In arbitral proceedings generally, pleadings are not necessarily determinative in the same way or to the extent that they might be in court litigation; the consensual nature of arbitration means that the parties may agree to an unpleaded issue being dealt with in the arbitration[1]. For this reason, recourse may be had to various sources to determine the scope of submission to arbitration including: (a) the pleadings; (b) the agreed list of issues; (c) the opening statements; (d) the evidence adduced in the arbitration; and (e) the closing submissions[2]. What is important that the tribunal appreciates the parties’ positions and that the parties understand each other’s positions. But does this necessarily apply in all cases?
The Singapore Court of Appeal had the opportunity to consider the importance of pleadings in the context of expedited and documents only arbitrations and has provided useful pointers to both counsel and tribunals.
The appellant, Wan Sen Metal Industries Pte Ltd (“WSM”) sought to set aside an arbitration award on the basis that the arbitrator acted in breach of natural justice inter alia by failing to apply her mind to the essential issues arising from the parties’ arguments.
Background
The respondent Hua Tian Engineering Pte Ltd (“HTE”) was WSM’s labour subcontractor in a construction project. A dispute arose between them wherein WSM alleged that HTE’s work was defective and terminated the Sub-Contract. Thereafter, WSM commenced an arbitration against HTE under the 2016 SIAC Arbitration Rules. The arbitration was an expedited, documents-only arbitration.
The arbitration Before the Arbitrator, HTE contended that it was due payment for works it had carried out before WSM’s allegedly wrongful termination (the “pre-termination works”). WSM contended that, because of HTE’s allegedly defective works, WSM had incurred charges which it maintained were to be borne by HTE (the “back charges”), and that any amount due for the pre-termination works was exceeded by the back charges, and accordingly it was not liable to HTE.
The Arbitrator found that WSM was not entitled to terminate the Sub- Contract, dismissed WSM’s claims, and allowed most of HTE’s counterclaims. The basis on which the Arbitrator awarded damages in the counterclaim was different from that on which HTE’s counterclaim was mounted. In its pleaded case, HTE sought payment of the value of work it had completed under the Sub-Contract. However, the Arbitrator awarded damages by computing the value of the completed as well as the uncompleted work under the Sub-Contract. The counterclaim for the value of the uncompleted works (“Expectation Damages”) was unpleaded and it was first raised by HTE in its written submissions.
When WSM applied to set aside the award, the key question was whether the Arbitrator could compute the damages on a basis that was not pleaded. WSM was unsuccessful at first instance and appealed.
The appeal
On appeal, WSM contended that the Arbitrator acted in breach of natural justice because inter alia she failed to apply her mind to the essential issues arising from the parties’ arguments. WSM argued that it did not know and could not reasonably have expected that the Expectation Damages issue would become a live issue in the Arbitration, because it had not featured until receipt of HTE’s written submissions, in which HTE had asserted it in a single paragraph.
The decision
In arriving at its decision, the Court of Appeal made the following observations, delivered by Chief Justice Sundaresh Menon, about the importance of pleadings in expedited and documents only arbitrations. They are worth repeating in extenso[3].
In the ordinary course of an arbitration, the pleadings; agreed list of issues; the opening statements; the evidence, and closing submissions provide convenient touchpoints from which the tribunal can appreciate the parties’ respective cases and provide opportunities for the parties to adjust their arguments where necessary or to raise objections to points being taken outside the ambit of their dispute. This element of continuous interaction affords multiple opportunities for the tribunal and the parties to understand parties’ respective cases.
Where a documents-only arbitration is concerned, there is less engagement between the tribunal and parties. This means that there may be a real chance that the tribunal and/or the parties fail to appreciate the contours of the dispute and whether points were being taken by one side that had not been fully understood by the other, or for that matter, by the tribunal.
Where the arbitral process is expedited and/or is to be determined based on documents alone, pleadings can provide a crucial anchor in ensuring that the tribunal is fully cognisant of the parties’ cases. Where the procedure in a case provides for pleadings, these play a significant role in such arbitrations. They serve as the starting point of what issues parties have agreed to arbitrate; and they help in establishing whether the parties have engaged with or departed from those issues in their written submissions. They also assist the tribunal in understanding the true nature of the parties’ arguments.
Pleadings can and do serve the valuable function of defining the parameters of the issues which the parties have to address, and thus, they help avoid a situation where a party is faced with an issue it may not have had the opportunity to address. The likelihood of this happening is greater in a documents-only arbitration where the interactions between the parties will not be as iterative as would be the case with the usual process. Hence, the pleadings will generally assume a more significant role in defining the issues and assessing what natural justice demands must be afforded to a party faced with an unexpected claim.
This is an issue that is sensitive to the facts and the context of any given case. It will be important to consider the manner in which the unpleaded issue was raised, the other party’s response to this, and whether the tribunal provided the parties with a fair opportunity to be heard regarding this issue.
When faced with such a situation, it would be prudent for a tribunal to clarify the parties’ positions. Steps that can be taken might include clarifying whether the parties are aware that an unpleaded issue has been introduced; whether the aggrieved party wishes to object to this introduction or otherwise respond to the issue; and whether the pleadings should be amended.
In a documents-only arbitration, it will be especially important that a tribunal clarifies with the parties whether it may decide an issue that has not been pleaded. This is so because the parties’ agreement to proceed with the documents-only arbitration would typically have been premised on the issues disclosed in the pleadings. This may not extend to issues that were not raised on the pleadings, and the tribunal should therefore seek clarification from the parties on how they wish to proceed.
It would similarly be sensible for the parties to make their positions clear, especially given the lack of an oral hearing which might otherwise have provided an invaluable avenue for clarification on their respective cases. A party that wishes to advance arguments on an unpleaded issue should take steps to amend its pleadings. And if a party discovers that its counterparty has introduced an unpleaded issue, the sensible response would be to draw attention to this circumstance, so that the tribunal can take steps to ensure that the matter proceeds fairly. This, in the Court of Appeal’s judgment, reflects the shared responsibility between the tribunal and the parties to ensure the effective functioning of the arbitral process in the context of a documents-only arbitration.
Applying that reasoning to the facts in this case, the Court of Appeal ruled that the Arbitrator had failed to appreciate that the Expectation Damages issue was unpleaded[4] which in turn led to her oversimplifying WSM’s case. This meant that the Arbitrator failed to consider the entirety of WSM’s case as regards the Expectation Damages Issue, because of her belief that its objection was premised solely on HTE’s entitlement to that measure of damages, but not an objection to how the claim was being valued. This failure amounted to a breach of natural justice because the tribunal ascribed an incorrect position to the appellant, which led her to fail to consider the true issue that had been raised.[5]
Conclusion
It is apparent that the introduction in this case of an unpleaded claim had led to the undermining of a key procedural safeguard in arbitration (i.e. the requirement to observe due process to ensure that parties have fair opportunity to present their case and to respond to the case brought against them) that in turn, affected the tribunal’s ability to deliver a just outcome in respect of the parties’ substantive legal rights. The guidance that the Court of Appeal has provided will be welcomed by both counsel and tribunals and should lead to more efficient and effective arbitration proceedings.
For more information contact:
S Suressh
Partner & Head, International Arbitration
Suressh@harryelias.com
+65 6361 9883
Yvonne Foo
Partner & Co-Head, Construction and Engineering
YvonneFoo@harryelias.com
+65 6361 9371
[1] see Phoenixfin Pte Ltd and others v Convexity Ltd [2022] 2 SLR 23 at [50]
[2] see CDM and another v CDP [2021] 2 SLR 235 at [18]
[3] [2025] SGCA 5 at [39 to 44]
[4] [2025] SGCA 5 at [37] and [38]
[5] Ibid at [44] to [46]