Case Insight: Vietnam Oil and Gas Group v Joint Stock Company (Power Machines – ZTL, LMZ, Electrosila Energomachexport) and another appeal [2025] SGCA 50

The Singapore Court of Appeal (“CA”) set aside an SIAC award on the basis of a breach of the fair hearing rule. The CA further held that remission was not an appropriate remedy, providing important guidance on when an award should be set aside rather than remitted to the tribunal.

Brief facts 

A dispute arose from an Engineering, Procurement, and Construction (EPC) Contract for a thermal power plant in Vietnam between the project owner, Vietnam Oil and Gas Group ("PVN"), and the contractor consortium member, Joint Stock Company (Power Machines – ZTL, LMZ, Electrosila Energomachexport) ("PM"). The contract was governed by Vietnamese law, and provided for SIAC arbitration seated in Singapore.

Following the imposition of US Sanctions on PM in January 2018, which led many subcontractors to suspend performance, PM issued two subsequent termination notices to PVN: (1) the First Notice, asserting termination based on force majeure; and (2) the Second Notice, asserting termination based on prolonged non-payment.

Procedural history 

The parties referred their dispute to arbitration. PM’s case was that it had validly exercised its right of termination of the EPC Contract and claimed monetary relief. In response, PVN contended that the issuance of the First Notice amounted to a wrongful termination of the EPC Contract because the US Sanctions did not amount to a force majeure event. Further, the Second Notice was not a valid termination notice since PM had, by its First Notice, previously and wrongfully repudiated the EPC Contract and abandoned the works.

The arbitral Tribunal ultimately issued a Final Award largely favouring PM, awarding approximately US$300 million in damages. While the Tribunal rejected PM’s force majeure case, it held that the Second Note “overrode and superseded” the first, inferring that PM must have intended this result. 

PVN applied to the High Court to set aside the Final Award. The High Court found breaches of natural justice and excess of jurisdiction but ordered remission. Both parties appealed.

Court of Appeal decision 

The CA considered the following issues, namely: (1) whether the Tribunal’s finding breached the fair hearing rule; (2) whether the Tribunal exceeded its jurisdiction; (3) whether the High Court erred in making the order for remission.

Whether the Tribunal’s finding breached the fair hearing rule

The CA affirmed the High Court’s finding that the Tribunal breached the fair hearing rule.  

The Tribunal’s reasoning – that it was implicit that the Second Notice overrode and superseded the First and that PM must be taken to have intended this – had no sufficient nexus to the parties’ arguments and the evidence that was led in the arbitration.

• It was neither party’s case that the Second Notice was capable of overriding, superseding or amending the wrongfully issued First Notice. 
• Further, PM did not lead any evidence to show that it intended to replace or supplement the First Notice. Indeed, PM had expressly pleaded the contrary.

As such, the Tribunal’s reasoning could not reasonably have been anticipated by the parties, and therefore breached natural justice. 

Whether the Tribunal exceeded its jurisdiction

In light of its finding on natural justice, the CA declined to decide the jurisdictional issue. However, it expressed the provisional view that the High Court may have erred in finding excess of jurisdiction on the basis that the Tribunal had departed from the parties’ cases in making the Final Award.

To the extent the parties expressly sought determination of the question whether the EPC Contract could be or was terminated by the Second Notice, the CA noted that the interaction between the two termination notices was arguably within the scope of the parties’ submission to arbitration.

Whether the High Court erred in exercising its discretion to order remission

The CA disagreed that the order for remission should have been made.

Article 34(4) of the Model Law states that when a court is asked to set aside an award, it may, at the request of a party, suspend the setting-aside proceedings and remit the matter to the arbitral tribunal.

Several principles govern the court’s discretion to make an order for remission pursuant to Article 34(4). The starting point is that remission of an award may be appropriate when the identified defect is capable of being cured. The court’s fundamental concern is in preserving the integrity of the arbitral process, and not the correctness of the tribunal’s reasoning or result. The court will also consider the following. 

• Where the question of remission arises in the context of remedying a breach of natural justice, whether a fair-minded observer could reasonably apprehend that the tribunal may not be able to afford the parties a fair process in its consideration on the remitted issues. 
• Whether the breach is in respect of a single isolated or stand-alone point, or a point or points that are central to the award. 
• Whether remitting the issue would likely require a party to amend its pleadings. 
• Whether there would be time and cost savings. 

In applying the principles to this case, the CA considered that the tribunal’s breach of the fair hearing rule was serious in nature, and was central to liability. Further, remission gives rise to concerns of prejudgment, and would likely require PM to amend its pleaded case, rendering the process unfair. The award was therefore set aside.

Commentary  

This decision is notable as an uncommon instance in which the Singapore CA set aside an SIAC award. This reaffirms Singapore’s well-established pro-arbitration policy of minimal curial intervention, and emphasises the high thresholds required for setting aside awards.

The judgment provides authoritative guidance on the proper limits of remission as a remedial option. In particular, the Court clarified that remission is inappropriate where the defect goes to the integrity of the arbitral process itself. In such circumstances, the appropriate course is to set aside the award rather than to remit the matter to the tribunal for further consideration.