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Singapore High Court rejects a challenge to the enforcement of an arbitration award founded on fraud and corruption

The Singapore High Court has confirmed the principle an allegation of fraud in a civil matter will be considered on the balance of probabilities, but that the nature of the evidence to enable a finding to be made should be more persuasive or strong than that required for a finding of, for example, negligence.

In Beijing Sinozonto Mining Investment Co Ltd v Goldenray Consortium (Singapore) Pte Ltd [2014] 1 SLR 814, the Singapore High Court considered a challenge under s31(4)(b) of the Singapore International Arbitration Act to the enforcement of an arbitration award. The appellant, Goldenray, sought to challenge an order permitting Sinozonto to enforce a CIETAC arbitration award in Singapore.

Goldenray claimed that the award was tainted by fraud or corruption such that its enforcement would be contrary to public policy under s31(4)(b) of the Singapore Act.  Goldenray asserted that Sinozonto had unilaterally entered into an improper arrangement with the tribunal to issue the award in Sinozono’s favour.

The Court confirmed that the term “public policy” within the meaning of s31(4)(b) would not extend to erroneous legal reasoning or the misapplication of law, but would extend to an award obtained by corruption, bribery or fraud such that it would violate the basic notions of morality and justice.

The burden of proof fell on Goldenray to establish on the balance of probabilities that there was an improper arrangement between Sinozonto’s representatives and the tribunal.  The Court considered the inherent probability or improbability of the event itself to be a factor to be taken into account when determining whether the event had occurred.  The Court dismissed Goldenray’s challenge on the basis that it had failed to produce sufficient evidence of an improper arrangement.

The Court made clear that a complaint of fraud must be supported by evidence which is more persuasive than that required in a claim for negligence and commensurate with the gravity and seriousness of an allegation of dishonesty.  The case should serve as a further reminder that the allegations of fraud made in civil proceedings should not be made frivolously and unsupported by sufficiently compelling evidence.

*A version of this article was originally published by Practical Law Arbitration http://uk.practicallaw.com/country/arbitration