While most will agree that justice should not be hurried, what happens when parties refuse to comply to arbitration procedural timelines?

In this article, we discuss the challenges in balancing efficiency and procedural fairness in arbitration proceedings by examining the recent Singapore court decision of Sai Wan Shipping Ltd v Landmark Line Co, Ltd [2021] SGHC 8 (“Sai Wan”).

Dilatory tactics in arbitration proceedings

The use of dilatory tactics by recalcitrant parties is a common, if not expected, problem in arbitral proceedings. For the aggrieved party, a delay in proceedings necessarily increases the overall costs involved. Understandably, an aggrieved party will attempt to press ahead with proceedings as best it can. The arbitrator also has a general duty to conduct proceedings efficiently under some major institutional rules. The SIAC Rules 2016 requires the Tribunal to conduct the arbitration in a manner that ensures the “expeditious” and “economical” resolution of the dispute, and to discuss procedures that will be most “efficient” for the case.⁽¹⁾ The ICC Rules 2021 requires the arbitral tribunal and parties to conduct the arbitration in an “expeditious and cost-effective manner”.⁽²⁾ However, while the English Arbitration Act 1996 imposes on the tribunal a general duty to adopt suitable procedures “avoiding unnecessary delay or expense”⁽³⁾, no similar wording exists in Singapore’s International Arbitration Act (“IAA”) or in the UNCITRAL Model Law (“Model Law”).

Limits to procedural efficiency

Faced with a defaulting or absent counterparty, the temptation may be to proceed with the arbitration as quickly as possible, or to force the recalcitrant party into submitting to procedural directions by issuing draconian orders. On one hand, some may argue that efficiency should be secondary to due process or procedural fairness. On the other, one could possibly view efficiency as one of the key pillars of procedural fairness itself. Undergirding procedural fairness is the party’s right to be treated equally and to be given a full opportunity to present its case.

In the recent Singapore court decision of Sai Wan, the balance between the arbitrator’s enforcement of procedural timelines and a party’s right to be heard was examined. In particular, the Singapore Court examined whether an arbitrator went too far in issuing and enforcing a final and peremptory order against a defaulting party.

What happened?

In Sai Wan, the Owner of a vessel brought an ad hoc arbitration against the Charterer over unpaid hire. The Charterer had failed to participate in the first part of the proceedings. The Owner then applied for a final award on the balance sum. Without inviting any submission from the Charterer on the time it would require, the arbitrator directed that the Charterer was to provide its defence by a specified date and time, failing which, the Owner may apply for a final and peremptory order. The Charterer failed to meet the deadline, and there was correspondence between the parties’ counsel for an extension of time. Upon review of this correspondence, the arbitrator proceeded to issue a final and peremptory order for the Charterer to file its defence by a further set date and time. The Charterer failed to serve its defence submissions within the time stipulated. It only did so later the same day, citing internet connectivity issues as the reason for its delay. The arbitrator considered that he was bound by the clear terms of his peremptory order, and must exclude the Charterer’s defence submissions, unless the Owner was prepared to accept them into evidence. The Owner declined, and the arbitrator upheld the final and peremptory order.