South Pacific Oil Ltd v Pacific Islands Energy Pte Ltd [2026] SGHC(I) 7

The originating application also sought a declaration that the Tribunal erred in making what was described as a negative jurisdictional ruling in respect of the question of whether the liquidated damages claimed by the Defendant against the Claimant in the Arbitration were penal in nature and therefore unenforceable.

The Claimant sought relief under s 10(3)(b) of the International Arbitration Act 1994 (2020 Rev Ed) (the “IAA”) in respect of the negative jurisdictional ruling and under s 24(b) of the IAA and Art 34 of the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”) in respect of the application to set aside the Final Award.

Background to the arbitration

The background to the Arbitration is uncontroversial. As set out in the Claimant’s written submissions, the Claimant is a state-linked company incorporated in the Solomon Islands. Relevantly, it owns and operates a fuel terminal storage and distribution business in Honiara, the capital city of the Solomon Islands. It is wholly owned by the Solomon Islands National Provident Fund.

The Defendant is a privately owned company incorporated in Singapore engaging in the business of supplying petroleum products and lubricants in the Pacific Islands.

By a contract dated 8 December 2014 (the “Contract”), the Defendant agreed to supply Products defined as Diesel (0.5% Sulphur) and/or Unleaded Gasoline and/or Kerosene and/or any other petroleum product agreed by the parties from time to time.

Clause 2.1 of the Contract obliged the Claimant to accept minimum quantities of the Product for each year of the Contract. Clause 2.1(g) dealt with the position where the Claimant failed to accept delivery of the minimum quantities; it is in the following terms:

The grounds of the application

In its written submissions, the Claimant relied on the following propositions in support of its application:

(a) The Final Award should be set aside for having failed to address an essential question relating to the causative connection between the minimum purchase quantities (“MPQ”) breach and the costs incurred by the Defendant due to the MPQ breach;

(b) Alternatively, the Final Award should be set aside for being in conflict with public policy by effectively conferring upon the Defendant a windfall disguised as damages in the abject absence of any consideration by the Tribunal regarding causation of loss;

(c) Alternatively, the Final Award should be set aside under a de novo review of the Tribunal’s negative jurisdictional ruling in respect of the question whether clause 2.1(g) was an unenforceable penalty;

(d) Alternatively, the Tribunal’s determination of res judicata and Henderson v Henderson rule render the Final Award liable to be set aside under s 24(b) of the IAA and/or Art 34 of the Model Law.

The awards

As I indicated, the Tribunal made two awards, the Partial Award which the Tribunal described as a Partial Award on Liability and the Final Award which he described as a Final Award on Quantum.

The Partial Award

In the Partial Award, the arbitrator dealt with the matters which form the subject of the present complaint under the heading “Issue 2 – Liquidated Damages”. At [127]–[128] of the Partial Award, he dealt with the submissions made by the Claimant concerning clause 2.1(g). He made the following remarks:

It is apparent from these paragraphs that the arbitrator was considering the construction of the clause. He did not consider as a secondary question whether the clause, properly construed, constituted a penalty.

Having concluded the Claimant breached its contractual obligations, he made (relevantly) the following order (Order 7):

The Final Award

In the Final Award which is described as a “Final Award on Quantum”, the arbitrator rejected an application by the Claimant to argue clause 2.1(g) of the Contract was void as a penalty. He rejected the submission that the matter had been left open by the Partial Award and concluded that the Claimant was precluded from raising the issue by virtue of the doctrine of issue estoppel or the extended doctrine of res judicata. In that context he made the following remarks:

The relevant legislation

The following provisions of the IAA are relevant:

Article 34 of the Model Law is also of relevance; it provides as follows:

The submissions

The Claimant

At the hearing, counsel for the Claimant argued that the Tribunal’s intention should be objectively ascertained at the time of the Partial Award. He also submitted that the court in dealing with whether there is a breach of natural justice, should look at the pleadings holistically instead of technically or pedantically. Counsel for the Claimant submitted that so far as the breaches of natural justice are concerned, the Claimant’s case was based on issues of causation and penalty.

Counsel for the Claimant referred to the submission made on behalf of the Defendant at the Tribunal that clause 2.1(g) was in the nature of a take or pay clause. He submitted that if it was, the claim would be in the nature of a debt claim. However, he submitted the Tribunal was clear that there must be a causal connection.

Counsel for the Claimant also pointed to the fact that unlike what he said on the question of penalty, the Tribunal did not say he was functus officio on the issue of causation. He referred to the fact that in the Final Award, the Tribunal noted that the Claimant had submitted the Defendant had not suffered any loss in respect of either of the breaches which were found against it. He contrasted this with the statement by the Tribunal at [55] of the Final Award that the issues which arose were whether clause 2.1(g) was unenforceable because it was a penalty and if it was enforceable, what was the amount of damages payable. He submitted this showed that the Tribunal had totally omitted to consider the issue of causation as one of the issues before it. It must be remembered that in [55] of the Final Award, the arbitrator also stated an issue was whether the Claimant was precluded from arguing clause 2.1(g) was a penalty.

Counsel for the Claimant submitted that the prejudice caused by the failure to deal with the question of causation was real and significant as it could reasonably have made a difference to the quantification of damages including the possibility of a finding of no damage. In his written submissions, he referred to the references to this issue in the Claimant’s Counter-Memorial, opening submissions and closing submissions in the second phase of the proceedings, submitting the Claimant was at pains to expressly advance his case on the issue of causation.

In relation to penalty, counsel for the Claimant submitted the Claimant was denied due process by the Tribunal’s refusal to entertain arguments on this point. He referred to certain aspects of the procedural history. First, he referred to Procedural Order No.2 (which had bifurcated the proceedings into two phases) in which Issue 2 stated, “Whether [PIE] is entitled to liquidated damages in respect of its [MPQ] claims”. This was to be determined in the first phase of proceedings. He noted the Defendant relied on this issue to say the issue of penalty was decided in the Partial Award. He referred further to the contention in the Claimant’s witness statements in the arbitration that any damages sought did not represent actual losses or a genuine attempt by the Defendant to pre-estimate its losses in the event of an MPQ breach. He submitted that it followed as early as the first phase of the proceedings there was an issue raised whether clause 2.1(g) was a genuine pre-estimate of loss.

Counsel for the Claimant also referred to the fact that the Claimant’s opening written submissions in the first phase of the proceedings, stated that the Defendant’s reliance on clause 2.1(g) was misplaced because clause 2.1(g) did not stipulate any pre-estimate of loss. He submitted that was referring to the penalty doctrine. He also referred to the closing submissions in the first phase of proceedings that to allow substantial damages would be to allow a windfall payment which he also submitted was consistent with the penalty doctrine. He also referred to the case authorities pertaining to the penalty doctrine which raised by the Claimant before the Tribunal (eg, Denka Advantech Pte Ltd v Seraya Energy Pte Ltd [2021] 1 SLR 631, Dunlop Pneumatic Tyre Co, Ltd v New Garage and Motor Co, Ltd [1915] AC 79), as set out at [130] of the Partial Award.

Counsel for the Claimant pointed to the statement by the Tribunal at [91] of the Final Award that there was no decision on the question of penalty. He submitted there could not be an issue estoppel on this ground because it was not dealt with. Counsel for the Claimant submitted [130] of the Partial Award was important. He submitted it demonstrated that notwithstanding Issue 2 in Procedural Order No.2 (see [26] above), the Tribunal found it appropriate to only determine the issue of construction and expressly stated it was not going to decide if clause 2.1(g) was a valid liquidated damages clause. He submitted that on a reasonable reading, the Tribunal decided to leave open the question of penalty and the validity of the liquidated damages clause notwithstanding the arguments that were raised. He submitted it was reasonable for a litigant to consider that the Tribunal was prepared to address its mind to penalty when it came to the second tranche. In relation to Order 7, he submitted Order 7 and [130] and [140] of the Partial Award should be read holistically.

He submitted the effect was the Claimant was unable to present its case on penalty in violation of Art 34(2)(a)(ii) of the Model Law or it amounted to a breach of natural justice under s 24(b) of the IAA. He submitted alternatively, the Final Award had been rendered infra petita notwithstanding the Tribunal had left the issue open in the Partial Award.

Counsel for the Claimant contended on the question of negative jurisdiction that the breach of natural justice was compounded by the erroneous finding that the Tribunal was functus officio on the penalty issue. He submitted it could not seriously be denied that this was a negative jurisdictional finding. He submitted that brought the matter within s 10(3)(b) of the IAA which, he submitted, expressly provides that if an arbitral tribunal rules on a plea at any stage that it has no jurisdiction, any party may apply to the court for a ruling on jurisdiction.

Counsel for the Claimant referred to the argument by the Defendant that by reason of the decision of Judith Prakash J (as Her Honour then was) in AQZ v ARA [2015] 2 SLR 972 (“AQZ v ARA”), s 10(3) of the IAA cannot be used to set aside an award which deals with the merits of the dispute as well as the question of jurisdiction (see AQZ v ARA at [71]). He submitted the decision should not be followed. He submitted first that the decision is not binding as the Singapore International Commercial Court has co-ordinate jurisdiction with the General Division of the High Court. Second, he pointed out that Art 16(3) of the Model Law only deals with the situation where the arbitral tribunal has ruled that it has jurisdiction. He submitted that the purpose of s 10(3)(b) was to extend the regime to include the possibility of allowing the parties to challenge a negative jurisdictional finding.

He also referred in that context to the report of the Law Reform Committee of the Singapore Academy of Law (Report of the Law Reform Committee on Right to Judicial Review of Negative Jurisdictional Rulings (January 2011)) (the “Law Reform Report”). He noted that in para 22 of that report, the Committee recommended that judicial review of negative jurisdictional rulings ought to be enabled and that the Committee suggested at para 24 “the draftsmen need not draw a distinction between a ruling as a preliminary question and a ruling in an award on the merits”. He also referred to the fact that s 10(3)(b) of the IAA refers to a ruling on a plea “at any stage of the arbitral proceedings that it has no jurisdiction”. He submitted that any stage of the proceedings includes a ruling made in an award on the merits. He submitted the contrary construction deprives s 10(3)(b) of any utility and purpose. He submitted Prakash J did not consider the Law Reform Report.

He also submitted that the standard of review was de novo and in the present case the Tribunal’s findings on issue estoppel and Henderson v Henderson were based on his conclusion that he was functus officio. He submitted it was immaterial in those circumstances whether decisions on issue estoppel or extended issue estoppel involved questions of admissibility or jurisdiction as “everything that leads to a negative jurisdictional finding is susceptible to a de novo review”.

He also submitted the Final Award should be set aside on public policy grounds. He submitted the award disguises a windfall conferred on the Defendant as compensatory damages. He submitted the test of the public policy ground for setting aside the award is that the award must shock the conscience and be clearly injurious to the public good or wholly offensive to the ordinary reasonable and fully informed member of the public or violate the forum’s most basic notions of justice. He submitted that where the Tribunal left open the question of causation and penalty, the refusal to entertain the arguments on penalty was a matter which would shock the conscience of the court because what it essentially did was confer a substantial amount of damages in circumstances where the Defendant was essentially given a free pass not to address essential questions of proof of actual loss and whether clause 2.1(g) was a penalty.

He also referred to the role that the National Provident Fund plays in the Solomon Islands. He stated that the outsized nature of the Final Award can be shown by reference to the fact that the award was equivalent to 2,530% of the profit the Defendant could have expected to make had the Claimant purchased the MPQ. He also referred to the fact that the figure translated to 150% of the Claimant’s total annual profit, 41% of its current net assets and 1.7% of the Solomon Islands’ Gross Domestic Product. He also pointed out that the award would represent more than half of the profits that the Defendant would expect to earn in a year even though it was acknowledged the Solomon Islands was a small market. Finally, he submitted that prior to the making of the award the Defendant was prepared to settle all outstanding MPQ damages for US$2m. He submitted the award would set the Solomon Islands’ National Provident Fund back by at least three years.

The Defendant

Counsel for the Defendant submitted that the point of importance in the application is whether the Tribunal in the Partial Award on liability decided whether the Defendant was entitled to liquidated damages under clause 2.1(g).

Counsel for the Defendant submitted that this was decided in the Partial Award. He submitted that if this was the case, the argument that the Claimant was denied the opportunity at the hearing leading up to the Final Award to argue penalty falls away because the validity and enforcement of clause 2.1(g) had already been decided in the Partial Award. The Defendant stated its position was that the Claimant did substantially argue penalty in the lead up to the Partial Award although without specific reference to the word “penalty”.

Counsel for the Defendant also submitted that if the Tribunal decided in the Partial Award that clause 2.1(g) was a valid liquidated damages clause, the causation argument also falls away because all that was required was to apply the formula in clause 2.1(g) and there were no issues of causation.

He submitted that if the Tribunal had decided clause 2.1(g) is a valid liquidated damages clause, then the jurisdictional issue also falls away and likewise, so would the issue estoppel objections. He also submitted that the rule in Henderson v Henderson applies because any challenge to the validity or effectiveness of clause 2.1(g) should have been made at the hearing leading up to the Partial Award. He also submitted that even if the penalty argument was raised but not dealt with, although there would not be a Henderson type estoppel there would still be an issue estoppel as it was decided that clause 2.1(g) was valid and enforceable.

Counsel for the Defendant also submitted that if it was claimed the Tribunal erred in not considering the question of penalty in the Partial Award, the Partial Award should have been challenged and the Claimant is out of time to do so.

In relation to the words “the question here is one of construction” in [130] of the Partial Award, he submitted the Tribunal was referring to the argument made by counsel for the Claimant as mentioned at [127] of the Partial Award, not to the whole case. He submitted that what the Tribunal said at [136] of the Partial Award on the requirement of a causative connection was likewise a reference to the argument made on behalf of the Claimant as noted at [134] of the Partial Award, not a reference to the whole case.

He also submitted that the proposition that causation and the validity of clause 2.1(g) was still open to attack following the Partial Award is against the plain and obvious reading of Order 7. He submitted that Order 7 was in line with what the Tribunal stated at [140] of the Partial Award and with the list of issues agreed by the parties at the liability phase.

Counsel for the Defendant emphasised again that it was no longer open to challenge the Partial Award and if the Claimant had taken the view there was something wrong with the Partial Award because it did not deal with penalty, it should have applied to set it aside. He also stated that even if there was ambiguity in the Partial Award, the Claimant could have applied for interpretation of the Partial Award, but it failed to do so.

Counsel for the Defendant submitted that I should follow AQZ v ARA.

In relation to public policy, he submitted the courts take a restricted view of public policy and there is no precedent for invoking public policy in a case of this nature.

The Claimant’s submissions in reply

In reply the Claimant repeated its submission that the court should take a holistic approach in dealing with [140] of the Partial Award. He submitted that even reading the Partial Award technically, there is no reference to the word “enforceable”. He submitted the exact word used was “entitled”. He submitted that when that word was used in [140] it was not a decision encompassing the question of enforceability or validity but whether the Defendant was entitled to construe it as a liquidated damages clause in its entirety. He submitted the Tribunal did not say that clause 2.1(g) was enforceable.

He also submitted that penalty was argued.

In dealing with [140] of the Partial Award, counsel for the Claimant accepted that ordinarily one would construe a statement that the Defendant was entitled to liquidated damages as necessarily assuming that the liquidated damages clause was valid but stated that the present case was different.

In relation to AQZ v ARA, counsel for the Claimant repeated his submission that the reasoning in that case would strip s 10(3)(b) of the IAA of its utility and purpose.

Finally, he submitted that the test for public policy is an open-ended one and that the categories are not closed.

Consideration

It is convenient to deal first with the causation issue raised by the Claimant.

I have set out the relevant paragraphs of the Partial Award at [13] above. At [127]–[128] of the Partial Award, the Tribunal set out the Claimant’s submissions on the construction of clause 2.1(g). Essentially the argument was that clause 2.1(g) requires proof of actual loss.

I will return to [130] of the Partial Award when dealing with the penalty issue. However, what is important to note for the purposes of the causation argument is the Tribunal’s comment that the question was one of construction.

Once it was determined that the damages for failure to take the MPQ were to be assessed by reference to a formula, there is no requirement for any further proof of loss including any causative connection. The Tribunal made it clear that was his approach at [86] and [88] of his Final Award (see [15] above).

For these reasons alone, the Claimant’s challenge to the Final Award based on its causation argument fails. It was not the case that the Tribunal had failed to address the requisite causal connection in the Final Award because the Tribunal had already made a decision on it in the Partial Award.

So far as the question of penalty is concerned, I am of the view that it was raised as an issue for determination at the liability phase of the arbitration. First, as the Claimant pointed out, Issue 2 of the issues to be determined in the liability hearing was whether the Defendant was entitled to liquidated damages in respect of the MPQ claims (see [26] above). That implicitly raises the question of the validity of clause 2.1(g). That coupled with the submissions that clause 2.1(g) did not stipulate any pre-estimate of loss and would allow a windfall payment to the Defendant together with a reference to the classic cases on penalty referred to by the arbitrator at [130] of the Partial Award demonstrates that the question of penalty was raised. The Defendant does not contend to the contrary.

It is also clear that the Tribunal did not deal with the question of whether clause 2.1(g) constituted a penalty. The Tribunal said as much in [130] of the Partial Award and in [91] of the Final Award.

In one sense this is understandable. The question of penalty did not seem to be raised expressly as distinct from implicitly by reason of the matters I have referred to in [58] above. However, I am of the view that it was raised, and the Tribunal failed to deal with it.

What then is the effect? It would have been open to the Claimant to challenge the Partial Award under Art 34(2)(a)(ii) of the Model Law. However, Art 34(3) of the Model Law provides such an application may not be made after three months have elapsed from the date the party making the application received the award. It is not in dispute that the Claimant did not make such an application.

The question remains whether it was open to challenge the Final Award on the basis the Tribunal decided to leave the penalty question open and deal with it in the second tranche of the proceedings which led to the making of the Final Award. In support of this proposition the Claimant argued that on a fair reading of the Partial Award, the question had in fact been left open by the Tribunal for the second tranche of the proceedings.

I do not think that this is correct. The statement in [130] of the Partial Award made it clear the Tribunal took the view that penalty was not argued as distinct from it being deferred for further hearing. Further, the Partial Award at [140] expressly states the Defendant was entitled to liquidated damages, a statement which must be predicated on the validity of clause 2.1(g). Order 7 of the Tribunal’s orders on the Partial Award is consistent with that conclusion.

Section 19B of the IAA provides that an award made by an arbitral tribunal pursuant to an arbitration agreement is final and binding on the parties. That includes a partial or an interim award (see s 19A of the IAA read with s 19B). An award will be final to the extent it resolves a claim or matter with preclusive effect (see PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] 4 SLR 364 at [51]–[53], ONGC Petro additions Ltd v DL E&C Co Ltd [2023] SGHC 197 at [34], CBI Constructors Pty Ltd v Chevron Australia Pty Ltd [2024] 98 ALJR 1096 (“CBI Constructors”) at [18]). As was stated in CBI Constructors at [21], the effect of the final and binding nature of the award is that the tribunal cannot modify the award after it was rendered and has no authority to reconsider or further consider the subject matter of that award (see also Michael J Mustill & Stewart C Boyd, The Law and Practice of Commercial Arbitration in England (Butterworths, 2nd Ed, 1989) at 404–405).

In the present case, the Tribunal in its Partial Award finally determined the validity of clause 2.1(g). A decision that it constituted a penalty and, therefore was invalid, would be directly contrary to that decision. The Tribunal had no jurisdiction to embark on that issue following the handing down of the Partial Award.

Further, the decision in the Partial Award gave rise to an issue estoppel in respect of the validity of clause 2.1(g) including the question of penalty. To subsequently raise the question of penalty, would be to deny the validity of clause 2.1(g), a matter which was determined in the Partial Award (see Goh Nellie v Goh Lian Teck [2007] 1 SLR 453 at [35]–[36], Blair v Curran [1939] 62 CLR 464 at 510).

It follows the Tribunal was correct in holding it was functus officio in respect of the penalty issue following the handing down of the Partial Award.

The Claimant also contends that it was denied natural justice by reason of the failure of the Tribunal to consider the question of penalty. However, to the extent there was such a denial, it occurred by virtue of the Tribunal failing to consider the issue in the Partial Award, which the Claimant failed to challenge within the time prescribed by the Model Law. There could be no further denial of natural justice in the Tribunal failing to consider the issue in connection with the handing down of the Final Award and for the reasons set out above, the Tribunal had no jurisdiction to do so.

It should be noted that in this application, the Claimant did not challenge the Partial Award under s 24(b) of the IAA on the ground it was denied natural justice. Rather it challenged the Final Award submitting that the question of the denial of natural justice should be dealt with holistically. In particular, it did not contend that the time limit imposed by Art 34(3) of the Model Law did not apply to a challenge to an award under s 24(b) of the IAA.

The Claimant, in my opinion, was correct in taking this approach. Section 3 of the IAA provides that subject to that Act, the Model Law has with the exception of Chapter VIII the force of law in Singapore. Article 34 of the Model Law is in Chapter VII. Thus, the time limit in Art 34(3) of the Model Law would apply to a challenge under s 24(b) of the IAA. Although s 24(b) of the IAA expands the ground of challenge to an award, it says nothing about time limits. It would be incongruous if different time limits applied to a challenge under that section in contrast to a challenge on the grounds contained in Art 34(2) of the Model Law which include public policy grounds. This, I note, is the approach taken by the Court of Appeal in Bloomberg Resorts and Hotels Inc v Global Gaming Philippines LLC [2021] 1 SLR 1045 at [91]–[97].

As I indicated, the Claimant also relies on s 10(3)(b) of the IAA contending that the decision of the Tribunal that it was functus officio on the question of penalty was a negative jurisdictional ruling which could be challenged under that sub-section. The Claimant accepts that the submission involves the proposition that the decision in AQZ v ARA (see [31] above) was wrongly decided.

In AQZ v ARA, Prakash J, after an extensive review of the drafting history of Art 16(3) of the Model Law (the broadly equivalent provision to s 10(3)(b) of the IAA), concluded that relief under Art 16(3) was not available when a party seeks to set aside a ruling which is primarily on jurisdiction but also deals marginally with the merits because that was not the purpose the drafters intended Art 16(3) to serve. She stated in such circumstances an application can be made to set aside the award pursuant to s 3(1) of the IAA coupled with the relevant provision of Art 34(2) of the Model Law (see AQZ v ARA at [69]). She also concluded the same position applied in relation to an application under s 10(3)(b) of the IAA notwithstanding the difference in wording. In particular, she rejected the submission that the words “at any stage of the arbitral proceedings” affected the position, stating that those words dealt with the issue of when such a determination can be made rather than the question of the form that the tribunal’s ruling is to take (see AQZ v ARA at [70]–[71]).

Even if I was of the view that her Honour’s conclusion was incorrect, I would be most hesitant to depart from it. First, it has stood unchallenged for a number of years. Second, it has been followed on at least three occasions, Kingdom of Lesotho v Swissbourgh Diamond Mines (Pty) Ltd [2019] 3 SLR 12 at [68]–[69], Sinolanka Hotels & Spa (Private) Limited v Interna Contract SpA [2018] SGHC 157 at [79], BTN v BTP [2020] 5 SLR 1250 (“BTN v BTP (HC)”) at [50]. In BTN v BTP (HC), Belinda Ang Saw Ean J (as her Honour then was) rejected an argument based on the Law Reform Report similar to that raised by the Claimant in the present case (at [85]–[87]). Her Honour’s decision was affirmed on appeal (see BTN v BTP [2021] 1 SLR 276 (“BTN v BTP (CA)”)) although this particular issue was not dealt with.

Further, far from considering the decision in AQZ v ARA was incorrect, I respectfully agree with her Honour’s decision and her reasons. I also respectfully agree with the reasons of Ang J in BTN v BTP (HC) rejecting the argument based on the Law Reform Report. I would only add that, in my view, their Honours’ conclusions are fully supported by consideration of the text of s 10(3)(b). First, the words “at any stage of the arbitration proceedings” in s 10(3)(b) relates to a time when the arbitration proceedings are on foot, not after they have been completed by the making of an award. Second, s 10(6) provides that when the court decides the tribunal has jurisdiction, the tribunal must continue the arbitration proceedings and make an award. That clearly contemplates that an award has not been made. Third, the Model Law and the IAA provide specific and confined grounds for setting aside an award. Section 10 of the IAA should not be construed as implicitly providing a further ground.

For these reasons, the Claimant cannot rely on s 10(3)(b) to contend that the Tribunal’s decision in the Final Award that it was functus officio should be set aside. I would add that in the circumstances it is unnecessary to consider whether the Tribunal’s ruling was essentially one of res judicata which is a ground of admissibility, not jurisdiction (see BTN v BTP (CA) at [68]–[73]). I would also add that, in any case, I would have been satisfied that the Tribunal had correctly concluded that it had no jurisdiction over the penalty issue (see [65] above).

There remains for consideration the public policy issues. In its written submissions, the Claimant correctly submitted that it was necessary for an award to be set aside on the grounds of public policy that it would “shock the conscience” or be “clearly injurious to the public good” or be “wholly offensive to the ordinary reasonable and fully informed member of the public” or “would violate the forum’s most basic notion of morality and justice” (see PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597 at [59]).

I have set out the reasons the Claimant contends the Final Award violates public policy at [34]–[35] above. However, I do not think the ground is made out. Essentially a liability arose as a result of a contract freely entered into between the parties. Whilst clause 2.1(g) may have been liable to be set aside as a penalty (as to which it is not appropriate for me to express any view), the Claimant had the opportunity to challenge the Tribunal’s failure to deal with this issue in the Partial Award but did not do so. Whilst I have considerable sympathy for the position of the Claimant, the fact remains the Final Award is not against public policy.

In the result I would make the following orders:

(a) the application of the Claimant to set aside Final Award No.130 of 2025 is dismissed;

(b) the Claimant is to pay the Defendant’s costs of the application;

(c) in the event the parties are unable to agree on the quantum of such costs within a period of 14 days from this judgment, each party within a further 14 days is to provide submissions on the appropriate quantum of costs together with a schedule setting out the costs incurred by them in the proceedings.