CMJ and another v CML and another [2021] SGHC(I) 20

By this Originating Summons (“the OS”) the plaintiffs seek to set aside Singapore International Arbitration Centre (“SIAC”) Award No 91 of 2020 (“the Award”). The plaintiffs were the claimants and counterclaim respondents in the arbitration (“the Arbitration”). The defendants were the respondents and counterclaimants. Since it is not necessary to draw any distinction between the individual plaintiffs or defendants, I shall refer to the plaintiffs together as “CMJ” and the defendants together as “CML”, their names having been anonymised for the purposes of these proceedings.

The OS was filed in the High Court (Originating Summons No 873 of 2020) on 9 September 2020 and was transferred to the Singapore International Commercial Court on 13 April 2021. Following the filing of affidavits and written submissions, there was an oral hearing before me on 1 and 2 November 2021 where Mr Giam Chin Toon SC (“Mr Giam SC”) appeared on behalf of CMJ and Mr Cavinder Bull SC (“Mr Bull SC”) appeared on behalf of CML.

The Arbitration was commenced 6 June 2016. It was seated in Singapore and the applicable substantive law was the laws of the People’s Republic of China (“PRC”). It was administered by the SIAC and conducted under the United Nations Commission on International Trade Law Arbitration Rules of 1976 (“the UNCITRAL Rules”).

CMJ sought declarations that CML had breached certain contracts, certain agency duties and duties of good faith under PRC law and sought damages for these alleged breaches. CML denied the claims made, disputing the scope of the duties alleged and the alleged breaches. CML counterclaimed for damages for CMJ’s alleged breaches of the contracts and for recovery of outstanding amounts allegedly owed by CMJ to CML under the contracts. Both parties claimed to be entitled to terminate the contracts by reason of the alleged breaches.

By the Award dated 11 June 2020, a three-member tribunal (“the Tribunal”) dismissed all of CMJ’s claims but upheld CML’s counterclaim to a limited extent and awarded damages in respect of those breaches.

CMJ seek to set aside the Award on the ground that there were breaches of natural justice in that they were not given a fair opportunity to present their case and that the Tribunal failed to apply its mind to important aspects of their submissions in the Arbitration.

Background

The Arbitration arose from a dispute between the parties in relation to a petroleum contract entered into on 24 March 2005 to explore, develop and produce oil and gas resources at certain offshore fields. The collaboration between the parties turned out to be less successful than they had hoped. It appears that not only did the parties discover less gas in the fields than was anticipated but world gas prices also declined significantly over the course of the project which put the parties at a disadvantage in their negotiations with the sole buyer for the gas produced. The reasons for the less than satisfactory outcome are, however, not relevant to the OS.

What is relevant is the way in which the Arbitration, which was regulated in the usual way by Procedural Orders, was conducted. The timeline of the Arbitration is conveniently set out in a table in the first affidavit of Mr Yuen Po Kwong Peter, which is reproduced below:

On 1 June 2018, Procedural Order No 1 was amended and proceedings thereafter were regulated by Procedural Order No 2 (“PO2”). The Arbitration was conducted “memorial style” so that the parties’ statements of case would be accompanied by factual evidence and expert reports. CMJ’s Statement of Claim was accompanied by four witness statements and three expert reports, one of which was from Professor Ling Bing (“Prof Ling”), an expert in PRC law (“The Ling Report”). CML’s Defence was accompanied by one factual witness statement and three expert reports, but there was no expert report on PRC law in response to the Ling Report.

CMJ’s Reply, served on 26 March 2018, and their accompanying statements and reports thus did not address further the question of PRC law. On 10 May 2018 CML changed their counsel and the contents of the Rejoinder were thus determined by the new counsel. The Rejoinder was accompanied by three further witness statements and an expert report of Professor Liu Kaixiang (“Prof Liu”) on PRC law (“the Liu Report”) which, for the first time, responded to the Ling Report.

By a letter dated 11 July 2018, CMJ’s lawyers wrote to CML’s lawyers contending that:

The letter also went on to assert that during the joint expert meetings and the preparation of joint expert reports (“JERs”), the experts should not be precluded from discussing the new issues and relying on such materials as CMJ or their experts produced in response to those new issues (see also [24] below).

The reference to joint expert meetings and JERs in the letter was a reference to para 2.1(j) of PO2, which provided as follows:

Paragraph 8.4 of PO2 provided as follows:

Reference should also be made to paras 8.10, 9.2(a) and 9.2(b), which provided as follows:

CML responded to CMJ’s letter of 11 July 2018 by a letter dated 17 July 2018 resisting any attempt by CMJ to adduce further evidence and use the JER process to expand upon the expert evidence already served. The material passages in CML’s letter read as follows:

The Additional Fact Evidence

So far as concerns the additional fact evidence on which CMJ wished to reply an application was made by CMJ to the Tribunal by a letter dated 18 July 2018 to admit two further witness statements, one from Mr [C] and the other from Mr [D] ( both names redacted). I need say no more about the latter as any reliance on the failure to admit that statement was not pursued at the hearing before me. The letter explains why Mr C’s witness statement (“BT2”) addresses matters raised in the Rejoinder which, it was said, could not have been addressed by CMJ in their Reply as these matters post-dated the date of service of the Reply. It states:

CML’s lawyers responded to CMJ’s application by a lengthy letter dated 23 July 2018. Briefly stated, CML asserted that BT2 was an attempt to expand upon the issues that had already been canvassed by CMJ in their Reply as well as seeking to introduce new factual issues. CML made the point that if CMJ wished to raise these issues, para 9.2(c) of PO2 gave them an opportunity to do this by way of direct examination at the evidentiary hearing and stated that if BT2 was to be admitted, CML should be given an opportunity to submit further evidence in response.

The letter also drew attention to the fact that to grant the application would result in unequal treatment between the parties and that the delay in making the application would, if granted, prejudice the proper preparation of CML’s case.

In turn, CMJ’s lawyers responded by a letter dated 25 July 2018. This gave reasons why BT2 was responsive to matters raised for the first time in the Rejoinder and asserted that it would be preferable for BT2 to be allowed in evidence in advance of the hearing, rather than for Mr C to give his evidence orally at the hearing. This would avoid unequal treatment whilst ensuring that CMJ was not prejudiced by being denied the right to rely on the evidence. On 30 July 2018, CML’s lawyers submitted a final round of comments reiterating the points outlined in its earlier letters to the Tribunal.

By an e-mail dated 2 August 2018, the Tribunal ruled on the question of whether BT2 should be admitted in evidence. It declined to admit it and reasoned as follows:

On 24 August 2018, CMJ’s lawyers asked the Tribunal to amend its directions on the hearing arrangements so as to allow Mr C to give evidence-in-chief lasting for 30 minutes and to allow Mr C to adduce further materials in support of his position. On 28 August 2018, the Tribunal acceded to the request for Mr C to give evidence-in-chief, but rejected the application for Mr C to adduce further materials on the basis that it had already made a decision on the admission of further documents, some of which has been admitted and some not. On the latter request it said this:

Pursuant to this direction, Mr C gave evidence-in-chief on Wednesday 12 September 2018 from 4.59pm until 5.24pm.

The Expert Evidence

In the same time frame, the parties’ lawyers were addressing the question of expert evidence and the preparation of the JERs. On 6 July 2018 CML’s lawyers wrote to CMJ’s lawyers seeking to agree the ground rules for the preparation of the JERs. Six rules were proposed as follows:

CMJ’s lawyers wrote back to CML, by way of the 11 July 2018 letter (see [11] above), agreeing to the first four proposals but rejected the last two stating:

In response, in the letter dated 17 July 2018 (see [15] above), CML’s lawyers rejected this approach, emphasising that the JER process was designed to narrow (not expand) the existing issues and that the introduction of material in addition to the existing material in the expert reports as already served would be contrary to the provisions relating to the JER process set out in PO2.

On 3 August 2018 CMJ’s lawyers informed CML’s lawyers that Prof Ling intended to rely on a further 17 PRC law authorities in response to the Liu Report.

Thereafter, Prof Liu sent Prof Ling, under cover of an e-mail dated 5 August 2018, a first draft of their proposed JER, which was six pages long. On 6 August 2018, by letter, CML’s lawyers gave full reasons for objecting to the proposed introduction of the 17 PRC law authorities.

In response, on 7 August 2018, Prof Ling sent back a revised draft extending to some 19 pages. CML contended that a large proportion of the material in the column labelled “Professor Ling’s view” in the revised draft had been new material which was not in Prof Ling’s previous expert report.

Also on 7 August 2018, CMJ’s lawyers wrote to the Tribunal seeking leave for Prof Ling to refer to 10 of the 17 additional authorities in the JER. Full reasons were given at para 10 of that letter, but the substance of the reasoning was that this was a necessary step to provide CMJ with a proper opportunity to respond to the Liu Report which had only been served as part of the Rejoinder when it could and should have been served as part of the Defence. Had it been, Prof Ling could have prepared a further report as part of CMJ’s Reply. Granting Prof Ling leave to refer to the PRC law authorities was the best way of affording Prof Ling a fair and just opportunity to address the Liu Report, which was served late.

On 8 August 2018, CML’s lawyers wrote to the Tribunal objecting to the introduction of the 10 authorities on five grounds, each of which was explained in full in that letter.

Next, on 9 August 2018, CMJ’s lawyers wrote to the Tribunal complaining about the conduct of CML’s counsel in the JER process and requesting, inter alia, a direction that the parties’ experts should file separate reports on area of disagreement.

By a letter dated 10 August 2018, CML’s lawyers refuted the allegations of misconduct and opposed the provision of separate reports. As a result, CMJ’s lawyers wrote to the Tribunal, also on 10 August 2018, seeking directions.

On 14 August 2018 the Tribunal gave directions on each of these issues. In relation to the JERs, the Tribunal said this:

And, in relation to the PRC authorities, it said this:

CMJ were dissatisfied with the decision on the JERs and considered that CML’s experts were using the decision to frustrate the purpose of the JERs. CMJ therefore wrote again to the Tribunal on 20 August 2018, seeking the opportunity for their experts to respond to new points made by CML’s experts. This was opposed by CML’s lawyers in a letter to the Tribunal dated 21 August 2018.

The Tribunal then issued a further decision on 22 August 2018, which stated:

CMJ’s lawyers responded in a long letter dated 24 August 2018, reiterating the fact that CML’s change of counsel had led to the Rejoinder evidence producing six new witnesses and three new expert reports, such that CMJ had not had a proper opportunity to respond to the new issues raised in that evidence. CMJ expressed surprise that the Tribunal considered that it felt that there would be a sufficient opportunity for Prof Ling to express his views orally during the hearing. At para 11 of that letter a request was made for an additional 1.5 hours, over and above the 30 minutes that had been specified in the Arbitration’s “Hearing Arrangements/Schedule”, for the experts to make oral presentations. Paragraphs 12-14 of the letter read as follows:

The request for an extra 1.5 hours was granted by an e-mail from the Tribunal dated 28 August 2018, but the Tribunal made it plain that the additional time did not authorise the introduction of new materials or documents. In addition, by an e-mail dated 31 July 2018, the Tribunal granted CMJ an additional four hours to present their case and cross-examine CML’s witnesses on the basis that CML had more witnesses, some of whose evidence required translation.

Prior to the evidentiary hearing, the parties submitted Opening Submissions which were supposed to be subject to a 30-page limit but which, in CMJ’s case, ran to 39 pages and contained reference to some 355 pages of additional material. By a letter to the tribunal dated 4 September 2018, CML’s lawyers objected to the excessive length and the introduction of the new material by CMJ. By an e-mail dated 5 September 2018, the Tribunal allowed CMJ’s 39-page Opening Submissions and directed that the additional material contained therein be admitted.

The hearing took place in Singapore between 10 and 20 September 2018. So far as the expert evidence was concerned, the Tribunal adopted a witness conferencing procedure which, as indicated, allowed each party’s PRC expert to give a 30-minute presentation followed by questioning from the Tribunal and the parties’ counsel. However, at the hearing, Prof Ling’s presentation took 45 rather than 30 minutes.

No further procedural objections were taken in relation to the expert evidence and, following two rounds of closing submissions, the Award running to 722 paragraphs was issued on 11 June 2020.

CMJ’s Grounds of Objection

CMJ raise three grounds for asserting that they were not given a fair opportunity to present their case and that the Tribunal failed to apply its mind to important aspects of their submissions in the Arbitration. These are expressed in CMJ’s written submissions as follows:

The first of these relates to the non-admission of the witness statements of Mr C (namely, BT2) and Mr D. As indicated, Mr Giam SC had confirmed at the hearing before me that CMJ were not pursuing the objection in relation to the latter (see [16] above). So far as concerns Mr C’s evidence, there was an issue in the Arbitration as to whether CML had been in breach of their contractual duty to drill for additional gas. In the Award, there was a factual finding that CML had complied with their duty to drill for additional gas and thus was not in breach. CMJ contends that the failure to admit BT2, which related to this issue, meant that CMJ had been denied the opportunity properly to respond to evidence given in the Rejoinder and, hence, that the refusal to admit BT2 caused real prejudice.

The second is expressed as being an objection based upon the form of the JER of the PRC law experts. In the course of the oral submissions before me it became clear that the objection was in truth an objection about the conduct of CML in filing Prof Liu’s report as part of the Rejoinder evidence rather than with the Defence. Thus CMJ had been denied the opportunity to respond by way of a full written report from Prof Ling in the Reply evidence and the procedure directed by the Tribunal for dealing with the late filed report of Prof Liu denied CMJ a proper opportunity of responding to CML’s case.

The third is an assertion, related to the first, based upon an alleged legal duty to drill for additional gas arising out of a letter dated 15 July 2011 from CML to CMJ (“the 15 July 2011 Letter”).

Before turning to each of these grounds I shall first consider the legal principles applicable to an application seeking to set aside an arbitral award. There was no material dispute between the parties as to these principles, which are well-settled.

The Applicable Legal Principles

The First Schedule to International Arbitration Act 1994 (Cap 143A, 2002 Rev Ed) (“IAA”) contains the UNCITRAL Model Law on International Commercial Arbitration (“the Model Law”) which applies to the Arbitration.

Article 34(1) of the Model Law provides that an application for setting aside an award to the appropriate supervisory court is the sole means by which an award can be challenged. Such an application can only be made on one or more of the grounds specified in Art 34(2). In this case, the relevant ground is found in Art 34(2)(a)(ii) and/or (iv), which read:

The reference to being “unable to present his case” is a reference back to Art 18 of the Model Law, which requires that “[t]he parties shall be treated with equality and each party shall be given a full opportunity of presenting his case”.

Section 24 of the IAA amplifies upon this by providing:

The general principles for setting aside an award on the basis of a breach of natural justice were summarised by the Court of Appeal in Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 (“Soh Beng Tee”). I draw attention to the following observations in Soh Beng Tee, which are relevant to this case:

(a) it is indispensable to the requirement in every arbitration that the parties should have an opportunity to present their respective cases as well as to respond to the cases against them (at [42]);

(b) it is not a ground for intervention that the court considers that it might have done things differently or expressed its conclusions on the essential issues at greater length (at [58]);

(c) the judicial philosophy is of minimal curial intervention so that the court’s supervisory role should be exercised with a light hand and the arbitrators’ discretionary powers should be circumscribed only by the law and by the parties’ agreement (at [59]-[60]);

(d) the courts are not a stage where a dissatisfied party can have a second bite at the cherry (at [65(b)]);

(e) the court will not intervene because it might have resolved the issues differently (at [65(c)]);

(f) there must be a real basis for alleging that the arbitrator has conducted the arbitral process either irrationally or unreasonably (at [65(d)]);

(g) each case should be decided within its own factual matrix and it is not the function of the court “to assiduously comb an arbitral award microscopically in attempting to determine whether there was any blame or fault in the arbitral process” (at [65(f)]);

(h) an applicant who seeks to set aside an arbitral award must establish (at [29]):

(i) which rule of natural justice was breached;

(ii) how it was breached;

(iii) in what way the breach was connected to the making of the award; and

(iv) how the breach did or could prejudice its rights.

As to the fourth of these, the Court of Appeal in Soh Beng Tee emphasised that there must be something more than the existence of a breach of natural justice - it must also be shown that the breach might realistically have led to a different outcome (at [86]-[90]).

This aspect was considered further by the Court of Appeal in LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2013] 1 SLR 125 (at [54]):

Both parties drew my attention to the recent Court of Appeal decision in China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another [2020] 1 SLR 695 (“China Machine”). The Court of Appeal summarised the applicable principles on the setting aside of an arbitral award for breach of natural justice, as follows (at [104]):

Ground 1: The non-admission of BT2

As I have recorded above (at [43]), the alleged breach of natural justice lay in the Tribunal’s decision not to allow BT2 to be adduced in evidence, such that CMJ were not given a full opportunity of presenting their case within the meaning of Art 18 of the Model Law.

It is contended that this evidence is relevant to, and could have served to undermine, the conclusions reached by the Tribunal at paras 519-521 and 523-524 of the Award. Appropriately redacted to preserve anonymity, they read:

In essence, CMJ’s case is that the evidence that Mr C proposed to give in BT2 would demonstrate that CMJ did continue to insist strongly that the work regarding the [X] well should be progressed at the relevant time.

CMJ’s case thus is:

(a) there was a breach of natural justice in that CMJ’s right to be treated with equality and be given a full opportunity of presenting their case pursuant to Art 18 of the Model Law was undermined;

(b) this was done by the Tribunal’s refusal to admit BT2, which was replying to new issues raised in the Rejoinder;

(c) the breach was connected to the making of the Award in that it could have affected the conclusions reached at para 523 of the Award; and

(d) the breach thus prejudiced CMJ’s rights.

CML challenges each limb of this argument. First, they contend that the material in BT2 was not in response to any new issues in the Rejoinder. Second, even if it was, the Tribunal’s decision in exercising its discretion not to allow it to be admitted was proper and reasonable in all the circumstances. Third, any possibility of the parties not being treated with equality was removed by the Tribunal’s decision to allow CMJ the opportunity to adduce 30 minutes of evidence-in-chief from Mr C. Fourth, even if the evidence in BT2 had been adduced, it did not have the potential to undermine the conclusion at para 523 of the Award. It could not therefore have affected the outcome on that issue, so that CMJ have suffered no prejudice even if there was a breach of natural justice.

I do not propose to resolve the question of whether the relevant contents of BT2 were in response to new issues, merely expanded upon matters already covered in earlier evidence or raised new issues. The Tribunal was of the view that it did expand on the issues already raised and contained new allegations based, apparently, on recently acquired factual material (see [20] above). However, the Tribunal took steps to ensure that CMJ were not disadvantaged by its refusal to admit BT2, whatever be the status of the evidence, by allowing Mr C to give evidence-in-chief for 30 minutes. The question is whether those steps were, in the circumstances of this case, sufficient to avoid the breach of natural justice which CMJ now relies upon.

The starting point is to revert to para 8.10 of PO2 which is set out above (at [14]). This provision expressly anticipates that there may be a need for testimony from a witness which is offered to rebut an argument or evidence raised in the Rejoinder. Paragraph 8.10 of PO2 is not limited to testimony directed to issues raised for the first time in the Rejoinder. It was thus open to CMJ to adduce oral evidence from Mr C directed at any part of the Rejoinder evidence. Indeed, CMJ appreciated this in their letter of 18 July 2018 (the contents of which I have set out above at [16]), where they contended that it would be better to submit BT2 prior to the evidentiary hearing rather than make the same points in examination-in-chief.

In its ruling on 2 August 2018, the Tribunal refused to allow BT2 to be introduced in evidence (see [20] above). This was an exercise of discretion based upon its analysis of the nature of the evidence, the proximity of the hearing, the fact that the experts would have to consider the new evidence when they were already in the final stages of drafting the JERs and the fact that CML would not have an opportunity to peruse and respond to the evidence before the hearing.

In response to the refusal, CMJ requested that Mr C should be allowed 30 minutes to give evidence-in-chief and be allowed to adduce further materials in support. The former request was allowed but the latter was not (see [21] above). There was thereafter no protest by CMJ that the inability to adduce further materials rendered it impossible for Mr C to give the evidence which CMJ wished him to give.

The Tribunal was placed in a not unfamiliar but nonetheless invidious position of having to deal with late applications to adduce evidence. On the one hand, a refusal to admit the evidence could lead to an injustice, but to admit it could also lead to an injustice to the other party in having to grapple with the new evidence as well as preparing for the hearing. Accommodating the needs of both parties could possibly have the result of jeopardising the hearing date, which in a case such as this would be thoroughly undesirable.

To my mind, this is a case where the observations of the Court of Appeal in China Machine ([54] above) are particularly apposite. This was a matter of procedure and the Tribunal did its best to be fair to both parties consistent with adhering to the existing procedural timeline (see [8] above). I do not consider that what the Tribunal did falls out with the range of what a reasonable and fair-minded tribunal might have done in the circumstances of this case. There was therefore no breach of natural justice in the Tribunal’s refusal to admit BT2.

Even if I were to be wrong in this, I consider that CMJ’s case on the issue fails on other grounds as well. I shall briefly explain my reasoning.

First, CMJ assert that the evidence in BT2 would serve to demonstrate that they did insist strongly that the work regarding the [X] well should be progressed. I do not read it as so doing. Instead, BT2 deals with Mr C’s concerns that the [Y] well was being proposed (see para 15 of BT2) and that CML were taking a negative view of other wells including [X] (see paras 17, 23 and 28 of BT2). Whilst Mr C makes it plain that CMJ did not agree with that view, he concluded at para 33 of BT2 that:

This evidence is inconsistent with the suggestion that CMJ strongly insisted that the [X] well should be progressed. Therefore, even if the evidence in BT2 was admitted, the Tribunal would not have come to a conclusion different from the one it had reached at para 523 of the Award. As such, even if there had been any breach of natural justice as a result of the Tribunal’s refusal to admit BT2, it would not have prejudiced CMJ.

Second, when giving oral evidence, Mr C did not say that he had “strongly insisted” that wells such as [X] should be proceeded with. His evidence was that he was critical of the decision to proceed with the [Y] well and discussed possible alternatives with CML but did no more than that. Mr C was therefore given the opportunity at the evidentiary hearing to adduce the evidence that CMJ now says should have been admitted, but he did not. CMJ has therefore not demonstrated that, on the material actually before the Tribunal, its reasoning was either “irrational or capricious” (see Soh Beng Tee ([51] above) at [65(d)]).

At the hearing before me, Mr Giam SC sought to draw my attention to certain documents which were not before the Tribunal which he contended supported the suggestion that CMJ had insisted that other wells be drilled. I declined to allow CMJ to rely upon these documents. As I explained in my ex tempore decision released to the parties in the course of the hearing before me, it is not for this court to look at material which was not before the Tribunal. Any suggestion that there is a failure of natural justice on the part of the Tribunal in carrying out its function must focus on the material that was before it (see China Machine ([54] above) at [104(d)]). It cannot be right that the court now, in a setting aside application, allows further material to be relied upon and then seeks to place its own judgment on that material, in place of that of the Tribunal.

There cannot be a breach of natural justice if a party was given an opportunity by the tribunal to adduce evidence but did not avail itself of that opportunity, save in circumstances where it considered that the opportunity was an insufficient one and brought that to the attention of the tribunal at the material time. This CMJ did not do.

For all these reasons therefore, in the circumstances of this case, there was no breach of natural justice in the Tribunal’s refusal to admit BT2.

Ground 3: The additional gas issue

It is convenient to consider the third ground before the second as it is factually related to the first of CMJ’s objections. In the Arbitration, CMJ contended that CML had a separate and independent duty to drill for additional gas. This is said to arise from the 15 July 2011 Letter (see [45] above), the last sentence of which (suitably redacted) reads:

CMJ’s case is succinctly stated in the following paragraphs of their written submissions:

In relation to CMJ’s contention that this issue was an essential issue, CML drew my attention, in particular, to the observations of the High Court in TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] 4 SLR 972 (at [72]-[74]):

In relation to the question of whether the Tribunal has, in fact, failed to consider an essential issue, CML relied upon the Court of Appeal’s decision in AKN and another v ALC and others and other appeals [2015] 3 SLR 488 (at [46] and [59]):

It is not suggested that the Tribunal did not have in mind CMJ’s argument that CML had a separate and independent duty to drill for additional gas, as the Tribunal specifically referred to it at para 491 of the Award:

Thereafter, at paras 492-503 of the Award, the Tribunal set out the respective arguments of the parties, which included, at para 499, CML’s contention that there was no such legal obligation on their part arising from the 15 July 2011 Letter to drill additional wells as that decision was reserved to the JMC.

The Tribunal then considered those submissions at paras 504–524 of the Award and concluded that there was no breach of CML’s obligations in this regard.

Reading these paragraphs as a whole, it is clear Tribunal had well in mind the two ways in which CMJ put their case: based on CML’s duties as a reasonable and prudent operator and, alternatively, on CML’s alleged duties arising from the 15 July 2011 Letter. It equally had well in mind that drilling decisions were to be subject to the authorisation of the JMC. At para 509 of the Award, the Tribunal also held that it was apparent from the statements in the JMC meetings as well as in other documents that CMJ themselves had “proceeded very carefully about the plan of additional drilling”.

Whilst it does not expressly state that the obligations placed on CML by the terms of the 15 July 2011 Letter were the same as those placed on them as a reasonable and prudent operator, the inescapable conclusion is that it is implicit from the Tribunal’s reasoning that it did. Indeed, it would make no commercial sense to interpret the wording of the 15 July 2011 Letter as imposing a duty on CML to drill wells which no reasonably prudent operator would consider it was viable to drill, which is what CMJ’s submissions amount to.

I therefore accept that the question of whether CML’s conduct constituted a breach of their obligations under, inter alia, the terms of the 15 July 2011 Letter had been raised before the Tribunal. I do not accept that there was a failure in the Award properly to address this issue and I therefore find that there was no breach of natural justice in the way in which the Tribunal approached this issue.

Ground 2: The PRC law issue

CMJ’s submission is a clear one. They adduced expert evidence in the form of the Ling Report as part of the Statement of Claim in April 2017 (see [9] above). CML did not adduce any PRC law evidence in their Defence which was served in October 2017 (see [9] above). There was therefore no need for CMJ to adduce any evidence on PRC law as part of their Reply evidence in March 2018. CML did however adduce the Liu Report as part of their Rejoinder evidence on 18 June 2018, a month before the JERs were due on 23 July 2018 (see [10] above). Accordingly, CMJ were denied the opportunity, of responding to CML’s PRC law evidence whilst preparing their Reply – a period of some five months following the service of the Defence. The conduct of CML thus put CMJ in a position of inequality and denied them the full opportunity of presenting their case as Art 18 of the Model Law mandates.

CMJ, quite reasonably and properly, did not seek an order that the Liu Report was not to be admitted in evidence. That would have amounted to a denial of CML’s right properly to present their case unless CML’s conduct was such as to warrant such a draconian order. Provided that the report could be admitted without prejudicing CMJ’s right to respond in an appropriate way, there would be equality, notwithstanding CML’s regrettable conduct in adducing the Liu Report late.

CMJ however contends that the directions which the Tribunal did give denied them this opportunity. CMJ says they sought to use the JER process to set out the areas of disagreement in relation to matters set out in the Liu Report, but this was opposed by CML and the Tribunal agreed with CML. Although the Tribunal allowed the additional 10 PRC law authorities to be adduced and granted CMJ the latitude to have an additional 1.5 hours over and above the 30 minutes for their experts (including Prof Ling) to make oral presentations during the evidentiary hearing (see [37]-[38] above), this did not give Prof Ling a proper opportunity to deal fully with the matters raised by Prof Liu and thus constituted a material breach of Art 18 of the Model Law.

For their part, CML make three points. First, that the procedure adopted by the Tribunal was fair and that it certainly did not constitute the sort of unreasonable behaviour on the part of the Tribunal that would justify the intervention of the court on a setting aside application. Secondly, that the procedure adopted was procedure that CMJ themselves proposed and to which they made no complaint at that time. Third, that, in any event, CMJ have suffered no prejudice even if there was a breach of natural justice in the way in which the expert evidence was adduced.

I have set out earlier the way in which this issue arose and the manner in which the Tribunal had directed that Prof Ling’s evidence should be adduced (see [23]-[41] above). The first point to note is that at no time did CMJ seek permission from the Tribunal to adduce a further written report from Prof Ling. It sought to achieve the same result by modifying the JER process so that the JERs contained, by way of an explanation of the areas of disagreement, additional material from Prof Ling to refute assertions made by Prof Liu. This course of action was rejected by the Tribunal, but it did allow the 10 additional PRC law authorities to be introduced by Prof Ling and, following repeated requests from CMJ, did accede to CMJ’s request for an extra 1.5 hours over and above the 30 minutes previously provided for their experts’ oral presentations. The Tribunal also gave CMJ an additional 4 hours to present their case and cross-examine CML’s witnesses.

In making these directions the Tribunal was implementing in the manner it deemed appropriate the procedure as set out at para 8.10 of PO2 (see [14] above) which specifically foresaw that there might be a need to receive oral testimony from a witness at the hearing to rebut evidence adduced in the Rejoinder.

When faced with late evidence, a court or tribunal is presented with the difficult task of balancing the potential unfairness to one party or the other in the way in which it permits the parties to respond and deal with that evidence, should it allow it to be adduced. It must bear in mind that “perfect justice” - by which I mean giving the party faced with dealing with the new evidence the opportunity that it otherwise would have had, had the new evidence been adduced on time - is seldom an option if the proposed hearing date is not to be lost. Adjourning a hearing, particularly in a case where there are numerous counsel and witnesses and there are three judges or arbitrators is a course which the overall interests of justice require should be avoided, if at all possible.

My instinct, on the facts of this case, would have been to give CMJ a brief period in which they could put in a further expert report from Prof Ling in response to the Liu Report and for the JER process for the PRC law issues to be delayed until after this had been done. But that is not what CMJ sought and the fact that I might have done things differently is not a relevant consideration (see Soh Beng Tee ([51] above) at [65(c)]). The relevant question is whether the proceedings were conducted in a manner which was fair within the specific context of the particular facts and circumstances of this case. I have to ask myself whether what the Tribunal did falls within the range of what a reasonable and fair-minded tribunal in those circumstances might have done. In doing so I must accord a margin of deference to the Tribunal in matters of procedure (see [62] above; see also China Machine ([54] above) at [104(c)]-[104(d)]).

On this basis, I conclude that the Tribunal did act in a way that was both fair and reasonable in the circumstances of this case. In so doing, I take into account the following:

(a) it would have been unfair to deprive CML of the opportunity to adduce the Liu Report notwithstanding the fact that it could and should have been adduced as part of the Defence;

(b) PO2 anticipated that further evidence might have to be adduced to rebut matters that arose as part of the Rejoinder and that this was to be done by way of oral evidence at the hearing;

(c) the 10 additional PRC law authorities were introduced, as requested by CMJ;

(d) CMJ were allocated an extra 1.5 hours for oral presentations by their experts and a total of four hours for presenting their case so as to be able to deal with issues that arose as part of the Rejoinder and that these issues were then canvassed fully in the written closing submissions; and

(e) the course adopted by the Tribunal was calculated to, and did, avoid the possibility of having to adjourn the evidentiary hearing.

CMJ contended that oral testimony was not as good as written testimony but, as Mr Bull SC pointed out at the hearing before me, in those 1.5 hours, Prof Ling could have read out a prepared statement encapsulating all the material that he would have included in a reply report. CMJ also contended that time was taken up during those 1.5 hours in translating Prof Ling’s evidence for Prof Liu’s benefit. However, CMJ would have been aware that this would be necessary when they sought and were granted the additional 1.5 hours. It was also suggested that the Tribunal rushed Prof Ling when he gave his oral evidence. I have read the passages in the transcript of the proceedings when Prof Ling gave his oral evidence and I do not consider that the Tribunal was unfairly rushing Prof Ling. I agree with CML that, when the passages of the transcript are read in context, it is clear that the Tribunal was moving matters along in accordance with the timetable and Prof Ling was working with them to achieve this end. He was not being treated unfairly.

Taking all these matters together, I am satisfied that there was no breach of natural justice and that this ground of objection by CMJ must fail.

In the light of this decision, I can deal with the other two contentions of CML briefly. Their second point was that the procedure adopted by the Tribunal was procedure that CMJ themselves proposed and to which they made no complaint at the material time. I do not consider that this is a fair assessment of the position. The initial course proposed by CMJ was rejected by the Tribunal and thereafter CMJ made various requests which, it is apparent from the correspondence, they considered represented the next best way forward if they were not to be allowed to proceed in the way which they thought would give them a proper opportunity to respond to the late evidence in the Rejoinder (see [35]-[37] above). It was a course proposed under protest, not by desire. This aspect of CMJ’s conduct is unlike that of an aggrieved party who had conducted itself before the tribunal on the footing that it remained content to proceed with the arbitration, but only to complain after the fact when it realised that an award has been made against it (see China Machine ([54] above) at [168] and [170]). Had I concluded that there was a breach of natural justice, I would not have denied CMJ relief on this ground.

The third point was that, in any event, CMJ have suffered no prejudice even if there was a breach of natural justice in the way in which the expert evidence was adduced. There were two issues on which the PRC law experts disagreed. The first was as to whether the particular agency relationship between CMJ and CML constituted a “general” or “special” agency under PRC law. The second related to the impact on that agency relationship under PRC law if the agent was an unpaid/uncompensated agent and of certain alleged limitations of liability of such an agent. The contention made by CML in the Arbitration was that such an agency had existed in this case and that, as a result, Art 406 of the PRC Contract Law limited their liability vis-à-vis CMJ to losses resulting from wilful misconduct or gross negligence.

CML’s contention is that, although the Tribunal resolved the general/special agency issue in their favour, this was irrelevant to the final outcome as the Tribunal went on to hold that the relationship between the parties on agency was regulated by the contractual arrangements between them and did not depend on whether CML were a general or special agent. In particular, the Tribunal recorded at paras 253-255 of the Award that it had been common ground between Prof Ling and Prof Liu that under PRC law the contractual arrangements between the parties are the “primary” source of an agent’s duties. The latter was not challenged before me. I therefore accept that, even if the Tribunal acted in breach of natural justice by denying Prof Ling a proper opportunity to present the arguments on this issue, CMJ would have suffered no prejudice, since ultimately it was irrelevant to the outcome.

So far as concerns the unpaid/uncompensated agent issue, again, the Tribunal decided it in CML’s favour and concluded that in order for CML to be liable as an uncompensated agent, CMJ would have to prove that there had been a breach of duties which amounted to wilful misconduct or gross negligence (see paras 295-304 of the Award). But it then went on to consider each breach relied upon by CMJ (see paras 305-388 of the Award). CML contends that, in each case, the Tribunal found, either that the breach had not been proved on the facts, or that the alleged breach was not such as to fall within the scope of CML’s duties as an agent.

The Tribunal’s conclusions are summarised at paras 387-388 of the Award. Briefly put, it held that almost all of the alleged breaches arose out of CML’s actions as co-seller rather than as agent and that, in so far as they did not, CMJ had failed to establish the factual basis of these allegations, far less that these were a result of CML’s wilful misconduct or gross negligence. Accordingly, I accept that, even if there was a breach of natural justice in relation to the unpaid/uncompensated agent issue, such that the finding that CML were an unpaid agent might be reviewed, this finding would only have become relevant if the Tribunal determined that CML had acted in wilful misconduct or gross negligence.

The Tribunal’s conclusion, however, was not premised on a finding that CML had acted in wilful misconduct. It found in favour of CML on the underlying facts. Since the issue of wilful misconduct or gross negligence did not arise, the outcome would have been the same irrespective of whether the Tribunal determined the unpaid/uncompensated agent issue in CML’s favour. CMJ has therefore suffered no relevant prejudice on this issue either.

Conclusion

For the reasons given, CMJ are not entitled to the declarations sought in the OS. It is therefore not necessary to consider whether the Award should be set aside or whether matters should be remitted to the Tribunal for further consideration.