In CZT v. CZU, [2023] SGHC(I) 11, the Singapore International Commercial Court (High Court) issued an important decision dealing with deliberative secrecy in international arbitration. The decision considered and clarified when an arbitral tribunal's notes and deliberation records are producible on a challenge to an award.
Background
The plaintiff and defendant concluded a contract for the purchase and sale of certain material, machinery and components (the "Goods"). The defendant appointed a third-party contractor to use the Goods to build products for the defendant. The plaintiff, defendant and contractor later entered into a tripartite agreement under which the defendant transferred its rights and obligations under the contact to the contractor.
The defendant alleged some of the Goods were defective. It commenced a lawsuit against the plaintiff and contractor in its home jurisdiction. It obtained judgement against the contractor for 30% of damages claimed. However, the court declined jurisdiction over the plaintiff based on an arbitration agreement in the original contract between the parties.
Arbitration
The arbitration agreement called for arbitration under the ICC Rules seated in Singapore with a three-member tribunal. The majority of the tribunal (the president and the defendant's nominee) submitted a draft award to the ICC Court for scrutiny pursuant to ICC Rules Art. 34.1
After several rounds of "scrutiny," the ICC Court approved the draft award for issuance. In it, the majority found for the defendant, holding the plaintiff liable for delivering non-confirming goods and ordering damages.
The plaintiff's nominee, however, did not sign the final award. He indicated he would not sign due to "his disagreement with the conclusions and reasoning of the other two arbitrators." Instead, he issued a scathing dissenting opinion, accusing the majority of having "engaged in serious procedural misconduct," including "continued misstating of the record," attempting "to conceal the true ratio decidendi from the Parties," "distortion of the deliberation history," lack of impartiality, and knowingly stating an incorrect reason for the Minority's refusal to sign the Final Award
Galvanized by this dissenting opinion, the plaintiff subsequently filed proceedings before the Singapore Courts to annul the award, alleging the majority:
- breached procedural fairness (Model Law Art. 34(2)(a)(ii),
- exceeded its jurisdiction (Model Law Art. 34(2)(a)(iii),
- ailed to conduct the arbitration according to the parties' agreement (Model Law Art. 34(2)(a)(iv); and
- rendering an award contrary to Singaporean public policy (Model Law Art. 34(2)(b)(ii)).
In preparing their case, the plaintiff's counsel wrote to the ICC secretariat asking that all tribunal members preserve their records of all deliberations. The dissenting arbitrator agreed, as did the president, despite noting that he did not accept that any of these documents were subject to disclosure. The defendant's nominee did not respond.
The plaintiff's counsel then asked the ICC secretariat and tribunal members whether they would disclose their deliberation records. The ICC refused based on confidentiality. The defendant's nominee did not respond. The president said his records were confidential but would disclose them if a competent court ordered him to do so. The dissenting arbitrator likewise said he would disclose only pursuant to a court order.
In consequence, the plaintiff moved before the Singapore International Commercial Court for three summonses, requiring each tribunal member to disclose their deliberation records. It grounded its request on three bases:
- that majority's "true reasons" were not contained in the final award, and that those true reasons would prove that the plaintiff did not get a fair hearing;
- the majority attempted to conceal its true reasons; and
- lack of impartiality.
Decision
The Court began by noting that Singapore law does not expressly protect the arbitral tribunal's deliberation records, and that the courts had yet to address the issue. However, the Court referenced English case law and international doctrinal authorities stating that tribunal deliberations are presumptively confidential. The Court concluded that, under Singapore law, tribunal deliberations are protected by implied confidentiality. It reasoned this was necessary, among other reasons, to protect the integrity of the process and encourage full and frank debate among the tribunal members.
The Court laid down a general rule that an exception to deliberative secrecy arises where the "interests of justice in ordering the production of records of deliberations outweigh the policy reasons for protecting the confidentiality of deliberations" (para. 52). The Court said the exception will arise only in the "rarest of cases." The allegations would have to be "very serious in nature," and would include allegations of corruption where there is a real prospect that the allegation would succeed (para. 53). Although the impugned documents must be relevant and material to the outcome of the challenge, this alone is insufficient to qualify as an exception to deliberative secrecy.
Interestingly, the Court noted that an arbitrator can be called to give evidence about what actually took place in the hearing. For example, in one case the plaintiff cited, the Court ordered disclosure of certain documents (to be viewed by the judge in camera) to ascertain whether one of the parties in fact waived reliance upon a defence initially advanced in the proceeding. The Court found this case distinguishable since that was not the reason the plaintiff sought disclosure.
Dealing with the plaintiff's grounds, the Court found that breach of the "fair hearing" rule is insufficient to lift deliberative secrecy. The Court also noted that this ground could be fully argued based on the arbitral record, and that the tribunal's deliberation records were unnecessary. Importantly, however, the Court acknowledged that allegations that the tribunal lacked impartiality could fall within the deliberative secrecy exception. After all, the purpose of deliberative secrecy is to facilitate the tribunal's deliberations and shield it from undue pressure, not to mask partisanship. However, the plaintiff did not show a real prospect of succeeding on this ground in the annulment proceeding.
The Court noted that the plaintiff's basis for seeking the disclosure was the dissenting arbitrator's scathing statements in his reasons. However, the dissenting arbitrator was not specific about why or how the majority masked its "true reasons" for the award. His comments demonstrated little more than his own subjective opinion. For the Court, these bare allegations could not ground a disclosure order.
Finally, the Court noted that the prior drafts of the final award are part of the content protected by deliberative secrecy. This is because, until the award is signed and sent to the parties, it is not finalized. Anything before that ultimate step forms part of the deliberative process.
Analysis
This case appears to be largely consistent with Canadian law, which protects an arbitral tribunal's deliberative secrecy. Indeed, in its decision the Court cited the Ontario Superior Court of Justice's decision in Noble China Inc. v. Lei, 42 O.R. (3d) 69, 1998 CanLII 14708 (ON SC) which considered similar questions.
It's worth noting, however, that the deliberative secrecy standard upheld by the Court appears to diverge somewhat from Canadian administrative law jurisprudence, which allows the court to pierce an administrative tribunal's deliberative secrecy when a party can show "valid reasons for believing that the process did not comply with the rules of natural justice." In all cases, the burden of lifting deliberative secrecy rests on the applicant.
Notably, in Noble China, Justice Lax suggested, but arguably did not decide, that deliberative secrecy is stronger in private arbitration than in the administrative law context. This distinction flowed from the fact that the parties to an administrative proceeding do not select their decision-maker, whereas in arbitration they do.
There are two problems with this conclusion:
First, parties do not always choose their arbitrators.
Second, it is unclear why choosing the adjudicator should afford that person greater protection. The administrative law jurisprudence only allows disregarding deliberative secrecy in the face of a credible natural justice violation. Surely when we choose arbitrators, we are not suggesting they may disregard natural justice, which is non-waivable under all Canadian arbitration legislation.
In any event, the Singapore Court's decision strengthens the deliberative secrecy rule in international arbitration. Like all Canadian jurisdictions, Singapore is a Model Law jurisdiction. This decision should therefore carry persuasive value for parties having to defend a tribunal's deliberative secrecy in a Canadian court.
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Footnote
1. The ICC Rules provide for a process by which the ICC Court, which is not a "court" but the administering body under the ICC Rules, will review the award and propose modifications going to form. The Court may also draw the tribunal's attention to matters of substance but "without affecting the arbitral tribunal's liberty of decision."
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