Whether An Award May Be Set Aside If An Issue Of Law Was Decided Wrongly

The Singapore High Court in the case of Himalaya Food International Ltd v Simplot India LLC [2020] SGHC 222 dismissed an application to set aside an arbitral award which was alleged to have exceeded the scope of submission to arbitration.

In this instance, the first and second Respondents (the "Respondents"), the Claimant and Himalaya Simplot Pvt Ltd entered into a Master Agreement ("MA") under which the second Respondent agreed to purchase Potato Processing Equipment ("PPE") that Himalaya Food International Ltd (“HIL”) had been using to produce potato products. Pursuant to the MA, representations and warranties were provided in relation to the capacity, operation and condition of the PPE, and that the PPE was fit for the use reasonably intended. Disputes arose and the Tribunal ruled that HIL breached the representations and warranties as the PPE was not fit for the purpose to meet the production requirements on quality at the required volumes. The Tribunal therefore awarded the Respondents damages. 

The Claimant applied to set aside the arbitral award on the grounds that the Tribunal dealt with a dispute not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration by contending that  the representations and warranties did not refer to the PPE producing "quality" potato products. The Court disagreed with the Claimant’s argument, stating that:

1.     An agreement to arbitrate is the foundation of an arbitral Tribunal’s jurisdiction. Where the parties have
        agreed on what is in issue before the Tribunal, the losing party cannot thereafter fault the Tribunal for
        dealing with that issue. Here, it was common ground that whether the PPE could produce potato
        products of “quality” was in issue, and the Tribunal did not exceed the scope of submission to
        arbitration in deciding that issue.
2.     Even if the quality of the products were not within the scope of the dispute resolution clause, the parties
        had, by their conduct in the course of the arbitration, conferred jurisdiction on the Tribunal to deal with
        that issue.

The Claimant's application was premised on a contentious interpretation of the MA (whether the Representations and Warranties imposed requirements not only as to quantity but also as to quality) and this is in reality a challenge to the substantive correctness of the Tribunal's decision, which amounts to a backdoor appeal. The application was accordingly dismissed.