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Singapore Court Of Appeal Ruled That Errors Of Law Or Fact Made In An Arbitral Decision Are Final And Binding

In the case of BTN and another v BTP and another [2020] SGCA 105 the respondents, BTP and BTQ (both are individuals) sold their shares of the company and BTN (a Mauritian company) assumed 100% control of the Malaysian company, BTO. Employed under Promoter Employment Agreements (“PEAs”), the respondents stood to gain an Earn Out Consideration of USD 35m if they were dismissed without cause.

BTO dismissed the respondents “With Cause”. However, the respondents obtained a ruling from the Malaysian Industrial Court (“MIC”) which found that they had been dismissed without cause. Appellants did not participate in the MIC proceedings.

Thereafter, the respondents commenced an arbitration against both BTO and BTN for the Earn Out Consideration. The Tribunal found in the respondents’ favour and held that the MIC award precluded the appellants from reopening arguments as to whether the respondents’ termination was “With Cause” (“Res Judicata Issue”).

To set aside the award, the appellants contended that:
1.      There was a breach of natural justice;
2.      The award was contrary to the public policy; and
3.      The Tribunal’s decision on the Res Judicata Issue meant that it had failed
         to decide matters falling within the submission to arbitration.

The Court of Appeal disagreed and found that, even if an arbitral Tribunal were to erroneously apply the res judicata doctrine in its award, this would not be a basis for setting aside the award. Errors of law or fact made in an arbitral decision are final and binding on parties and may not be appealed against or set aside on public policy grounds. Only a decision on a Tribunal’s jurisdiction is subject to a de novo independent review by the courts. Since an arbitral decision made on the basis of res judicata is a decision on admissibility, not jurisdiction, it is not subject to review.

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