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High threshold for establishing fraud in setting aside application

In the case of CLX v CLY and another [2022] SGHC 17, the plaintiff sought to partially set aside an arbitral award pursuant to Singapore’s Arbitration Act, on the following grounds:  

(a)   the award was induced or affected by fraud due to the dishonest concealment and/or giving of false 
        evidence by the first defendant;
(b)   there was a breach of natural justice as the plaintiff was deprived of the opportunity to be heard in
        light of such dishonest concealment; and
(c)   the award was contrary to public policy as it was rendered on the basis of an egregious error of fact.

In dismissing the plaintiff’s application, the High Court reinforced the position that the threshold establishing fraud in the context of setting aside an arbitral award is high and requires strong and cogent evidence of actual and deliberate fraud. The core elements that would need to be established are:

(a)   dishonesty or bad faith;
(b)   the materiality of the new evidence to the decision of the tribunal; and
(c)   the non-availability of the evidence during the earlier proceeding.

To succeed in the application, the plaintiff must prove that the first defendant has deliberately concealed material information or given false evidence to mislead the arbitrator. Negligence or error in judgment would not be sufficient.  

Notably, the court opined that the plaintiff also did not satisfy the due diligence requirement in adducing new evidence. The alleged new evidence raised by it was available prior to the conclusion of the arbitration, and such information could have been obtained had the plaintiff exercised reasonable diligence.  

As regards the natural justice ground, the court indicated that the plaintiff was in effect arguing that it was deprived of an opportunity to present a different defence and/or counterclaim, as the Arbitration was extensive and detailed, and the plaintiff was afforded every avenue to present its case.  

This decision shows that the threshold to establish fraud remains a high one and parties should always be diligent in adducing new evidence.

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