Singapore Court of Appeal Restricts Remission Where Tribunal Breaches Fair Hearing Rule

In Vietnam Oil and Gas Group v Joint Stock Company (Power Machines – ZTL, LMZ, Electrosila Energomachexport) [2025] SGCA 50, the Singapore Court of Appeal clarified the limits of judicial intervention in arbitral proceedings and the principles governing remission of an award to the tribunal for reconsideration.

The dispute arose from an engineering, procurement, and construction (EPC) contract for a power plant in Vietnam between Vietnam Oil & Gas Group (“PVN”) and a consortium led by Joint Stock Company Power Machines (“PM”). When disputes emerged, PM sought to terminate the contract by way of two separate notices. The first (“First Notice”) was based on force majeure arising from U.S. sanctions allegedly preventing performance. The second (“Second Notice”) was later issued under a separate contractual clause allowing termination after 150 days of non-payment.

The SIAC tribunal found that the First Notice was invalid, as the sanctions did not constitute a force majeure event, but that the Second Notice validly terminated the contract. In paragraph 548 of the Final Award, the tribunal reasoned that a valid Second Notice, issued while the contract remained on foot, superseded and replaced the ineffective First Notice. Accordingly, it awarded PM damages.

PVN applied to the High Court to set aside parts of the award, arguing that the tribunal had breached natural justice and exceeded its jurisdiction by relying on reasoning that neither party had advanced. The High Court agreed that the tribunal had breached the fair hearing rule and exceeded its jurisdiction, but declined to set aside the award. Instead, it ordered remission of the specific issue—whether the Second Notice could override, supersede, or supplement the First Notice—back to the tribunal for reconsideration. Both parties appealed: PVN contended that the entire award should be set aside, while PM argued that the High Court had erred in finding that the tribunal had breached the rules of natural justice and that the remission order was inappropriate.

The Court of Appeal upheld the High Court’s finding of a breach of the fair hearing rule. It found that paragraph 548 of the award introduced a line of reasoning that the parties could not reasonably have anticipated. It bore no relationship to the arguments of the parties, and was, in fact, contrary to the factual position taken by PM in the arbitration. The Court further held that the tribunal had come to its decision despite knowing that neither party’s expert evidence had addressed the issue.

However, the Court of Appeal concluded that remission was not appropriate in this case. The defect in the tribunal’s reasoning went to the heart of the dispute on liability. Given the nature and seriousness of this breach, a reasonable observer could lack confidence in the tribunal’s ability to reconsider the matter impartially. The Court therefore set aside the remission order, allowing PVN’s appeal and dismissing PM’s cross-appeal.

The judgment reinforces Singapore’s pro-arbitration stance while clarifying that curial intervention remains justified where there has been a fundamental breach of procedural unfairness. It also refines the scope of remission, confirming that remission should be reserved for discrete, curable defects and is inappropriate where the irregularity undermines confidence in the tribunal’s fairness or the integrity of the arbitral process.