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High Court

Triulzi Cesare SRL v Xinyi Group (Glass) Co Ltd

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[2014] SGHC 220Case no. Originating Summons No 1114 of 2014

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  1. Belinda Ang Saw Ean J:

  2. Introduction

  3. [1] The plaintiff, Triulzi Cesare SRL (“Triulzi”), a company incorporated in Italy, is in the business of, inter alia, manufacturing and producing horizontal and vertical washing machines for glass sheets. The defendant, Xinyi Group (Glass) Company Limited (“Xinyi”), a company incorporated in Hong Kong, is in the business of manufacturing and selling, inter alia, float glass products, solar glass products, automobile glass products and other associated products in the People’s Republic of China.

  4. [2] Triulzi and Xinyi entered into three contracts on 17 November 2009 for Xinyi’s purchase of Triulzi’s washing machines. The precise contractual arrangements between the parties are not relevant to the present application. Suffice to say for now, the three contracts provided for any disputes between the parties to be resolved by arbitration in Singapore.

  5. [3] Disputes arose between the parties that led to Xinyi commencing an arbitration in the International Court of Arbitration of the International Chamber of Commerce (“ICC”) vide Case No. 18848/CYK) (“the Arbitration”). The sole arbitrator, Mr Woo Tchi Chu (“the Tribunal”), was appointed by the end of September 2012. The Arbitration was governed by the ICC Rules of Arbitration 2012 (“the ICC Rules 2012”).

  6. [4] On 12 August 2013, the Tribunal issued a final award dated 12 August 2013 (“the Award”) which was forwarded to the parties by the ICC Secretariat on 19 August 2013. The Tribunal allowed Xinyi’s claim and dismissed Triulzi’s counterclaim.

  7. [5] Triulzi filed Originating Summons No 1114 of 2013 (“OS 1114/2013”) on 18 November 2013 to set aside the Award under Art 34(2) of the UNCITRAL Model Law on International Commercial Arbitration 1985 (“the Model Law”), as set out in the First Schedule to the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“the IAA”), and s 24(b) of the IAA.

  8. [6] Mr Paul Tan (“Mr Tan”) represented Triulzi in OS 1114/2013 while Mr Shum Wai Keong (“Mr Shum”) was Triulzi’s counsel in the Arbitration. Ms Koh Swee Yen (“Ms Koh”) represented Xinyi in both OS 1114/2013 and the Arbitration.

  9. Gist of the underlying dispute in the Arbitration

  10. Xinyi’s case

  11. [7] By cl 15 of each contract, upon the installation of each washing machine at Xinyi’s premises, an acceptance test would be conducted by both parties in accordance with the technical specifications. This involved an 8-hour uninterrupted test with different sizes of glass sheets. If the installed machine failed the acceptance test, Xinyi could then cancel the respective contract and Triulzi would have to refund Xinyi the purchase price. Triulzi was allowed to make modifications to the machine twice but the acceptance period must not extend beyond 70 days.

  12. [8] Xinyi’s case, as stated in the Award, was that sometime during July 2010, the first washing machine was delivered to and installed at Xinyi’s facility by Triulzi pursuant to the first contract. The machine was found to be faulty on several occasions and it underwent modifications. Despite all that, the machine still failed to meet the technical specifications stipulated in the first contract. Stains were found on the glass sheets after being washed in the machine. An acceptance test was carried out from 7 to 12 May 2011 and the machine failed the acceptance test. In or around May 2011, Xinyi cancelled the first contract by asking Triulzi to take back the machine.

  13. [9] On or around 15 February 2011, the second washing machine was delivered to and installed at Xinyi’s facility by Triulzi pursuant to the second contract. Xinyi informed Triulzi that the machine also failed to meet the technical specifications stipulated in the second contract. Xinyi cancelled the second contract on 8 June 2011.

  14. [10] On or around 5 March 2011, Xinyi paid 10% of the purchase price of the third washing machine pursuant to the third contract. In view of the defects found in the second machine, Triulzi was requested, on or around 25 April 2011, to conduct a detailed factory inspection of the third machine before delivering it to Xinyi’s facility. Triulzi did not respond to this request and did not deliver the third machine to Xinyi. Thereafter, Xinyi cancelled the third contract on or around 8 June 2011.

  15. [11] In the Arbitration, Xinyi claimed for a refund of the purchase price paid under all three contracts as well as damages.

  16. Triulzi’s case

  17. [12] Triulzi’s Answer and Counterclaim in the Arbitration was that the first washing machine was fully operational by late December 2010 or early January 2011. Triulzi alleged that the first machine’s faulty performance was due to the dirty and dusty environment of Xinyi’s premises where it was installed and the lack of proper maintenance of the machine by Xinyi. Furthermore, the stains on the glass sheets were not caused by the first machine but from another machine which processed the glass sheets in the manufacturing process. According to Triulzi, all issues with the first machine were resolved by March 2011. Xinyi did not reject the first machine and did not ask Triulzi to take the machine back.

  18. [13] As regards the second washing machine, Triulzi’s position was that its technician could not properly install and test the second machine as Xinyi failed to provide the necessary facilities for proper testing. However, the second machine was thereafter found to be operational during the technician’s second visit. Despite the fact that the first and second washing machines were properly installed and functional, Xinyi failed to make full payment of the purchase price for both machines.

  19. [14] Triulzi also claimed that the third machine was never delivered because of Xinyi’s stated intention to reject the delivery of the machine in a letter dated 8 June 2011 to Triulzi.

  20. [15] Triulzi therefore counterclaimed for the balance of the purchase price owing under the first two contracts and specific performance of the third contract.

  21. The Award

  22. [16] The evidential hearing was held from 22 to 25 April 2013. The events, prior to 22 April 2013 and at the evidential hearing itself, are at the heart of OS 1114/2013. A chronology of the relevant events is set out below (at [25]– [43]). Paragraphs of the Award that are relevant to OS 1114/2013 are set out in the course of this Judgment.

  23. Outline of the issues in OS 1114/2013

  24. [17] Triulzi alleges a number of serious breaches in the Tribunal’s conduct of the arbitral proceedings which had caused it prejudice. According to Mr Tan, the Tribunal’s conduct violated a number of obligations under the IAA and the Model Law. Triulzi submits that the Award should be set aside on the following grounds:

  25. (a) on the basis of Art 34(2)(a)(iv) of the Model Law in that the Tribunal’s decision to admit Xinyi’s expert witness statement was in breach of the parties’ agreed arbitral procedure (“Issue 1”);

  26. (b) on the basis of Art 34(2)(a)(ii) of the Model Law and s 24(b) of the IAA in that Triulzi was, inter alia, not afforded a reasonable opportunity to be heard in respect of expert evidence (“Issue 2”); and

  27. (c) on the basis of Art 34(2)(b)(ii) of the Model Law in that the decision of the Tribunal not to apply the United Nations Convention on the International Sale of Goods (“the CISG”) as the applicable law of the three contracts does not accord with the public policy of Singapore (“Issue 3”).

  28. [18] Mr Tan’s fall-back argument, which is an alternative to Issue 1, arises in the absence of a procedural agreement to exclude expert evidence. His fall-back argument is that the Award may be set aside under Art 34(2)(a)(iv) if it was not in accordance with Art 18 of Model Law (“Issue 1A”).

  29. [19] The outline of Issues 1 and 2 above is set out in board terms based on the challenges advanced in court. As I see it, the nub of the complaints for Issues 1 and 2 are the same in that they are challenges to the procedural orders or directions made in the course of the arbitral proceedings rather than a challenge to the making of the Award. This distinction is important. As stated below (at [52]–[53]), complaints against procedural orders or directions cannot give rise to the setting aside of an award unless the procedural orders or directions in question resulted in a breach of an agreed arbitral procedure or a breach of natural justice (ie, the procedural nature of the right to be heard), as a result of which a party’s rights have been prejudiced (see s 24(b) of the IAA). This is the first legal obstacle that Triulzi has to overcome. I will elaborate on the case management powers of the arbitral tribunal later in this decision.

  30. [20] Significantly, a singular query that foreshadows the outcome of OS1114/2013 is whether Triulzi’s complaints are due to either circumstances attributable to the Tribunal or circumstances that resulted from Triulzi’s own failures or choices (tactical or otherwise). The features in the present case that fashioned the circumstances that gave rise to Triulzi’s complaints described below (at [25] to [43]) will be scrutinised in due course. For now, it is appropriate to state that there can be no basis whatsoever to set aside the Award under Art 34(2)(a) of the Model Law and s 24(b) of the IAA if Triulzi’s complaints are not premised upon circumstances attributable to the Tribunal.

  31. [21] Finally, Triulzi’s application cited Art 31(2) of the Model Law as a ground for setting aside the Award. However, this ground was not developed in Triulzi’s submissions, and I need say no more.

  32. Outline of Triulzi’s criticisms of the Tribunal

  33. [22] I now outline the specific criticisms of the Tribunal said to give rise to the present application to set aside the Award. The specific complaints or criticisms alleged against the Tribunal are as follows:

  34. (a) Conduct prior to 22 April 2013:

  35. (i) The Tribunal admitted Xinyi’s expert witness statement in breach of the parties’ purported agreed arbitral procedure to file only factual witness statements.

  36. (ii) Alternatively, the Tribunal failed to afford Triulzi a reasonable opportunity to file a meaningful expert witness statement in response to Xinyi’s expert witness, thereby resulting in a denial of a fair hearing.

  37. (b) Conduct at the evidential hearing on 25 April 2013:

  38. (i) The Tribunal’s refusal to admit Triulzi’s expert witness statement on 25 April 2013 was tantamount to a failure to afford Triulzi a reasonable opportunity to respond to Xinyi’s expert witness, thereby resulting in a denial of a fair hearing.

  39. [23] The failures described are said to be cumulative in effect with the result that Triulzi suffered prejudice from the fact that:

  40. (a) Triulzi was prevented from advancing arguments to the Tribunal that the machines in dispute had complied with the contractual technical specifications, and that any non-performance was due to Xinyi’s lack of maintenance and the very dirty environment of Xinyi’s facility; and

  41. (b) Triulzi was prevented from refuting the Tribunal’s reliance on Xinyi’s expert evidence concerning the contractual requirement to run the subject machines for 8 hours in the conduct of the acceptance test.

  42. Chronology of events relevant to Issues 1 and 2

  43. [24] On 25 September 2012, the Tribunal was formally constituted.

  44. Conduct prior to 22 April 2012

  45. 10 to 13 December 2012

  46. [25] The Tribunal circulated a draft procedural timetable to both parties on 10 December 2012 (“the Draft Procedural Timetable”). According to the Draft Procedural Timetable, “Witness Statements” were to be filed by 28 January 2013 and the evidentiary hearing was to take place from 18 to 21 February 2013. The parties then attended a Case Management Conference before the Tribunal held on 11 December 2012 (“the CMC”). The timelines in the Draft Procedural Timetable were then adjusted to accommodate the various commitments of each counsel before a revised procedural timetable was adopted by the Tribunal (“the Procedural Timetable”). The revised timelines that were formalised provided, inter alia, as follows:

  47. (a) “Filing of Witness Statements” by 25 March 2013; and

  48. (b) Hearing dates fixed for 22 to 25 April 2013.

  49. At the CMC, a preliminary issue relating to the governing law of the three contracts was heard. The Tribunal determined the governing law of the contracts to be Singapore law.

  50. [26] Before the close of the CMC, Mr Shum proposed adopting the International Bar Association Rules on the Taking of Evidence in International Arbitration (“the IBA Rules”) for the purposes of the Arbitration. Ms Koh did not object and the Tribunal duly directed that the IBA Rules be adopted.

  51. [27] The Tribunal forwarded to the parties the Procedural Timetable and the minutes of the CMC in its e-mail dated 13 December 2012. In the same e-mail, the Tribunal emphasised the need to strictly adhere to the timelines in the Procedural Timetable:

  52. Subsequently, at the parties’ request on 22 March 2013, the Tribunal allowed witness statements to be filed and exchanged by 1 April 2013. No changes were made to the hearing dates.

  53. 1 to 5 April 2013

  54. [28] On 1 April 2013, Xinyi filed the expert witness statement of Dr Bao Yiwang (“Dr Bao”) along with other factual witness statements. Dr Bao’s statement contained a 22-paragraph report pertaining to the design and specifications of the first and second washing machines as well as the operating environment of Xinyi’s facility (“Dr Bao’s Report”).

  55. [29] On 2 April 2013, Triulzi wrote asking the Tribunal to exclude Dr Bao’s Report from the arbitral proceedings. Triulzi alleged that it was indicated to the Tribunal at the CMC that the parties would not be filing any expert witness statements and that, consequently, the Procedural Timetable did not provide a timeline for expert witness statements to be filed. Triulzi’s letter dated 2 April 2013 made clear that Triulzi’s position was that the parties’ “agreement” to dispense with expert evidence was reached at the CMC. Triulzi further complained that no notice of Xinyi’s intention to file Dr Bao’s Report was given to Triulzi before 1 April 2013. In the circumstances, admitting Dr Bao’s Report would thus be contrary to the alleged procedural agreement reached during the CMC. Triulzi also argued in its lawyer’s letter that the admission of Dr Bao’s Report would be prejudicial as Triulzi would not have an opportunity to verify the contents of Dr Bao’s Report. Besides, Dr Bao’s Report had no probative value as the inspection by Dr Bao took place 21 months after the disputes over the washing machines arose.

  56. [30] As an alternative to its application to exclude Dr Bao’s Report, Triulzi sought an order from the Tribunal to allow it to engage an expert to inspect the two washing machines at Xinyi’s facility and to file an expert witness statement thereafter. Triulzi further applied for the evidentiary hearing dates in April to be vacated. Triulzi requested a total period of eight weeks: (a) four weeks from the date of the Tribunal’s order for inspection of the first and second washing machines at Xinyi’s facility; and (b) an additional four weeks for the expert’s report to be filed.

  57. [31] On 4 April 2013, the Tribunal replied that the minutes of the CMC contained no record of any agreement that the parties would not be filing expert evidence. The Tribunal’s e-mail of 4 April 2013 reads as follows:

  58. [32] On 5 April 2013, Xinyi replied stating that it had never indicated at the CMC that it would not file any expert witness statements. There was no agreement between the parties to dispense with expert evidence. Besides, the Tribunal’s minutes did not record any agreement between the parties. Ms Koh’s position was that the Tribunal’s reference to the “Filing of Witness Statements” in the Procedural Timetable meant that there was “no limit placed on the type or number of witness statements to be filed”. She pointed out that, having elected not to call an expert, Triulzi had waived its right to do so and should not be permitted to file an expert witness statement at that late a stage. Filing an expert witness statement at that time would prejudice Xinyi as Triulzi would have had the benefit of Dr Bao’s Report. However, if the Tribunal was minded to grant Triulzi an opportunity to file an expert witness statement, then it should be filed within seven days.

  59. [33] Triulzi replied on 5 April 2013. It maintained that there was an agreement between parties to dispense with expert evidence and that the agreement was indicated to the Tribunal at the CMC. Triulzi repeated its request that it be given time to inspect the washing machines and to thereafter file an expert witness statement.

  60. [34] The Tribunal thereafter issued directions on the same day which provided as follows:

  61. 12 to 16 April 2013

  62. [35] On 12 April 2013, Triulzi wrote to the Tribunal complaining that the time given by the Tribunal for it to find an expert was “just too short”, and again raised the matter of vacating the hearing dates.

  63. [36] On 16 April 2013, a hearing was convened for the Tribunal to give parties further directions. At that hearing, Triulzi disclosed an e-mail from one Jonathan Peter Wigg (“Mr Wigg”) whom it had intended to call as an expert witness. In that e-mail, Mr Wigg stated that he would only have been available from early June 2013 onwards. Triulzi also disclosed an e-mail which advised that an application made in Italy for a visa to China should be submitted one month before the date of travel.

  64. [37] Triulzi’s second attempt to vacate the evidential hearing in April was rejected by the Tribunal. In its e-mail dated 16 April 2013, the Tribunal directed, inter alia, that the hearing from 22 to 25 April 2013 would proceed as stated in the Procedural Timetable. The Tribunal also noted:

  65. [38] On the same day, Xinyi wrote to the Tribunal expressing its disapproval of Triulzi’s conduct in relation to calling an expert witness. It said that after the Tribunal’s decision on 5 April 2013, Triulzi did not raise any issue with the Tribunal’s directions until 12 April 2013 when Mr Shum wrote to the Tribunal stating that Triulzi did not have enough time. Triulzi also did not contact Xinyi at all to arrange for an inspection at Xinyi’s factory premises.

  66. Conduct at the evidential hearing on 25 April 2013

  67. [39] At the evidentiary hearing which began on 22 April 2013, Xinyi called two witnesses of fact and Dr Bao. On the last day of hearing, 25 April 2013, and before Triulzi’s last factual witness took the stand, Mr Shum applied to the Tribunal to adduce the expert witness statement of one Dr Alberto Piombo (“Dr Piombo”). Dr Piombo’s expert evidence pertained to the operation of the first and second washing machines (“Dr Piombo’s Report”). The date of the report was 22 April 2013 and it coincided with the first day of the hearing. Mr Shum explained that he only received Dr Piombo’s Report on the morning of 25 April 2013.

  68. [40] Ms Koh objected to Mr Shum’s very late application to admit Dr Piombo Report after two undeniable events: (a) Triulzi had, by its own conduct, elected not to file an expert witness statement having missed the original and extended deadlines for doing so; and (b) Dr Bao had already testified. She surmised that Dr Piombo’s Report would have been prepared with the benefit of Dr Bao’s Report, including evidence given under cross-examination.

  69. [41] In response, Mr Shum explained that Triulzi had difficulties with the time frame of 10 days set by the Tribunal previously on 5 April 2013 and wanted the Tribunal to hear further submissions on the admissibility of Dr Piombo’s Report now that it was in hand. He stated that if the Tribunal were to admit Dr Piombo’s Report, then a further hearing could be fixed for the cross-examination of Dr Piombo. As Dr Piombo was not in attendance at the hearing on 25 April 2013, Mr Shum explained that he would not be using Dr Piombo’s Report at the hearing on 25 April 2013. Rather, he was bringing it up in order to have it placed before the Tribunal in light of the fact that Xinyi had adduced expert evidence at the hearing. He disagreed with Ms Koh’s contention that Triulzi had elected not to call an expert.

  70. [42] After Mr Shum’s confirmation that Dr Piombo was not present at the hearing, the Tribunal remarked:

  71. [43] Critically, the Tribunal’s view was that Mr Shum had not raised any compelling arguments to persuade it to admit Dr Piombo’s Report. The evidentiary hearing hence continued without Dr Piombo’s Report being admitted. The Tribunal subsequently rendered the Award in favour of Xinyi, and Triulzi now seeks to set it aside.

  72. Issue 1: Breach of an agreed arbitral procedure

  73. [44] Issue 1 focuses on the Tribunal’s decision to admit Dr Bao’s Report (see [34] above). The contention here is that the Tribunal’s decision to admit Dr Bao’s Report was in breach of a procedural agreement to dispense with expert evidence and that the Award should therefore be set aside pursuant to Art 34(2)(a)(iv) of the Model Law. In response, Xinyi maintains that there was no agreement to dispense with expert evidence. Thus, Triulzi’s criticisms of the Tribunal’s conduct of the arbitral proceedings, including the Tribunal’s procedural orders and directions prior to 22 April 20l3 (see [25]–[38] above) that related to the admission of Dr Bao’s Report, are unfounded.

  74. [45] Before turning to the question whether there was, in existence, a procedural agreement between the parties, it is useful, at this juncture, to outline some of the relevant general principles underlying the application of Art 34(2)(a)(iv) of the Model Law with regard to a breach of an agreed arbitral procedure. Art 34(2)(a)(iv) provides:

  75. [46] I start with the important features of party autonomy in international arbitration. There are two aspects to this concept of party autonomy – the restricted role of the courts in the arbitral process and the procedural freedom and flexibility enjoyed by the parties. Section 15A(1) of the IAA provides that “a provision of rules of arbitration agreed to or adopted by the parties … shall apply and be given effect, except to the extent that such provision is inconsistent with a provision of the Model Law or [Part II of the IAA] from which the parties cannot derogate.” Article 19 of the Model Law reads:

  76. This article undoubtedly reflects the principle of party autonomy in fixing the procedure to be adopted and followed by the arbitral tribunal. The parties have the freedom and flexibility to determine the rules of procedure that governs the arbitration, and failing an agreement by the parties, the arbitral tribunal is permitted to conduct the arbitration in such a manner as it considers appropriate. Notably, the parties’ freedom under Art 19(1) is subject to the mandatory, ie non-derogable, provisions in the Model Law. One example of a mandatory provision is Art 18 of the Model Law which prescribes the minimum procedural requirements of equality of treatment and natural justice (ie, reasonable opportunity to be heard and to present one’s own case).

  77. [47] In the absence of any procedural agreement, Art 19(2) of the Model Law gives the arbitral tribunal wide procedural powers to determine the applicable rules of evidence on admissibility, relevance, materiality and weight of any evidence. To this end, the power of the arbitral tribunal under Art 19(2) is discretionary and the arbitral tribunal is required to exercise its discretion within the confines of the mandatory provisions of Model Law and Part II of the IAA.

  78. [48] It follows that within the boundaries of the minimum procedural requirements noted in Art 18, parties are free to agree on the institutional rules that govern the arbitration. This can happen prior to or subsequent to the commencement of the arbitration. The Arbitration was an ICC case and it was governed by the ICC Rules 2012. Besides the freedom to choose the procedural rules for the conduct of the arbitration, other matters that parties are free to agree to may include the matters mentioned in PT Perusahaan Gas Negara (Persero) TBK v + Joint Operation [2010] 4 SLR 672. In that case, it was stated at [39] that the parties’ agreed procedure, in the context of arbitration, may relate to “timelines for submission of answers in response to the request for arbitration, the information required to be provided in the submissions, notification to the parties of the names of the members of the arbitral tribunal, etc.”

  79. [49] Arguably, an agreement to dispense with expert evidence may be regarded as a procedural agreement. Once the parties have agreed upon the procedure to be adopted for the arbitration, the arbitral tribunal will be obliged to conduct the arbitration in accordance with the procedure agreed by the parties.

  80. [50] An award may be set aside under Art 34(2)(a)(iv) of the Model Law if: (a) the award is not in accordance with the parties’ agreed procedure, unless the agreed procedure is in conflict with a mandatory provision of the Model Law; or (b) the award is “not in accordance with this Law” (see [45] above). As stated, equality of treatment and natural justice prescribed in Art 18 are two of the non-derogable minimum procedural requirements under the Model Law as regards the procedural conduct of the arbitration.

  81. [51] On the other hand, Article 34(2)(a)(iv) of the Model Law is not engaged if the non-observance of either an agreed procedure (Art 19(1)) or the minimum procedural requirements of Art 18 is not due to circumstances attributable to the arbitral tribunal but is derived from the applicant’s own doing. A helpful commentary that stresses the same point is made in respect of the purpose of Art 18 in the UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration (United Nations, 2012) (“the 2012 Digest”) at p 98, para 7:

  82. [52] Separately, Art 34(2)(a)(iv) is again not engaged if the challenge to the award is against the arbitral tribunal’s procedural orders or directions which fall within the exclusive domain of the arbitral tribunal. As stated in Singapore International Arbitration: Law & Practice (David Joseph and David Foxton gen eds) (LexisNexis, 2014) (“SIA: Law & Practice”) at ch 6, para 4.1:

  83. [53] SIA: Law & Practice continues in the same chapter at para 5.3 that if a party is dissatisfied with procedural orders or directions, there is no right of recourse to set aside the order or direction by the Singapore courts. There are two reasons for this:

  84. [54] I now come to technical and minor breaches committed by an arbitral tribunal. It cannot be the case that any breach of an agreed arbitral procedure, even that of a technical provision or minor formality, will invariably result in an award being set aside. Most supervising courts inquire into the materiality of the procedural requirements that was not complied with and the nature of the departures from the parties’ agreed arbitral procedures. The cases below (see [55]–[58]) illustrate the element of prejudice (whether procedural or substantive) that eventuates as a result of a violation of an agreed procedure to support the materiality of the breach.

  85. [56] This passage quoted above was approved in another US District Court decision of Karaha Bodas Company, LLC v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara 190 F Supp 2d 936 (SD Tex, 2001). It was held at 945 that for a complaining party to succeed in an application under Art V(1)(d) of the New York Convention on the ground that the arbitral tribunal departed from the agreed arbitral procedure, it “must show that there is a violation of an arbitration agreement between the parties and that the violation actually caused [that party] substantial prejudice in the arbitration.” In applying this principle, the United States District Court in Williams v National Football League 2012 WL 2366636 (D Colo, 2012) confirmed an award even though it was rendered after a specified time limit agreed upon by the parties as the complaining party was not substantially prejudiced by the delay.

  86. [57] Although the US decisions dealt with Art V(1)(d) of the New York Convention, the observations are relevant to an application of Art 34(2)(a)(iv) of the Model Law since Art 34 of the Model Law was drafted to “align the grounds for setting aside with the grounds for recognition and enforcement that were listed in Article V of the New York Convention” (see Howard M Holtzmann and Joseph E Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Kluwer Law and Taxation Publishers, 1989) (“Holtzmann and Neuhaus”) at p 912). It must be noted that the UNCITRAL Working Group on International Contract Practices (“the Working Group”) had also discussed and rejected the suggestion to include additional grounds for setting aside under Art 34 in favour of keeping to the scope delineated by Art V of the New York Convention. As stated by the Working Group in the Report of the Working Group on International Contract Practices on the Work of its Fifth Session (A/CN.9/233, 28 March 1983) at para 187:

  87. [58] The Québec Supreme Court has also adopted an approach similar to that of the US Courts in the context of a setting-aside application on the ground that there was a violation of the agreed arbitral procedure. In Holding Tusculum BV v Louis Dreyfus Holding SAS [2008] QCCS 5904, it was argued that an award should be set aside as the tribunal had revisited issues that have already been decided in breach of an implied term of the applicable arbitration procedure. Articles 940.6 and 948 of the Code of Civil Procedure (chapter C-25) (Québec) required the Québec Supreme Court to take into consideration the Model Law and New York Convention respectively when dealing with international arbitral awards. In this regard, the Québec Supreme Court agreed with and cited at [129] the opinion of one, Fabien Gélinas, who was called by the applicant to provide expert evidence as to matters of international commercial arbitration:

  88. [59] I now come to the supervising court’s discretionary powers under Art 34(2) of the Model Law.

  89. [60] Even though the decisions above (at [55]–[58]) address the issue of prejudice when deciding whether to set aside an award, it is also clear that prejudice is not expressly stipulated to be a requirement for setting aside an award under Art 34(2)(a)(iv) of the Model Law. The issue of prejudice should instead be understood in the context of the discretionary nature of the court’s power to set aside awards under Art 34(2). As stated in Gary B Born, International Commercial Arbitration vol 3 (Wolters Kluwer, 2nd Ed, 2014) at p 3177:

  90. Notably, the operative word which is found in the opening sentence of Art 34(2) of the Model Law is “may”, and this word underscores the discretionary powers of the supervising court to refuse to set aside an award even if there was a breach of the agreed procedure.

  91. [61] In Grand Pacific Holdings Ltd v Pacific China Holdings Ltd (in liq) (No 1) [2012] 4 HKLRD 1 (“Grand Pacific”), the Hong Kong Court of Appeal opined (obiter) that the Hong Kong courts have a discretion to refuse to set aside an award even where a violation of Article 34(2)(a) is established. The Hong Kong Court of Appeal opined at [105] that even if the circumstances described in Art 34(2)(a) are established, “the Court may refuse to set aside the award if the Court is satisfied that the arbitral tribunal could not have reached a different conclusion.” Emphasis was once again placed on the word “may”. The Hong Kong Court of Final Appeal, in upholding the decision of the Court of Appeal, did not disturb the latter’s obiter dictum.

  92. [62] Other Model Law jurisdictions like New Zealand and Australia have similarly recognised the existence of the court’s discretion in a setting-aside application (see, for example, Downer-Hill Joint Venture v Government of Fiji [2005] 1 NZLR 554 at [103]; Cargill International SA v Peabody Australia Mining Ltd [2010] NSWSC 887 at [242]). Some national versions of the Model Law go even further than the Model Law in providing specifically that the power to annul an award is discretionary. For example, s 30 of the Arbitration Act (c 55) (British Columbia) provides that where the court finds that the arbitrator has “committed an arbitral error”, but that “the error consists of a defect in form or a technical irregularity,” the court may refuse to set aside the award where “refusal would not constitute a substantial wrong or miscarriage of justice”.

  93. [63] Most notably, in the Singapore Court of Appeal decision of CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK [2011] 4 SLR 305 (“CRW Joint Operation (CA)”), V K Rajah JA also observed in general terms at [100] that “the court may, in its discretion, decline to set aside an arbitral award even though one of the prescribed grounds for setting aside has been made out”.

  94. [64] Understood in the context of a general discretion, my view is that prejudice is a factor or element relevant to, rather than a legal requirement for the application of Art 34(2)(a)(iv) of the Model Law. In other words, prejudice is merely a relevant factor that the supervising court considers in deciding whether the breach in question is serious and, thus, whether or not to exercise its discretionary power to set aside the award for the breach. As the Hong Kong Court of Appeal observed in Grand Pacific at [105]:

  95. It can be gleaned from this passage that the Hong Kong Court of Appeal recognises that there may be certain instances where the court will nonetheless set aside an award despite the absence of prejudice.

  96. [65] Rajah JA in CRW Joint Operation (CA) at [100] observed that where prejudice was shown, the court ought not to exercise its discretion to refuse to set aside an award. As to whether Rajah JA’s observation is ostensibly inconsistent with the Hong Kong position just stated above, I do not think so. Depending on the facts of the particular case at hand, it may be possible to present the breach in question either in terms of prejudice or in terms of the seriousness of the breach. In my view, the singular point to be derived from both Grand Pacific and CRW Joint Operation (CA) is that every case is fact-sensitive and much depends on the circumstances of each case. I should also point out that Grand Pacific was a decision on the case management powers of the arbitral tribunal, whereas CRW Joint Operation (CA) was not.

  97. [66] As seen from the discussion above, the inquiry in a setting-aside application in respect of Art 34(2)(a)(iv) should focus on the materiality, or seriousness, of the procedural breach. From this perspective, an applicant wishing to set aside an award would endeavour to show the materiality of the procedural requirements that were not complied with. An applicant may do so by establishing the fact that the applicant had been prejudiced, or was reasonably likely to have been prejudiced, by the arbitrator’s conduct of the arbitral proceedings, including his procedural directions and orders. However, this does not mean that the setting-aside application would necessarily be rebuffed in the event that he fails to establish prejudice although he would have to advance alternative submissions to evince the materiality or seriousness of the breach.

  98. [67] Finally, I come to a separate principle that has general application to Triulzi’s challenges brought under Art 34(2) in respect of all four issues identified in [17] above. This is the “second bite at the cherry argument” that was frowned upon by the Court of Appeal in BLC and others v BLB and another [2014] 4 SLR 79 (“BLC v BLB”). In that case, the Court of Appeal cautioned in general terms against the use of the setting-aside procedure to raise new arguments that were not previously before the tribunal. The supervising court would also be wary of any attempts by a party to re-package or re-characterise its original case and arguments that were previously advanced in the arbitration for the purpose of challenging the award. As the Court of Appeal observed at [53]:

  99. Accordingly, a supervising court would not hesitate to scrutinise how the parties had approached their case in the arbitration and, in particular, to review the respective issues and arguments that had been put before the tribunal.

  100. Discussion and decision

  101. [68] With the principles set out above in mind, I now turn to consider Issue 1 in the context of the following matters:

  102. (a) The existence of a procedural agreement to dispense with expert evidence;

  103. (b) If (a) is established, whether there was a breach of the procedural agreement; and

  104. (c) If (a) and (b) are established, whether the breach was so material that the court should exercise its discretion in favour of setting aside the Award.

  105. [69] Specifically, any inquiry into the materiality of the procedural requirements that was not complied with and the nature of the departures from the parties’ agreed arbitral procedures will be examined and tested in light of Triulzi’s allegation of prejudice eventuated by the Tribunal’s conduct in the course of the arbitral proceedings including the latter’s procedural orders and directions.

  106. The existence of a procedural agreement

  107. (1) Alleged agreement reached at CMC

  108. [70] I now turn to the alleged agreement to dispense with expert evidence. As I alluded to above (at [49]), an agreement to dispense with expert evidence may be regarded as a procedural agreement. Triulzi maintains that there was such an agreement and that the admission of Dr Bao’s Report amounted to a violation of this agreement. Conversely, Xinyi argues that there was no such agreement to dispense with expert evidence . A resolution of this point in favour of Xinyi is enough on its own to defeat Triulzi’s application to set aside the Award under Art 34(2)(a)(iv) of the Model Law on the ground that the “arbitral procedure was not in accordance with the agreement of the parties”.

  109. [71] Mr Shum’s letter dated 2 April 2013, which was addressed to the Tribunal, specifically referred to an alleged agreement to exclude expert evidence that was reached at the CMC. It alleged that Xingyi had, by its conduct, reneged on it. Mr Shum further wrote:

  110. [72] Mr Shum’s subsequent letter addressed to the Tribunal dated 5 April 2013 reads as follows:

  111. [73] Finally, at Mr Shum’s request, the Tribunal recorded in its e-mail dated 16 April 2013 the following matters:

  112. (a) Mr Shum’s dissatisfaction with the Tribunal’s unwillingness to vacate the dates fixed for the hearing; and

  113. (b) Mr Shum’s allegation that “there was an agreement between the parties at the CMC that no expert witnesses would be called”.

  114. [75] The existence of an agreement to dispense with expert evidence was categorically rejected by Mr Zhao Jinhui (“ZJ”), the in-house counsel of Xinyi. ZJ maintained that no agreement to only file factual witness statements was ever reached by the parties through their respective counsel either at the CMC held on 11 December 2012 or prior to that.

  115. [76] I make two points in relation to the alleged telephone conversation mentioned above (at [74]). First, I note that no contemporaneous telephone attendance note was produced to prove the alleged telephone conversation between counsel. Secondly, there was no mention of a telephone conversation in any of the contemporaneous written communications to the Tribunal. As ZJ pointed out in his affidavit, the alleged telephone conversation surfaced for the first time in MT’s Reply Affidavit. Triulzi’s contention all the while during the Arbitration was that the alleged agreement was reached at the CMC and it cannot be afforded a “second bite at the cherry” now by raising a fresh allegation that the Tribunal was not informed of.

  116. [77] The Tribunal confirmed that there was no record of the alleged agreement in the Tribunal’s minutes of the CMC (see [31] above). Notably, the same minutes had been sent to the parties on 13 December 2012 and the accuracy of the contents was never queried by Triulzi prior to 1 April 2013. This was neither raised to the Tribunal on 22 March 2013 when parties sought an extension for the filing of witness statements to 1 April 2013 (see above at [27]).

  117. [78] The evidence adduced by Triulzi therefore does not stand up to scrutiny. Mr Tan was also aware of the weakness of the evidence to make good the existence of an agreement reached in a telephone conversation between Mr Shum and Ms Koh which was ostensibly communicated to the Tribunal at the CMC. He conceded that he was really relying on the Procedural Timetable to deduce the existence of the alleged agreement.

  118. (2) Alleged agreement as evidenced by the Tribunal’s direction on “Filing of Witness Statements”

  119. [79] Mr Tan argues that the Tribunal’s direction pertaining to the “Filing of Witness Statements” in the Procedural Timetable meant only factual witness statements in light of the IBA Rules that both parties agreed to be bound by on 11 December 2012. Xinyi disagrees and contends that the direction on the “Filing of Witness Statements” in the Procedural Timetable was intended to encompass both factual and expert witness statements.

  120. [80] I make three points. First, Mr Tan’s argument goes further than the stated position taken by Mr Shum during the course of the Arbitration. The latter had previously based Triulzi’s case on the existence of an agreement to dispense with expert evidence that was reached at the CMC which was then communicated to the Tribunal. Mr Tan’s reliance on the IBA Rules to define the meaning of the direction “Filing of Witness Statements” was not argued before the Tribunal. It was a new argument brought up for the first time in the present proceedings and, needless to say, is another attempt by Triulzi to have a “second bite at the cherry”.

  121. [81] Secondly, the Tribunal could not have contemplated the adoption and operation of the IBA Rules when it issued its direction on the “Filing of Witness Statements” in the Procedural Timetable. Significantly, prior to the CMC, the Tribunal prepared and circulated to the parties on 10 December 2012 the Draft Procedural Timetable that provided a deadline for the “Filing of Witness Statements”. This Draft Procedural Timetable was sent to the parties before the IBA Rules were raised on 11 December 2012 at the CMC. As can be seen from the Tribunal’s minutes of the CMC, the parties had first discussed the Draft Procedural Timetable and made modifications to the proposed deadlines so as to accommodate the schedules of counsel before formalising the Procedural Timetable. The IBA Rules were raised by Mr Shum after the directions for “Filing of Witness Statements” in the Procedural Timetable were finalised. In short, there was nothing to suggest that the direction on the “Filing of Witness Statements” in the Procedural Timetable was intended to mean anything different from what was initially intended by the Tribunal on 10 December 2012, and cannot be interpreted in light of the IBA Rules which came after the finalisation of the Procedural Timetable. Triulzi’s reliance on the IBA Rules to interpret the words “Filing of Witness Statements” in the Procedural Timetable is thus without merit.

  122. [82] Thirdly, Mr Tan’s reliance on the direction on the “Filing of Witness Statements” in the Procedural Timetable to deduce the existence of an agreed procedure to dispense with expert witness does not cohere with the nature of a procedural timetable under the ICC Rules 2012 and is rejected for the reasons below.

  123. [83] Mr Tan’s written submissions, taken to its logical conclusion, must mean that the Procedural Timetable embodied the agreement as to arbitral procedure between the parties. However, this contention does not sit well with the nature of the Tribunal’s procedural order, issued in the form of the Procedural Timetable, after the CMC. The CMC was held and the Procedural Timetable was issued by the Tribunal in accordance with Art 24 of the ICC Rules 2012 which states:

  124. [84] It is clear from Art 24(2) of the ICC Rules 2012 that a procedural timetable is established by the arbitral tribunal and not by way of an agreement by the parties. Even though the arbitral tribunal is required to consult the parties under Art 24(1), the directions formalised by the arbitral tribunal are its own procedural order. It is well within the arbitral tribunal’s power and discretion to accept or reject the views of the parties expressed during a case management conference as regards establishing the procedural timetable. Article 24(3) further empowers the arbitral tribunal to modify the established procedural timetable without being bound by the views of the parties as well. The establishment of a procedural timetable therefore falls under the arbitral tribunal’s exercise of its case management powers which will be discussed in greater detail when dealing with Issue 2.

  125. [85] Since the Procedural Timetable constitutes a procedural order issued by the Tribunal, the direction on “Filing of Witness Statements” cannot be characterised as an agreed procedure between the parties for the purposes of a setting-aside application under Art 34(2)(a)(iv) of the Model Law.

  126. (3) The Tribunal’s implicit acceptance that there was no agreement to dispense with expert evidence

  127. [86] I now refer to the Tribunal’s directions on 5 April 2013 (see [34] above). Ms Koh explained that the Tribunal considered the arguments of the parties in the exchanges of communication and must have implicitly agreed with Xinyi that there was no agreement to dispense with expert evidence. She elaborated that the Tribunal’s direction to admit Dr Bao’s Report supports her position that the direction on the “Filing of Witness Statements” in the Procedural Timetable should be interpreted as allowing for the filing of both factual and expert witness statements.

  128. [87] It is possible to construe the Tribunal’s directions on 5 April 2013 in Ms Koh’s way. Since the Tribunal’s minutes did not record any agreement to dispense with expert evidence, and considering the fact that the criticisms of the Tribunal now raised by Mr Tan are new, I see no reason to view the position taken by the Tribunal differently. Besides, Mr Tan’s criticisms simply do not stand up to analysis.

  129. Conclusion on the existence of the alleged procedural agreement

  130. [88] For the reasons stated, there was no agreed procedure to dispense with expert evidence. Triulzi’s application to set aside the award under Art 34(2)(a)(iv) of the Model Law on the ground that the Award was not in accordance with the parties’ agreed arbitral procedure is premised on the existence of an agreement to dispense with expert evidence. This premise is not made out and the application fails in limine.

  131. Other Matters

  132. [89] Having reached the conclusion that there was no agreement to dispense with expert evidence, it is not necessary to decide on the matters described above (at [68(b)] and [68(c)]). However, I propose to discuss some aspects of the matters raised in argument such as waiver and prejudice. The discussions below are connected to Triulzi’s criticisms that Triulzi was prejudiced from the fact that without its own expert’s witness statement, it was prevented from refuting the Tribunal’s reliance on Xinyi’s expert.

  133. Waiver of procedural irregularity

  134. [90] In relation to Xinyi’s waiver argument, it relies on Art 39 of the ICC Rules 2012. It argues that Triulzi is precluded from relying on the IBA Rules to interpret the direction on the “Filing Witness Statements” in the Procedural Timetable since Triulzi failed to raise that issue with the Tribunal. As such, Triulzi had lost its right to object on the basis of the IBA Rules.

  135. [91] It is now appropriate to refer to Triulzi’s request to the Tribunal to record Triulzi’s dissatisfaction with the Tribunal’s procedural directions issued on 16 April 2013 (see [37] above). Needless to say, Triulzi’s insistence that the tribunal recorded its dissatisfaction was nothing more than a precautionary attempt to state its objection at that time to overcome any argument that the right to complain has been forgone by waiver. However, the objections recorded did not cover the specific waiver argument that is discussed here.

  136. [92] Article 39 of the ICC Rules 2012 Rules states:

  137. [93] One of the objectives of Art 39 of the ICC Rules 2012 is to ensure that any objection as to the conduct of the proceedings is made promptly. If a party does not object, then it may well be deemed to have waived its right to object pursuant to Art 39. There is no need to waive in writing, although, as a matter of proof, an objection should be in writing or recorded in the transcript. A bare objection without any substantiation may not avoid a waiver of a procedural right. As stated in Michael W Bühler and Thomas H Webster, Handbook of ICC Arbitration: Commentary, Precedents, Materials (Sweet & Maxwell, 2nd Ed, 2008) at para 33-27:

  138. [94] The passage quoted above is important. It emphasises the need to allow the Tribunal to deal with the objections promptly and properly. In order to do so, any party objecting to the procedural irregularity must put forward the arguments which are available to it so as to allow the Tribunal an opportunity to consider them. This concern also constitutes part of the purpose behind Art 39 of the ICC Rules 2012 as stated in Jason Fry, Simon Greenberg and Francesca Mazza, The Secretariat’s Guide to ICC Arbitration (ICC, 2012) at pp 418–419:

  139. The rationale is that a party should not be allowed to withhold any arguments that it could have made before the Tribunal but make it at a later stage in a setting-aside application in the event that the arbitral award turns out to be unfavourable.

  140. [95] In arguing for the exclusion of Dr Bao’s report, Mr Shum wrote in his letter addressed to the Tribunal dated 2 April 2013:

  141. [96] Apart from a bare assertion that the Procedural Timetable did not provide for expert witness statements to be filed, Triulzi’s objections did not mention, let alone rely on, the IBA Rules to draw the distinction made in the IBA Rules between factual and expert witness statements. As stated above (at [81]), the IBA Rules were adopted after the Tribunal’s direction on the “Filing of Witness Statements” was made and there was no reliance placed on the IBA Rules to limit the direction on the “Filing of Witness Statements” to the filing of only factual witness statements. On the face of it, Triulzi’s failure to raise this issue in relation to the IBA Rules in the Arbitration precluded it from making such a submission in this setting-aside application.

  142. [97] Even if waiver is not made out under Art 39 of ICC Rules 2012, the use of the IBA Rules to draw a distinction between factual witness statements and expert witness statements in order to ascribe a different meaning to the direction on the “Filing of Witness Statements” in the Procedural Timetable is plainly an afterthought. It is based on ex post facto reasoning derived from facts that were not before the Tribunal when it issued its procedural direction on the “Filing of Witness Statements”.

  143. Admission of Dr Bao’s Report

  144. [98] Mr Tan raises the question of prejudice in his submissions (see [23] above). For the sake of argument, if there was a procedural agreement as alleged, it would then mean that expert evidence should have been excluded from the arbitral hearing. Consequently, the examination of prejudice in the context of Xinyi’s breach of the parties’ agreed arbitral procedure is really a question of whether the exclusion of expert witness statements, ie, Dr Bao’s Report, would have made a reasonable difference to the Tribunal’s deliberation (see LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd and another appeal [2013] 1 SLR 125 at [54]). The alleged prejudice that eventuated as a result of the breach must have a causal connection with the admission of Dr Bao’s Report. This question does not involve an inquiry into what would have happened if Triulzi had been allowed to adduce its own expert evidence.

  145. [99] From this perspective, Triulzi’s argument that there would be a real or likely difference to the Tribunal’s deliberation if it had been allowed to adduce its own expert evidence is not relevant to this issue of prejudice in the context of a setting-aside application under Art 34(2)(a)(iv) of the Model Law where the complaint relates to an alleged breach of an agreed arbitral procedure. In this context, one is concerned with the right to have the arbitration conducted in accordance with the agreed arbitral procedure. The scenario here is quite different from those cases where there is an alleged breach of natural justice which, in this case, would concern Triulzi’s right to adduce its own expert witness statements that flows from the right to be afforded a reasonable opportunity to present its case. That consideration is relevant in the context of Triulzi’s allegations of breach of natural justice which I shall deal with when discussing Issue 2.

  146. [100] In connection with this aspect of the application to set aside the Award under Art 34(2)(a)(iv) of the Model Law, the theoretical inquiry here (assuming that the admission of Dr Bao’s Report was in breach of an agreed procedure) is whether an exclusion of Dr Bao’s Report would have reasonably made a difference to the deliberations of the Tribunal. I now turn to Dr Bao’s Report to examine how the Tribunal dealt with it in the Award.

  147. [101] Dr Bao’s Report dealt with three issues that was considered by the Tribunal:

  148. (a) Whether there were design defects in the washing machines;

  149. (b) Whether the cleanliness of Xinyi’s facility affected the performance of the washing machines; and

  150. (c) Whether a full 8-hour acceptance test should have been conducted by Xinyi for the washing machines.

  151. [102] It is clear that as to the first issue, Dr Bao was not an expert in industrial washing machines and the Tribunal treated Dr Bao’s opinion as a “matter of conjecture”. As for the second issue on the cleanliness of Xinyi’s facility, the Tribunal found that Dr Bao’s opinion on the cleanliness of the facility was not satisfactory since his inspection was conducted more than 21 months after the washing quality issues arose. The Tribunal stated in [101] of the Award:

  152. [103] In summary, Dr Bao’s Report had no bearing on the Tribunal’s determination in respect of the first and second issues. As for the third issue, the Tribunal agreed with Dr Bao that there was no need for Xinyi to conduct a full 8-hour acceptance test. Whilst Triulzi argues that this is evidence of prejudice, it must be noted that in the same paragraph of the Award where the Tribunal seemingly agreed with Dr Bao on this point, the Tribunal further held:

  153. [104] This finding of the Tribunal is significant for the reason that the final determination of the Tribunal in relation to Triulzi’s defence would not have been affected even if he disagreed with Dr Bao’s opinion on the third issue.

  154. [105] For the reasons stated, an exclusion of Dr Bao’s Report would not have reasonably made a difference to the deliberations of the Tribunal. There is consequently no reason to set aside the award even if such a procedural agreement excluding expert evidence existed.

  155. Issue 1A: Award was not in accordance with Art 18 within the meaning of Art 34(2)(a)(iv)

  156. [106] Mr Tan’s fall-back argument is that the Award should be set aside under Art 34(2)(a)(iv) of the Model Law as it was not in accordance with Art 18 of the Model Law which sets out the non-derogable minimum procedural requirements as regards the procedural conduct of an arbitration. In my view, Mr Tan’s fall-back argument does not assist Triulzi because the evidence in this case pointed, at best, to a misunderstanding of the scope of the direction on the “Filing of Witness Statements” or some other mistake on Triulzi’s part. Plainly, the non-filing of Triulzi’s expert evidence by 1 April 2013 was entirely its own fault, and Triulzi was in delay, even at that stage, in complying with the Tribunal’s direction on the Filing of Witness Statements. Furthermore, for the reasons explained below (at [110] to [116]), the Tribunal’s subsequent procedural orders and directions cannot be relied upon as a ground for challenging the eventual Award. In the circumstances of this case, Art 18 is not engaged. I have already set out the purpose of Art 18 above (at [51]) which is about protecting a party from the arbitral tribunal’s conduct. It is certainly not intended to protect a party from its own “failures or strategic choices”.

  157. [107] It is now appropriate to set out Article 18 of the Model Law in full:

  158. [108] I accept that Art 18 of the Model Law, described as a key element of the “Magna Carta of Arbitral Procedure” in the Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration: Report of the Secretary General (A/CN.9/264, 25 March 1985) (“Analytical Commentary”) at p 44, is a mandatory provision, and the breach of which would be, as stated in Art 34(2)(a)(iv) of the Model Law, “in conflict with the provision of this Law” or “not in accordance with this Law”. Consequently, a breach of Art 18 may give rise to a ground for setting aside an award under Art 34(2)(a)(iv).

  159. [109] It must be recognised however that Art 18 is worded with reference to the abstract notions of “equality” and “full opportunity”. As observed by Holtzmann and Neuhaus at p 551:

  160. Therefore, the exact content of Art 18 that is engaged by a complaint of a breach of Art 18 must depend upon the level of abstraction at which the complaint is described or characterised.

  161. [110] In this case, Mr Tan argues that even without the alleged procedural agreement, the Tribunal nonetheless violated Art 18 of the Model Law as Triulzi was not treated equally compared with Xinyi. Mr Tan raises the point that the Tribunal should have appreciated the fact that Triulzi was under the mistaken belief that expert evidence was to be dispensed with. In this regard, Xinyi had the benefit of the entire duration from 11 December 2012, after the CMC, to 1 April 2013, the deadline for the “Filing of Witness Statements”, to produce an expert report whereas Triulzi was effectively not afforded such an ample amount of time as the Tribunal only gave it a ten-day time period. The crux of Mr Tan’s complaint is that only Xinyi, and not Triulzi, presented its expert evidence during the hearing from 22 to 25 April 2013.

  162. [111] I make several points. First, the Tribunal’s decision to extend time by ten days for Triulzi to file its expert witness statement must not be considered in isolation. I concluded that there was no agreement to dispense with expert evidence, and as such, Triulzi would have had the same amount of time as Xinyi (11 December 2012 to 1 April 2013) to prepare and file an expert witness statement. It is thus fanciful to now complain of inequality because the Tribunal gave Triulzi only ten days to prepare an expert report. Besides, it is risible that Triulzi now complains of inequality when the perceived disadvantage was occasioned by its own doing. The Tribunal’s decision to extend time by another ten days to file Triulzi’s expert witness statement was decidedly made after taking into account parties’ arguments and a myriad of factors including the arbitral tribunal’s obligation to conduct the arbitration fairly and expeditiously. The Tribunal had come to grips with Triulzi’s desire to inspect the two washing machines, but it was not told why Triulzi needed four weeks to inspect and another four weeks to prepare the expert report when Xinyi took four hours to inspect the two washing machines. In those circumstances, Triulzi’s contention relating to inequality must be rejected on this point alone.

  163. [112] Secondly, the term “equality” must be “interpreted reasonably in regulating the procedural aspects of the arbitration” (see Holtzmann and Neuhaus at p 551). It cannot be the case that each party must have the exact same amount of time afforded in relation to the production of an expert report. Article 18 does not require the arbitral tribunal to ensure that both parties are treated identically. Notably, the principle of equality in Art 18 is about applying similar standards to all parties throughout the arbitral process (see the 2012 Digest, p 97 at para 5). Furthermore, SIA: Law & Practice make the following comments at ch 6, paras 2.11–2.13 and 2.15:

  164. [113] I now refer to a German decision by the Oberlandesgericht Celle: 8 Sch 3/01 (2 October 2001) which was discussed by Dr Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions (Sweet & Maxwell, 3rd Ed, 2010) at pp 279–280:

  165. As can be seen from this excerpt, the mere fact that there was some “inequality” as a result of the fact that it was more convenient for the applicant, who understood Russian, to participate in the arbitration does not amount to a violation of Art 18.

  166. [114] Likewise the commentary from SIA: Law & Practice above (at [112]) recognises that the amount of time to be afforded to a party cannot be based solely on the amount of time afforded to the other party. Other circumstances may bear upon the judgment of the Tribunal. A relevant consideration is the conduct of the parties. The stage of the arbitral proceedings at the material time also matters.

  167. [115] In this regard, I note that in Triulzi’s letter dated 5 April 2013, Mr Shum had only requested time for Triulzi to engage an expert to inspect the two washing machines at Xinyi’s facility and produce a report based on such an inspection. Obviously, the Tribunal had relied on Triulzi’s submission that it only wanted to inspect the two machines at Xinyi’s facility. In this regard, the Tribunal: (a) noted that Dr Bao took four hours to inspect the machines; and (b) confined Triulzi’s inspection to the two washing machines and that its inspection should “not extend to other units in the same premises or other premises”. At the same time, the Tribunal was mindful that the extension of time to file an expert witness statement was being sought very close to the evidentiary hearing dates in April. In this regard, the Tribunal’s consideration of urgency in the conduct of the arbitral proceedings was a relevant factor. Notably, the Tribunal must have regard: (a) to the fact that Xinyi filed its expert witness statement on time on 1 April 2013; and (b) to its obligation to get on with the arbitral proceedings with reasonable expedition (see also [131]–[132] below). Seen against this backdrop of circumstances, the Tribunal could not be said to have treated Triulzi unequally. I also note that all these factors are also relevant to the issue of whether Triulzi was afforded a reasonable opportunity to be heard and they will be discussed in greater detail when I deal with Issue 2.

  168. [116] Lastly, it cannot be the case that Triulzi was treated unequally for the sole reason that Xinyi was the only party armed with expert evidence at the hearing. The Tribunal is only required to ensure that both Triulzi and Xinyi had an opportunity to submit expert evidence. It is not required to ensure that both Triulzi and Xinyi made full and best use of such an opportunity. Triulzi cannot complain of its own failure to make use of the opportunity given to it by the Tribunal. Triulzi’s complaint, in effect, is premised on it being denied an opportunity to adduce expert evidence rather than the bare fact that it did not adduce such evidence at the hearing. From this perspective, Triulzi’s main contention does not relate to equality of treatment under Art 18 of the Model Law and should be re-characterised as an allegation that it was not afforded a reasonable opportunity to present expert evidence. The question then is whether Triulzi was afforded a reasonable opportunity to be heard in the arbitration and this is raised by Triulzi under Issue 2.

  169. Issue 2: Breach of natural justice

  170. Criticisms of the Tribunal’s procedural orders and directions

  171. [117] Mr Tan’s alternative argument to the agreed procedural breach point is founded on s 24(b) of the IAA and Art 34(2)(a)(ii) of the Model Law. Issue 2 is premised on three specific criticisms of the Tribunal’s procedural orders and directions that were said to have effectively denied Triulzi a reasonable opportunity to present its own expert evidence. In particular, Triulzi was prevented from advancing arguments before the Tribunal that the subject machines complied with the contractual technical specifications, and that any non-compliance was due to Xinyi’s lack of maintenance and the very dirty environment of Xinyi’s facility. Triulzi was further prevented from refuting the Tribunal’s reliance on Xinyi’s expert evidence in respect of the contractual requirement to run the subject machines for 8 hours for the acceptance test. Mr Tan also argues that, as a result of such procedural orders and directions, Triulzi was treated unequally as compared with Xinyi (this inequality point is already discussed above). The three procedural orders and directions are:

  172. (a) The direction on 5 April 2013 for Triulzi to file its expert witness statement by 4pm on 15 April 2013;

  173. (b) The direction on 16 April 2013 refusing Triulzi’s application to vacate the hearing dates; and

  174. (c) The refusal to admit Dr Piombo’s Report on 25 April 2013.

  175. [118] As I alluded to above (at [19]), Triulzi’s challenge is effectively against the procedural orders and directions made in the course of the arbitral proceedings rather than a challenge to the making of the Award. In this case, Triulzi has to persuade the court that the Tribunal’s procedural decisions were, albeit a matter of case management, amounted to a breach of natural justice (ie, the procedural nature of the right to be heard) as a result of which Triulzi’s rights are prejudiced (see s 24(b) of the IAA). Notably, the accusations are not that the Tribunal had not dealt with all the central issues of the dispute or that the Tribunal had dealt with the issues without hearing the parties. Triulzi’s difficulty resides in establishing that Triulzi’s complaints arise from circumstances attributable to the Tribunal, or that the circumstances were not a result of Triulzi’s own failures or choices (tactical or otherwise). In the final analysis, the three procedural orders and directions could not even be treated as evidence of the Tribunal’s culpability and this means that Triulzi’s criticisms of the Tribunal (see also [22]–[23] above) must fail. In my view, these criticisms were unfounded.

  176. Triulzi’s arguments

  177. [119] In brief, Triulzi’s allegations as part of its natural justice arguments are as follows: (a) that ten days to produce an expert report did not afford it a meaningful opportunity to file an expert report; and that this short time extension was further compounded by (b) the Tribunal’s rejection of Triulzi’s application to vacate the hearing dates and (c) its refusal to admit Dr Piombo’s Report which Triulzi had attempted to file on the last day of the hearing.

  178. [120] Triulzi’s submits that the Tribunal’s procedural orders and directions described in [117(a)] and [117(b)] and the Tribunal’s decision described in [117(c)] violated its right to be heard as embodied in Art 18 of the Model Law that requires the arbitral tribunal to give each party “a full opportunity of presenting his case”. As a result of this violation of its right to be heard, Triulzi argues that the Award should be set aside under s 24(b) of the IAA and Art 34(2)(a)(ii) of the Model Law.

  179. Parties’ approach in OS 1114/2013

  180. [121] Section 24(b) of the IAA provides that:

  181. [122] Article 34(2)(a)(ii) of the Model Law provides that:

  182. [123] Both parties drew no distinction between s 24(b) of the IAA and Art 34(2)(a)(ii) of the Model Law. Vinodh Coomaraswamy J in ADG and another v ADI and another [2014] 3 SLR 481 (“ADG v ADI”) recognised at [118] that there is “no distinction between the right to be heard as an aspect of the rules of natural justice under s 24 (b) of the IAA and as an aspect of being able to be heard within the meaning of Article 34(2)(a)(ii).”

  183. [124] Furthermore, although Art 18 uses the word “full opportunity” to present one’s case, both parties proceeded on the understanding that this only requires the Tribunal to accord each party a “reasonable opportunity” to present its case. Coomaraswamy J also held in ADG v ADI at [105] that “full opportunity” to be heard as mandated by Art 18 is no different from a requirement to afford a party a reasonable opportunity to be heard. There is in effect no need to rely on Art 18 since the principles there accord with the principles of natural justice in both s 24(b) of the IAA and Art 34(2)(a)(ii) of the Model Law.

  184. [125] I therefore propose to deal with s 24(b) of the IAA and Art 34(2)(a)(ii) together since both provisions involve a single inquiry as to whether Triulzi was denied a reasonable opportunity to be heard (“the fair hearing rule”). It is noteworthy that the content of the fair hearing rule can vary greatly from case to case depending on the circumstances of each case since what may be a breach in one context may not be a breach in another. At this juncture, it is useful to refer to the Queensland Supreme Court’s observations on procedural fairness in the decision of Sugar Australia Pty Ltd v Mackay Sugar Ltd [2012] QSC 38 (“Sugar Australia”) at [33]:

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