The Court of Appeal of the Singapore Supreme Court has set aside an arbitral award passed by a tribunal led by former Chief Justice of India (CJI) Dipak Misra on the grounds that nearly 50 percent of the content was copied verbatim from two prior awards involving Misra.
Upholding an order of the Singapore International Commercial Court (part of the High Court), the Bench of Chief Justice Sundaresh Menon and Justice Steven Chong found that at least 212 paragraphs from parallel awards were retained in the present 451-paragraph award.
The matter pertained to a contract between a special-purpose vehicle managing freight corridors in India and a consortium of three companies involved in infrastructure projects. The disagreement centred on whether a 2017 Indian government notification increasing minimum wages entitled the consortium to additional payments under their contract.
When negotiations failed, the parties sought arbitration in Singapore under the International Chamber of Commerce (ICC) Rules.
In November 2023, a tribunal comprising Justice Misra, former Madhya Pradesh High Court judge Justice Krishn Kumar Lahoti and former Jammu & Kashmir High Court Chief Justice Gita Mittal ruled in favour of the consortium.
The award was challenged before the Singapore High Court on the grounds that the tribunal had copied extensively from two prior awards in related arbitration. All three tribunals were chaired by Justice Misra. The co-arbitrators were not involved in the parallel arbitration.
The approach breached natural justice by failing to independently assess the parties’ arguments – some portions referenced submissions from the prior arbitration that were not made in this case, noted the High Court.
It further said that applying incorrect contractual terms and legal principles, including referencing the wrong version of a key clause and mistakenly applying Indian instead of Singaporean arbitration law also breached natural justice.
It said by creating an appearance of bias, the tribunal appeared to rely on prior decisions rather than considering the case afresh.
Though it was not inherently wrong for an arbitrator to resolve two related disputes in the same manner, given that all three cases had differences, there was no possibility of the parties addressing the points raised or reaching the same conclusion in separate proceedings. Besides, portions from parallel awards were reproduced in the award, without even being adjusted for differences in the arguments made or in the terms of the applicable contracts, it added.
The Court of Appeal said that a fair-minded observer would reasonably suspect that the tribunal had approached the arbitration with a closed mind, having been improperly influenced by the earlier decisions.
By using previous awards as templates, the President (Justice Misra) created a strong appearance of prejudgment, including specific cognitive biases, anchoring bias (initial information disproportionately influencing later judgments), and confirmation bias (tendency to favour information confirming existing beliefs), it noted.
The High Court said extensive copying (47 percent) made it reasonable to suspect the tribunal did not truly consider the unique aspects of this case on its merits.
The integrity of the decision-making process had been compromised and the allegation of apparent bias has been made out, it added.
The Court said the tribunal drew on materials from the parallel arbitration that the parties had no access to and therefore, couldn’t address.
By importing substantial content from parallel arbitration without disclosure, the tribunal effectively denied the parties their right to be heard on that material.
The patently substantial material derived from the parallel arbitrations were extraneous considerations that had not been raised to the parties’ attention. That material formed such a pervasive part of the award that it simply could not be overlooked. It was neither contemplated nor agreed to by the parties that the award could be prepared by such a process.
The High Court further observed that since only the President had knowledge of the parallel arbitration, the co-arbitrators were placed in an unequal position, undermining the integrity of the decision-making process.
When one arbitrator had access to some exclusive information, it compromised the collective decision-making process. The party-appointed arbitrators were expected to act independently and impartially, with equal ability to influence the outcome. The unequal access to information undermined this fundamental expectation and further damaged the integrity of the arbitral process, it added.
It further held that the expectation of equality between the Arbitrators was compromised.
While noting that there was no evidence as to what actually transpired between the members of the Tribunal, the High Court said the two co-arbitrators in the case were not privy to the parallel arbitrations. They did not have any direct access to material or knowledge derived from those proceedings, which appeared to have significantly influenced the outcome of the present arbitration. The integrity of the arbitration, therefore, was further compromised as a result, it added.
The Singapore High Court ruled that it did not insinuate any bad faith on the arbitral tribunal, but the award itself had to be set aside to safeguard the integrity of the process.
It said it took the decision on the grounds of safeguarding the integrity and fairness of the arbitral process, which was the primary right accorded to those who opted to resolve their disputes through this means.
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