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Award made in excess of jurisdiction set aside

The High Court in the case of CIZ v CJA [2021] SGHC 178 ruled that the tribunal must decide cases as parties put before them, not cases that parties could or should have made.

In this case, there was an agreement for CIZ to pay CJA a success fee if CIZ managed to provide information and advice to CIZ on opportunities to acquire interests in oil and gas fields. This agreement was to last until 31 December 2013. In 2012, CIZ was presented with an opportunity to acquire shares in X Co, however, the deal was abandoned due to unresolved tax and production issues. In late 2015, the same deal re-emerged and this time, the tax and production issues were resolved. Subsequently by February 2017, CIZ acquired interests in X Co without involving CJA.

CJA commenced arbitration against CIZ claiming for the success fee in connection with the X Co transaction. CJA alleged that there was: (i) an oral contract with CIZ to extend the term of the Agreement; (ii) alternatively, an implied contract between CIZ and CJA on the same terms as the Agreement; and (iii) in any event, CIZ was estopped from asserting that the Agreement was no longer valid. The tribunal rejected the first two claims, and did not address CJA’s estoppel argument at all. However, it held that the success fee was payable to CJA as long as there was a clear link to the successful completion of the deal. It did not matter if a transaction following CJA’s presentation of the opportunity to CIZ completed before or after expiry of the Agreement. Neither of these grounds for the tribunal’s decision formed part of CJA’s arguments during the arbitration.

CIZ thereafter applied to set aside the award under Section 24(b) of the International Arbitration Act (IAA) (i.e. breach of natural justice) and Article 34(2)(a)(iii) of the Model Law, on the basis that the tribunal had exceeded its jurisdiction. Article 34(2)(a)(iii) applies where a tribunal improperly decides matters not submitted to it, or fails to decide matters that have been submitted to it - an arbitral tribunal may not depart from the pleadings to the extent of making its decision based on a ground that has not been pleaded at all.

Ultimately, the High Court set aside the award relating to the X Co deal under Article 34(2)(a)(iii) of the Model Law on the basis that the tribunal had exceeded its jurisdiction. The court expounded that the tribunal’s interpretation of provisions of the agreement “were inconsistent with the positions taken by the defendant on those Articles”, and “it was never the defendant’s case in the arbitration proceedings that it had a valid claim if there was no subsisting agreement after the Amended Agreement expired”. Further, the grounds on which the tribunal found in favour of CJA “were entirely different from the defendant’s case in the arbitration proceedings”.

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