUF”) at [69]. But that general principle is qualified by another proposition – that a tribunal is not required to invite submissions on every point necessary for its decision: AUF at [70]. The situation in which the tribunal reaches a final position which rests somewhere in the vast gulf between the two parties’ polar opposites in their pleaded cases is not uncommon. As was said in Carillion Construction Limited v Devonport Royal Dockyard Limited [2005] EWCA Civ 1358 (at [35]):

There is a delicate balance between upholding a party’s right to have a reasonable opportunity to respond to the case against it and affording enough latitude to a tribunal to reach decisions without being unduly hindered by the need to refer every point to the parties for argument. I fall back on the comprehensive summation of the law by the Court of Appeal in Soh Beng Tee (at [65]):

Accordingly, I reject the respondent’s submission that there was a breach of natural justice on these grounds.

(2) Transmission line costs

Having reviewed and analysed the tribunal’s chain of reasoning, I reject the respondent’s argument.

Set-off of SSL against Cost Overrun

As for the respondent’s argument that the tribunal exceeded its jurisdiction or deprived the parties of an opportunity to be heard on the reasoning adopted in this part of the award (see [135] above), I also reject these arguments. It is useful, first, to analyse the parties’ arguments in the arbitration on the respondent’s counterclaim for the SSL, amounting to $5.1m.

On the first question, the tribunal found that the respondent had lost its contractual right to recover the SSL for the primary reason that the SSL had been written down in the second claimant’s books in October 2013 under cl 9.7 of the SPA. The relevant part of cl 9.7 reads as follows:

The respondent failed to pay a Cost Overrun notice dated 16 October 2013 calling for payment of $9.6m. As a result, the tribunal found that the entire SSL, amounting to $5.1m, stood adjusted towards the amount specified in that Cost Overrun notice under cl 9.7. That extinguished the SSL entirely. There was therefore no question thereafter of the respondent ever recovering the SSL.

Neither party put this argument to the tribunal. Nonetheless, insofar as this finding (whether it is correct on the merits or not) was reached on the evidence submitted to the tribunal, ie, the minutes of the board meeting, and articulated in the course of the tribunal determining the first question arising on the respondent’s claim for repayment of the SSL, the finding was certainly within the tribunal’s jurisdiction.

Accordingly, there is no basis to set aside the tribunal’s findings on the SSL for breach of natural justice or excess of jurisdiction.

The BPTA Charges claim

The respondent’s case is that it argued, in its closing submissions to the tribunal, that the BPTA Charges claim was “not proved by production of any proof of payment”. In particular, the respondent pointed out two things to the tribunal:

(a) The claimants had provided no proper evidence to support a table which they relied on in the arbitration summarising the type and amount of BPTA Charges paid from May 2014 to October 2015.

(b) The claimants’ attempt to rely on the figures in the second claimant’s audited financial statements to prove the BPTA Charges paid before to February 2014 was misleading and inaccurate. All that the financial statements showed was “transmission line charges” in the sum of $3.7m. The claimants relied on this to claim BPTA Charges in a different sum, $3.3m, without offering any explanation for the variance.

The tribunal found in favour of the claimants on the BPTA Charges claim without addressing the respondent’s arguments on the lack of evidence. The respondent argues that, had the tribunal applied its mind to these arguments, the tribunal could have been persuaded that: (a) the table lacked proper supporting invoices and moreover contained descriptions of charges that were not within the scope of the respondent’s indemnity obligation; and (b) there was no evidence to support the claimants’ claim for $3.3m in BPTA Charges for the period before February 2014.

I have no difficulty in rejecting this argument. The tribunal did, in fact, expressly analyse the evidence supporting the BPTA Charges claim. The respondent’s real complaint is simply that the tribunal’s conclusion – that the charges were supported by sufficient evidence – was not the conclusion which the respondent advocated. The tribunal stated:

The tribunal’s reference to the details provided in the “tabular statement” is a reference to the fact that the claimants’ table provided not just the date, the description of the charge and the amount paid, but also incorporated exhibit numbers and Excel sheet page numbers cross-referencing the entries in the table to the primary evidence put before the tribunal.

I reproduce a sample entry from the table to illustrate:

Most of the evidence which the parties placed before the tribunal has not been placed before me on these applications. That is as it should be. I am not hearing an appeal from the tribunal’s award. It is not my task to determine whether the tribunal erred in fact or in law in its award on the BPTA Charges claim. My task is to ascertain, applying the binding authority of AKN, whether the clear and virtually inescapable inference is that the tribunal overlooked the respondent’s arguments that the BPTA Charges claim lacked sufficient evidential support.

The tribunal’s chain of reasoning makes it clear that the tribunal did apply its mind to the sufficiency of the claimant’s evidence. The tribunal found that the figures provided in the table were supported by details “from the documents on record” [emphasis added]. It therefore accepted those figures as having been proved. It is clear that the exhibit numbers and volume numbers listed in the table are references to where the original documents are to be found in the volumes of documents tendered to the tribunal. That is as far as its duty to consider the respondent’s objection on the adequacy of the evidence required the tribunal to go. As I have reiterated, a tribunal is not obliged to expressly refer to, analyse and reject every one of the parties’ arguments on every one of the points they raise.

For the same reason, I reject the respondent’s argument that the tribunal, by not referring to any supporting evidence in accepting the claim for $3.3m in BPTA Charges for the period before February 2014, must have failed to consider the respondent’s argument on the lack of evidence for that aspect of the BPTA Charges claim also. I do not consider it a clear and virtually inescapable inference that the tribunal, having taken account of the evidence supporting the BPTA Charges paid from May 2014 onwards in making a finding on those charges, must in the same breath have overlooked the need for documentary evidence for the earlier BPTA Charges. The more likely inference is that the tribunal implicitly concluded that the claimants’ claim for $3.3m for the period before February 2014 was also borne out on the evidence.

The entire tenor of the respondent’s case on the BPTA Charges claim is that the tribunal, by finding against the respondent despite what the respondent believed to be a compelling case, must have overlooked the respondent’s arguments on the issue. As an argument on breach of natural justice, that is fundamentally misconceived. I can do no better than to adopt the observation of Chan Seng Onn J in TMM Maritima (at [94]): no party has a right to expect the tribunal to accept its arguments, regardless of how strong and credible it perceives its own arguments to be.

I therefore reject all of the respondent’s arguments challenging the tribunal’s findings on the BPTA Charges claim. I find that the tribunal did not fail to consider the respondent’s arguments on the sufficiency of the claimant’s evidence in rendering its award on this claim.

Pre-award interest

The respondent complains about the tribunal’s choice of 4 July 2014 as the date on which pre-award interest commenced. Neither party argued in the arbitration that pre-award interest should start as early as 4 July 2014. Even the claimant sought pre-award interest only “from 31 October 2015 until the date of the award”. The respondent therefore submits that the tribunal breached natural justice in finding that pre-award interest should run from 4 July 2014.

I reject this argument. Pre-award interest is in the discretion of the tribunal under s 20(1) of the IAA:

The claim for pre-award interest was expressly brought under s 20(1) of the IAA as a provision of the lex arbitri. The respondent does not appear to have made any submissions on interest, apart from a bare denial that the claimants were entitled to interest at all. In particular, the respondent made no submission as to the date from which pre-award interest should run if, contrary to the respondent’s only submission, the tribunal found the respondent liable for pre-award interest. The commencement date for pre-award interest was therefore not a point which the respondent put in issue before the tribunal.

It is clear from s 20(1) of the IAA that the award of interest is a matter entirely at the tribunal’s discretion. Interest may be awarded “from such date, at such rate and with such rest as the arbitral tribunal considers appropriate”. The tribunal was entitled to grant pre-award interest in its discretion commencing from a date that it considered appropriate. Its omission to give reasons for choosing the date does not render this part of its award vulnerable to being set aside.

Conclusion on the respondent’s application

Having disposed of the respondent’s setting-aside application, I now turn to the claimants’ application.

The claimants’ application

It is this finding which the claimants challenge. The claimants argue that this is a finding made in breach of natural justice. The claimants therefore ask that this part of the award be set aside, alternatively remitted to the tribunal.

The parties’ cases

The claimants’ case rests on two arguments.

First, the claimants argue that the tribunal failed to consider the claimants’ evidence and arguments that their methods for repairing the penstock were entirely appropriate. The claimants highlight three aspects of their evidence and arguments to which they say the tribunal failed to apply its mind:

(a) A risk assessment undertaken by the claimants’ senior management and an expert report by the claimants’ independent engineering expert witness which both concluded that re-lining was the most prudent and cost effective method of rectifying the defects and completing the Project.

(b) The respondent’s original design for the penstock was inadequate. No penstock constructed according to that design could have resulted in a wet-commissioned Project.

(c) The time taken to complete other critical components of the Project, ie, the transmission line, meant that the Project could not have been wet commissioned by 30 June 2014 in any event.

The claimants’ second argument is that, in finding that the Project would have been wet commissioned by 30 June 2014, the tribunal adopted a chain of reasoning that the claimants could not have foreseen and therefore had no opportunity to address. As a result, the tribunal deprived the claimants of the opportunity to make submissions on this issue and went beyond the parties’ submissions.

Rectifying penstock defects

I deal first with the contention at [171(a)]. The claimants made extensive submissions before me on this contention. The evidence in question is:

(a) An internal report by the first claimant’s Vice-President dated 30 December 2013 which considered four methods for repairing the penstock. The Vice-President first evaluated re-welding and stated that it was not recommended given the long-term risk from “[preserving] flawed construction and design”, and the possibility of “missed defects”. The only recommended option was re-lining the penstock, as it was a “proven fix for failed high pressure penstock”, and was “deliverable in tolerable time scale”.

(b) The claimant’s independent expert witness’s report and evidence that the claimant’s decision to re-line the penstock was the “technically appropriate” solution in the circumstances. The claimants also point out that the respondent called no expert witnesses, leaving the claimant’s expert as the only independent expert evidence before the tribunal.

To follow the tribunal’s chain of reasoning, whether a particular method for repairing the penstock was appropriate for the purposes of the SPA did not turn on whether that same method was appropriate on grounds of safety or for enhanced durability of the penstock or indeed even for achieving wet commissioning. The tribunal’s main concern was whether the method chosen conformed best to the original designs and specifications for the penstock as proposed and constructed by the respondent. That is because these were the designs and specifications for the Project which the claimants had contractually accepted in the SPA.

Even if I am wrong on the inference to be drawn from this part of the award, the claimants still fail on the requirement of prejudice. Taking the tribunal’s reasoning to its logical conclusion, even if the tribunal took account of the claimants’ evidence summarised at [170] above, there is no possibility that the chain of reasoning which the tribunal actually adopted could have permitted it to accept re-lining as the appropriate repair method for the penstock within the contractual terms of the SPA.

Unfeasibility of the original penstock design

The claimants also argue that the evidence in the arbitration tended to show that the original penstock design was wholly inadequate to deliver wet commissioning. As the respondent itself acknowledged in June 2013, “the existing Y-piece design specifications [were] not appropriate for use in the Project”. The claimants also submitted to the tribunal that the respondent’s obligation under the SPA was to deliver a fully operational Project. The respondent would not be excused from that contractual obligation simply because the claimants had accepted the respondent’s original design after conducting its own assessment during the due diligence process leading to the SPA. Thus, the thrust of the claimants’ evidence on this aspect was that a complete overhaul of the penstock design was necessary in any case.

Accordingly, I dismiss the allegation that the tribunal breached natural justice by failing to consider the evidence in this regard.

Other components of the Project

The claimants point to evidence showing that there were also defects in the transmission line (ie, the cable transporting electricity to the power grid) that were being rectified under the claimants’ supervision concurrently with the penstock, and that this would have delayed the WCD far beyond 30 June 2014. In fact, the transmission line works were completed only on 17 October 2015.

Despite this evidence, the tribunal made no reference to the time required to complete the transmission line works when it held that the Project ought to have been achieved wet commissioning by 30 June 2014. The claimants submit that the tribunal’s failure to consider this evidence is critical, because the Project could not (whether contractually or in fact) be considered fully operational without the transmission line being ready.

I therefore dismiss this aspect of the claimant’s setting-aside application.

Opportunity to be heard on the Project completion date

I have no hesitation in dismissing this argument. First, the claimants’ position that it was deprived of a chance to argue that the Project could not have been completed by 30 June 2014 is inconsistent with its argument above (at [171(c)]) that, on the arguments and evidence submitted on transmission line works, it should have been apparent that the Project could have been completed no earlier than 17 October 2015. If the relevant evidence was already before the tribunal, there can be no argument that a party was deprived of the chance to present new material that could have a meaningful chance of making a difference.

Further, the tribunal’s calculation of three to four months was not a number plucked from the air. Ironically, it was based on the claimants’ own evidence. In the 30 December 2013 report from the claimants’ Vice-President (summarised above at [173(a)]), in assessing the viability of the four repair options for the penstock, he estimated that the re-welding method had a “[p]rogramme estimate [of] 4 months”. The tribunal adopted this time frame in the award. The tribunal thus found that “the Project would have been completed within three to four months from 1 February 2014 (or from 5 March 2014, if the date of the formal step in notice issued by [the first claimant] is the basis)”. The tribunal’s conclusion on the amount of time it would have taken to complete the Project was therefore based on the evidence before it.

Conclusion on the claimants’ application

Having rejected all allegations of a breach of natural justice in the tribunal’s decision to limit the claimants’ recovery on the basis that WCD should have been achieved by 30 June 2014, I dismiss the claimants’ application in its entirety.

Conclusion

In AKN, the Court of Appeal had this to say about the role of the supervisory court in a setting-aside application (at [39]):

In my view, there were several arguments raised in the present applications that amounted in essence to a disguised appeal on the merits of the tribunal’s decision. I reiterate, however, that in commercial arbitration, parties exercise their autonomy to choose their dispute-resolution method and to choose their dispute-resolvers. They must accept the consequences of that choice. There is no right of appeal from an arbitral award covered by the IAA. There is only a right to apply to set aside an award on limited grounds. In this case, neither party’s right to a fair arbitral process carried out within the tribunal’s jurisdiction was breached. Neither party’s complaints come within any of the limited grounds for setting aside an award.