Introduction
A fair process is foundational to the legitimacy of arbitration. Without a fair, impartial, and equal arbitral process, any party may rightly seek to set aside the resulting arbitral award.
Where an arbitrator has copied significant portions of an award from other sources, is the fair process of the arbitration necessarily compromised? Would the arbitrator’s duty of independence and impartiality necessarily be breached if such a practice is adopted, such that the award should be set aside?
In what appears to be the first decision of its kind across the Commonwealth jurisdictions, the Singapore Court of Appeal (“CA“) dealt with this issue in DJP v DJO [2025] SGCA(I) 2 (“DJP v DJO“), where at least 212 paragraphs of the award in issue (“Award“) had been reproduced from two prior awards arising out of arbitrations involving other parties. Those awards were made in parallel arbitrations arising out of largely similar contracts (“Parallel Arbitrations“), over which the same presiding arbitrator had also presided, albeit with different co-arbitrators.
The CA upheld the earlier decision of the Singapore International Commercial Court (SICC) Judge (“Judge“) to set aside the Award, finding that there had been a breach of natural justice. However, it highlighted that not all such copying of material will necessarily result in a breach of natural justice. This would depend on factors such as the source of copied material and the surrounding circumstances.
Rajah & Tann Singapore partners Francis Xavier, SC (Regional Head, Dispute Resolution) and Alina Chia (Partner, International Arbitration) were instructed counsel for the appellants.
Below, we delve into the facts and the CA’s reasoning.
Background
The respondent (“DJO“) was a special purpose vehicle set up to manage a network of Dedicated Freight Corridors (“DFCs“) in India. The appellants were three companies which had formed a consortium to tender for contracts relating to the western DFCs. One of these contracts was the CPT-13 Contract with which the Award was concerned. The CPT-13 Contract (which was a lump sum contract) contained various mechanisms for adjustments of the contract price. Clause 13.7 provided for adjustments to the contract price due to a change in legislation, whilst Clause 13.8 provided for adjustments to the contract price based on a formula to account for any rise or fall in the cost of labour, goods, and other inputs to the works.
Subsequently, the Indian Ministry of Labour and Employment issued a notification increasing the minimum wage payable to workmen in India (“Notification“). Three years later, the appellants lodged a claim for additional payment under Clause 13.7 on the basis that the Notification was a change in legislation. The respondent rejected the claim, leading to the appellants commencing an arbitration against the respondent (“Arbitration“). A tribunal of three eminent retired Indian judges were appointed to adjudicate the dispute in the Arbitration.
Around the same time, the respondent was also a respondent in the Parallel Arbitrations, which were two arbitrations involving similar claims by other consortiums in respect of change in labour costs owing to the Notification. One of the appellants was part of the claimant consortiums in the Parallel Arbitrations, and the presiding arbitrator of the Arbitration (“President“) was also serving as the presiding arbitrator in the Parallel Arbitrations. However, there were several key differences between the Arbitration and the Parallel Arbitrations.
- The co-arbitrators in the Arbitration had not acted in the Parallel Arbitrations, and did not have access to the documents from those arbitrations.
- The Arbitration was seated in Singapore, while the Parallel Arbitrations were seated in New Delhi.
- There were differences between the operative versions of clauses 13.7 and 13.8 in the CPT-13 Contract and the respective contracts that were the subject of the Parallel Arbitrations.
- Certain arguments were raised in the Arbitration but not in the Parallel Arbitrations.
Award and setting aside
In its Award, the tribunal found in the appellants’ favour on almost all issues. The Notification was held to be a change of legislation, and the respondent was therefore liable to make additional payment. However, the Judge took issue with several features of the Award. Of the 451 paragraphs in total, 212 paragraphs were found to have been copied from the awards issued in the Parallel Arbitrations (“Parallel Awards“). Furthermore:
- The Award contained verbatim reproductions of submissions made in the Parallel Arbitrations and references to computations that the respondent had not made in the Arbitration.
- The Award referred to authorities that had not been cited by the parties or put to them for their consideration and submissions.
- The tribunal cited an incorrect version of clause 13.8, which contained the formula for calculating adjustments. Consequently, the tribunal applied the wrong coefficients and relied on a wrong set of data points.
- The tribunal applied the wrong lex arbitri in relation to interests and costs.
Before the Judge, the respondent applied to set aside the Award on three grounds: (i) the tribunal had acted in breach of the agreed arbitral procedure; (ii) the reproduction of substantial portions of the Parallel Awards was contrary to Singapore’s public policy; and (iii) the tribunal had acted in breach of natural justice.
The Judge set aside the Award on the third ground, finding that the above issues with the Award constituted a breach of natural justice.
Appeal
On appeal, the appellants contended that the tribunal’s approach to preparing the Award was merely a “short-cut” approach that had not compromised the integrity of the Arbitration in any meaningful way. The differences between the Award and Parallel Awards had no material impact on the outcome of the Arbitration. Given that many of the arguments raised in the Arbitration effectively mirrored those raised in the Parallel Arbitrations, it was not objectionable to reproduce the relevant paragraphs. To the extent that new arguments had been raised in the Arbitration, the appellants submitted that these had been sufficiently considered and dealt with.
Further, the errors in the Award were inconsequential to the outcome of the Arbitration. For instance, there was no material difference in Singaporean and Indian law in relation to interests and costs.
Alternatively, the appellants submitted that only the tainted parts of the Award should be set aside, with the affected issues remitted to the tribunal to be determined afresh.
Decision of the CA
The CA agreed with the Judge that the principal complaint concerned the alleged breach of natural justice, and that such a breach had been made out.
Natural justice comprises two fundamental tenets: the rule against bias and the fair hearing rule. Properly construed, the respondent’s complaint was that the Arbitration had been decided by means of an unfair process that had implicated both rules. The allegations it had raised were evidence of the underlying failure of the process, not as isolated breaches of natural justice to be considered in silos. Accordingly, it was inapposite to evaluate each error in isolation.
With regard to the specific allegations raised, the CA found as follows:
- Breach of rule against bias: A fair-minded observer would reasonably come to suspect that the tribunal’s decision was influenced by a degree of anchoring bias (the unconscious tendency to rely on an earlier conclusion without regard to new information and fresh analysis) and confirmation bias (the difficulty of persuading a decision-maker to change his/her initial view).
- This suspicion of bias was compounded when considering that common issues across the three arbitrations had all been resolved to the same conclusion, despite the respondent’s having raised slightly different arguments.
- The errors in the Award suggested that the tribunal may not have adequately applied itself to the facts and submissions actually made in the Arbitration.
- The paragraphs addressing the fresh arguments raised in the Arbitration had mostly been interposed between the reproduced paragraphs. This structure and presentation would also have given rise to the reasonable impression that the tribunal had not considered the fresh arguments with an open mind.
- Breach of fair hearing rule: The use of the extraneous material had not been contemplated or agreed to by the parties. Nor had the material been brought to their attention. That material formed such a pervasive part of the Award that it simply could not be overlooked.
- Compromise of integrity of decision-making process: The expectation of equality amongst the arbitrators was compromised by the unequal access to relevant information and knowledge, given that the co-arbitrators in the Arbitration had no direct access to the extraneous material. The integrity of the entire decision-making process was thus compromised.
As the breach of natural justice related to the entire decision-making process, rather than discrete or limited issues, the Award had been rightly set aside in its entirety.
Comments on reproduction of material
The CA also delved into the principles on reproducing material from other sources. As a starting point, the source of the extraneous material should be considered, as well as the surrounding circumstances. For instance, if material was lifted from an academic source, this would be unlikely to constitute a breach of natural justice. Where material was lifted from a party’s submissions, this may give rise to the reasonable suspicion that the adjudicator had unthinkingly adopted that party’s position.
Where the material was lifted from a related award, however, the CA highlighted the following:
- The nature of the material would need to be considered. It may not be objectionable to copy a statement of facts that are relevant, non-contentious, and undisputed.
- Much may also depend on the similarity between the arbitrations, including whether they involve the same tribunal and parties. Where the parties and/or tribunal are different, there may be concerns that the relevant arbitration was decided on the basis of material that was not equally accessible, and therefore not equally considered, by the parties and/or arbitrators.
- This equality requires that the parties should have equal access to any relevant material. It also requires equality between the arbitrators, in that they should be equally placed to have the same access to the relevant material. Where only one arbitrator has recourse to extraneous material which reasonably appears to have influenced the outcome of the arbitration, this may in itself form a basis for challenging the integrity of the arbitration.
The CA also commented on drawing parallels with cases involving judicial copying, emphasising that different considerations may operate in the context of arbitration versus litigation. While case precedents involving how the courts have analysed these situations may provide helpful guidance, there were two key differences between the two modes of dispute resolution. First, the integrity of the process is particularly crucial in arbitration, since parties are generally not afforded the right to an appeal (and therefore a substantive review on the merits). Second, the confidential nature of arbitration stood in contrast with the principle of open justice in litigation.
Concluding Remarks
DJP v DJO stands as a rather extraordinary illustration of the potential risks in appointing an arbitrator who has acted in similar arbitrations. Although the CA noted that appointing a common arbitrator does not in itself raise issues of confirmation bias, any indication of bias or prejudgment would call for greater scrutiny. Accordingly, the choice to reproduce any part of the material should be made with great caution, bearing in mind the principles of equality set out by the CA.
This article was authored by Francis Xavier, SC and Alina Chia. A PDF version is available here.
Francis Xavier SC
