Background
CZT (“the Plaintiff”) and CZU (“the Defendant”) entered a contract where the former had to deliver specific Material Packages to the latter. A Contractor was to be appointed by the Defendant to construct certain products for the Defendant using the Material Packages supplied by the plaintiff. Later, the Plaintiff, Defendant and the Contractor entered into a transfer Agreement, wherein the Defendant transferred some of its rights and obligations to the Contractor, except for a few. Accordingly, Plaintiff entered a contract with Contractor for delivery of Material Packages.
Subsequently, the Defendant alleged that specific components of the Material Packages were defective and filed a case against the Contractor and the Plaintiff. The Court found Contractor liable for 30% of the damages. However, the claim against the plaintiff was dismissed due to a lack of jurisdiction because of an arbitration agreement in their contract.
Thereafter, Defendant commenced arbitration proceedings in Singapore before a three-member tribunal as mentioned in the contract between Plaintiff and Defendant. The Defendant claimed damages for the plaintiff’s failure to fulfil its contractual obligations. Whereas the plaintiff submitted that warranty period had expired and there was no relevant obligation towards the Defendant under the transfer agreement.
After 2 years on 24 March 2021, the majority submitted a draft award to the International Court of Arbitration of the International Chamber of Commerce (ICC) for its scrutiny, pursuant to Art 34 of the ICC Rules of Arbitration 2017 (“ICC Rules”). After scrutiny of the draft award, the ICC Court approved a revised version (the “May Award“) on 27 May 2021, but the parties were never notified. The ICC Court approved the final draft on 23 July 2021 following further revisions. The Final Award by Majority comprising of Prof. Jones and Prof. Kim, issued on 20 September 2021, held the Plaintiff liable for the non-performance of its obligation to deliver the Material Packages free of defects.
Dr Habegger (“the Minority”), dissenting, refused to sign and alleged serious procedural misconduct and lack of impartiality by the Majority. He accused them of concealing the true ratio decidendi from the Parties and distorting the deliberation history. On the same day, the Minority sent its dissenting opinion to the parties’ lawyers.
In October 2021, Plaintiff requested the ICC Secretariat to preserve the full arbitration record and deliberations. Minority confirmed the preservation, along with one majority Arbitrator. Whilst the other majority arbitrator declined to respond to this request, stating there is no ground for this request. The following week, the Plaintiff further requested the Tribunal and Secretariat to seek disclosure of the deliberation records. However, the same was denied except if so ordered by the Court.
The Plaintiff filed an Originating Summons in December 2021 in the General Division of the High Court to set aside the Final Award. In March 2023, the Plaintiff filed summonses for producing records of deliberations of the arbitration proceedings. Within ten days, the proceedings were transferred to the Singapore Commercial Court.
The plaintiff withdrew its application to produce certain records of deliberations before the Court would have done so. The Court, with respect to these records, observed that the said category was too broad and speculative.
Issues and Decision
When can arbitrators be ordered to produce their records of deliberations as an evidence in aid of applications to set aside their awards?
The Plaintiff submitted that the records of deliberations are both relevant and material. While accepting that certain allegations, such as the Majority having relied upon matters not argued by the parties or having attributed positions to the parties that were unsupported by the arbitration record, could be determined from the existing arbitration record, the Plaintiff contended that the deliberation records were necessary to establish three specific allegations.
First, the Majority decided a key liability issue on grounds and for reasons not contained in the Final Award but in the May Award. Second, the Majority attempted to conceal the true reasons behind the Final Award by issuing the May Award for ICC approval and then making material changes in the approved May Award following concerns raised by the Minority. Third, the Plaintiff contended that the Majority lacked impartiality during the arbitration proceedings. While acknowledging that deliberation records are generally confidential, the Plaintiff argued that this case falls within an exception.
On the contrary, the Defendant submitted that arbitral deliberations are protected by a strong obligation of confidentiality and exceptions to this rule should be permitted only in the rarest of cases. According to the Defendant, the present case did not justify any departure from that principle. The Defendant further opposed the production of records on the grounds of lack of sufficient relevance, confidentiality of arbitral deliberations is a legal impediment, unreasonable burden, commercial confidentiality, and institutional sensitivity, as per Order 110 Rule 17(2)(b) of the Rules of Court, 2014. Similar view was taken by Mr Toby Landau KC, appearing on behalf of one of the Majority Arbitrators to assist the Court.
The Court held that, much like the arbitration proceedings, the confidentiality of deliberations, is an implied obligation in law, even in absence of an express statutory provision to this effect. As such, the confidentiality of arbitrator’s deliberations is a common position of the parties. Confidentiality serves important policy reasons: it enables frank discussion between arbitrators, freedom from outside scrutiny, safeguards against undue pressures and outside influences, and minimises spurious challenges based on deliberations.
The Court partially accepted the majority arbitrator, Prof Jones’ submission that a distinction must be drawn between process issues and substantive disagreements, however, it rejected the Prof Jones’ submission that the disclosure must be confined only to process issues and held that the protection of deliberations for substantive disagreements is not absolute. The Court held that even where process issues are alleged, disclosure will be limited strictly to process facts, without revealing the manner arbitrators reached their decision.
The Court agreed with the Defendant and arbitrators that exceptions are to found only in the rarest of rare and most compelling cases, where the interests of justice outweigh confidentiality and disagreed with the Plaintiff’s broader formulation of exceptions i.e. “..considerations of due process, the interests of justice and the public policy of preserving the integrity and reputation of Singapore as a seat of arbitration..”
The Court finally concluded “”There are very strong policy reasons for protecting deliberations’ confidentiality. It would take a very compelling case to overcome these policy reasons.” and emphasised that serious allegation, such as corruption or demonstrated lack of impartiality with real prospects of success, could constitute exceptions.
Whether the Plaintiff’s case falls within exception?
Applying the above principles, the Court held that the Plaintiff’s allegation of a breach of the fair hearing rule did not justify disclosure of the Tribunal’s deliberations. Such allegations could be determined from the existing arbitration record, including the pleadings, submissions and transcripts, without intruding into the confidential deliberation records.
The Court was likewise unpersuaded by the Plaintiff’s contention that the Majority had attempted to conceal the true reasons underlying the Final Award by making changes to the May Award following concerns raised by the Minority Arbitrator. The Court observed that revising an award in light of criticisms raised during deliberations is not, by itself, evidence of impropriety. The reasons contained in the Final Award were the reasons ultimately adopted by the Majority and must be assessed on their own merits.
While the Court accepted that allegations of lack of impartiality may, in principle, be sufficiently serious to justify an exception to the confidentiality of deliberations, it found that the Plaintiff had failed to demonstrate that any of its allegations had real prospects of success. The Court noted that the allegations contained in the dissenting opinion were largely assertions that the Majority had reached incorrect conclusions, ignored concerns raised by the Minority, relied on matters not argued by the parties, misstated the deliberation history, and lacked impartiality.
The Court held that allegations concerning the correctness of the Majority’s findings or reliance on matters outside the parties’ cases either did not constitute valid grounds for setting aside the award or could be determined entirely from the arbitration record. Accordingly, disclosure of deliberation records was unnecessary.
As regards the allegation that the Final Award did not disclose the Majority’s true reasons and that the Majority had provided an inaccurate account of the deliberation history, the Court found that the Plaintiff relied solely on the Minority Arbitrator’s assertions. The dissenting opinion did not explain how the reasons in the Final Award differed from those in the May Award or identify the allegedly misleading aspects of the deliberation history. The Court therefore characterised these allegations as unsupported subjective opinions, insufficient to justify disclosure of confidential deliberations.
The Court further rejected the Plaintiff’s submission that disclosure should be ordered to enable it to investigate the allegations contained in the dissenting opinion. It reiterated that production orders cannot be used to facilitate a fishing expedition in the hope of uncovering evidence to support otherwise unsubstantiated claims.
Finally, the Court held that the allegation that the Majority concealed substantial changes made to the draft award after ICC scrutiny was unsupported by any evidence. The Court noted that revised draft awards are reviewed by the ICC Secretariat and, where necessary, by the ICC Court itself, making such concealment inherently unlikely. Accordingly, none of the Plaintiff’s allegations provided a sufficient basis to displace the confidentiality of arbitral deliberations.
Accordingly, the Court dismissed the Production Applications filed by the Plaintiff.
Significance
The Court’s decision strikes a careful balance between the competing interests of transparency and confidentiality in arbitration. Arbitration derives much of its effectiveness from the assurance of confidentiality, which extends not only to the parties and the proceedings but also to the tribunal’s internal deliberative process. Protecting the privacy of deliberations enables arbitrators to engage in frank and candid discussions, test competing views, and reconsider positions without fear that their preliminary opinions may later be exposed to parties or subjected to judicial scrutiny. The Court’s insistence on a high threshold for disclosure therefore serves an important function in preserving the independence of arbitrators and the finality of arbitral awards.
Case Details
Citation Codes: [2023] SGHC(I) 11
Date of Judgement: 28 June 2023
Court: Singapore International Commercial Court of the Republic of Singapore
Judges: Chua Lee Ming J, Dominique Hascher IJ and Sir Jeremy Cooke IJ
Author(s)
Kirti Chaudhary
Student at IILM University, Gurugram