THE AUTHOR:
Esen Aydin, Legal Content Manager at Jus Mundi
Arbitration Aftermath with Zeyad Abouellail and Esen Aydın: Your trusted source for the latest post-award developments in the dynamic world of investor-State and commercial arbitration. Back with a fresh perspective, Zeyad focuses on cases involving States, ministries, and public entities, while Esen handles disputes between private parties. From settlements and compliance with awards to recognition, enforcement procedures, annulment, and beyond. Each week, we bring you global insights and updates to navigate this ever-evolving landscape.
Marubeni and Doğuș v. Alstom
Swiss Federal Court Swiss Federal Court Dismisses Annulment of ICC Award Holding Alstom Liable to Consortium Partners
ICC Case No. 21338 (c-21758)
Institution: ICC (International Chamber of Commerce)
Tribunal: Henry M. Peter (President), Daniel Hochstrasser (Appointed by the claimant), J. William F. Rowley (Appointed by the respondent)
Seat of arbitration: Lausanne, Switzerland
On 17 February, the Swiss Federal Tribunal has dismissed two appeals (4A-221 and 4A-223) against an ICC award mandating Alstom to pay more than €63 million to its consortium partners due to the termination of a project.
Background
The dispute arose from the parties’ joint execution of the CR1 contract for the Marmaray railway modernization project in Istanbul. The claimants alleged that the French company Alstom, acting as consortium leader, had unilaterally and wrongfully terminated the CR1 contract with the Turkish Ministry of Transport in March 2010, without the unanimous consent required under the consortium agreement.
An ICC arbitration was launched by the Marubeni-Alstom-Doğuş consortium against the Turkish Ministry in 2010 (“CR1 arbitration”). In a series of awards, the tribunal found the termination invalid and held the consortium liable for approximately EUR 27 million after offsetting mutual claims.
In 2015 and 2016, the Japanese company Marubeni and the Turkish company Doğuş initiated two ICC arbitrations against Alstom under the consortium agreement governed by Swiss law. These proceedings were later consolidated (“Second arbitration”).
In its Final Award issued on 26 February 2024, the tribunal found that Alstom had breached the consortium agreement and held it liable for damages. The tribunal ordered Alstom to pay EUR 29.3 million to Marubeni and EUR 15.2 million to Doğuş, and rejected Alstom’s counterclaims in their entirety. The tribunal determined that Alstom’s liability should be reduced by one-third due to Marubeni and Doğuş’s contributory role in causing the damage.
Following the Final Award, both Marubeni and Alstom filed appeals before the Swiss Federal Tribunal in April 2024 to challenge the outcome of the second arbitration (4A-223 and 4A-221 respectively).
Marubeni’s Request for Annulment
In its appeal to the Swiss Federal Court in case 4A-223, Marubeni sought to annul the arbitral award on three main grounds. First, Marubeni claimed that the arbitral tribunal exceeded its competence by reducing the respondent’s liability by one-third, arguing that this reduction was unjustified because the relevant circumstances had already been considered in the earlier CR1 arbitration. Marubeni invoked the principle of res judicata, contending that certain issues had already been resolved in the CR1 arbitration and should not have been re-examined. Marubeni also alleged a violation of procedural fairness, asserting that the tribunal failed to give it an opportunity to respond to some claims and did not adequately consider the evidence it submitted on the consortium members’ shared responsibility.
The Swiss Federal Court rejected all grounds for annulment. Regarding the alleged excess of competence, the Court held that the plaintiff had forfeited their right to challenge the tribunal’s authority, having failed to raise the issue during the arbitration proceedings. On the res judicata claim, the Court clarified that the plaintiff had mischaracterized the scope of the CR1 tribunal’s findings, emphasizing that the current tribunal was competent to address internal matters between consortium members that were not part of the CR1 tribunal’s jurisdiction.
As for the procedural fairness claim, the Court found that the plaintiff’s arguments were purely appellatory and did not satisfy the high threshold for annulment. Concluding that none of the grievances met the legal standards for setting aside an arbitral award, the Swiss Federal Court dismissed the appeal in its entirety.
Alstom’s Request for Annulment
In its appeal in case 4A-221, Alstom sought partial annulment of the arbitral award, claiming the tribunal exceeded its competence by ruling on matters allegedly resolved in the earlier CR1 arbitration and by reducing the respondent’s liability. Alstom argued that the tribunal had gone beyond the scope of the consortium agreement. However, the Swiss Federal Tribunal found that the plaintiff had failed to contest the tribunal’s jurisdiction during the arbitration and was therefore precluded from raising it on appeal.
The court also clarified that the tribunal had acted within its jurisdiction by addressing internal disputes among consortium members, not external matters already ruled on in the CR1 arbitration. It emphasized the distinction between jurisdiction and the tribunal’s discretion in handling claims. Finding no excess of competence, the Swiss Federal Tribunal dismissed the annulment request and upheld the arbitral award.
DFCCI v. IRCON, Mitsui and Tata Projects
The Singapore Court of Appeal Confirms the Annulment of a Copied and Pasted ICC Award
ICC Case No. 26733/HTG
Institution: ICC (International Chamber of Commerce)
Tribunal: Dipak Misra (President), Krishn Kumar Lahoti (Appointed by the claimants), Gita Mittal (Appointed by the respondent)
Seat of arbitration: Singapore
In a judgment rendered on 8 April, the Singapore Court of Appeal rejected an appeal by the IRCON, Mitsui, and Tata Consortium (“Consortium”), which sought to reinstate an ICC award issued in 2023 against Dedicated Freight Corridor Corporation of India (“DFCCI”). The award was annulled in 2024 by the Singapore International Commercial Court (“SICC”).
Background
The dispute between DFCCI and the Consortium arose from a contract (“CPT-13 Contract”) signed in August 2015 for the operation of railway lines in India. DFCCI is responsible for operating a network of railway lines in India that serve only freight trains. The Consortium was established by three companies, tendered for one of the contracts related to the Western Dedicated Freight Corridors.
The core issue in the dispute revolved around the interpretation of clauses 13.7 and 13.8 of the FIDIC Conditions, which govern adjustments for changes in legislation and costs. The Indian Ministry of Labour issued a notification in January 2017 raising the minimum wage, and the Consortium sought an adjustment under clause 13.7 for the increase in labour costs. However, DFCCI argued that any cost increase resulting from the notification should be covered by clause 13.8, which addresses cost adjustments for rises or falls in labour and material costs. The Consortium did not submit its claim for adjustment under clause 13.7 until March 2020, more than three years after the notification.
DFCCI contested Consortium’s claim, maintaining that the claim for a change in minimum wage had been dealt with under clause 13.8, and that Consortium’s notice was not timely under the contractual terms. Following unsuccessful attempts at settlement and rejection by the Dispute Adjudication Board, DFCCI initiated arbitration in December 2021 to resolve the dispute.
The ICC tribunal issued its Award on 24 November 2023 and found in favour of the Consortium.
Judgment of the Singapore International Commercial Court
DFCCI subsequently sought to have the ICC award annulled before the Singapore courts. At the same time, two other arbitrations related to similar events were filed in Delhi, involving different contracts for the construction of another dedicated freight corridor. All these cases were handled by the same retired judge, who served as the presiding arbitrator.
In its judgment on August 15, 2024, the SICC determined that the presiding arbitrator, who had drafted the award, had prejudged the issues by copying and pasting factual and legal arguments from the earlier cases, which had not been raised by counsel during the arbitration. The tribunal used the wrong contractual clauses and applied the incorrect law, i.e., the Indian Arbitration Act instead of the Singapore Arbitration Act. The SICC ruled that the award was not the independent work of the tribunal, based on the materials and submissions before it.
Consequently, the court found a violation of the parties’ right to a fair, impartial, and independent decision, and the award was set aside due to a breach of natural justice.
Judgment of the Singapore Court of Appeal
The Consortium appealed the decision of the SICC and brought the matter before the Singapore Court of Appeal. They argued that the tribunal’s use of material from parallel awards did not significantly affect the arbitration’s outcome and that procedural fairness was not compromised. They claimed that many of the arguments in the arbitration were similar to those in the parallel cases, and the tribunal’s use of copied material was merely a “shortcut.”
The Court of Appeal emphasized that the two core principles of natural justice are impartiality and the right to be heard, both of which were at stake in this case. The Court highlighted concerns that the copied material, sourced from related awards with different tribunals or parties, might not have been accessible to all parties or arbitrators, thus raising fairness issues. The Court emphasised the need for equality, ensuring that all parties and arbitrators have equal access to relevant material.
The Court of Appeal agreed with the SICC, finding that the use of material from parallel arbitrations breached the fair hearing rule and undermined the expectation of equality among the arbitrators. It dismissed the Consortium’s argument for a partial annulment, stating that the breach of natural justice affected the entire award.
Power Machines v. PetroVietnam
The Singapore Court of Appeal has Dismissed an Application to Adduce New Evidence in the Context of Annulment Proceedings.
SIAC Case No. ARB274/19/AB
Institution: SIAC (Singapore International Arbitration Centre)
Tribunal’s composition: Doug S. Jones (President), Ilya Nikiforov (Appointed by the claimant), David Bateson (Appointed by the respondent)
Seat of arbitration: Singapore
The Singapore Court of Appeal rejected Petrovietnam’s request to submit new evidence, finding it immaterial to the appeal and procedurally improper, while the main appeal proceedings remain ongoing.
Background
Petrovietnam (“PVN”), the owner of a thermal power plant project in Vietnam, entered into an EPC Contract with a consortium led by Power Machines (“PM”) for the plant’s construction. In January 2018, the U.S. Office of Foreign Assets Control (“OFAC”) placed PM on its sanctions list, causing many of PM’s subcontractors to suspend performance. PM notified PVN that the sanctions constituted a force majeure event under the contract and continued to request payment of outstanding sums under its payment applications.
Subsequently, in November 2018, PM gave notice of its intent to terminate the contract on force majeure grounds. Additionally PM demanded payment from PVN, threatening termination for non-payment. On 28 January 2019, PM issued the first notice of termination, citing force majeure, with the termination to take effect on 18 February. Days later, on 8 February, it issued a second termination notice based on PVN’s failure to pay, with termination to take effect on 22 February.
On 22 August 2019, PM initiated arbitration proceedings against PVN under the SIAC Arbitration Rules. In a Final Award issued in November 2023, the tribunal found that the Russian claimant had lawfully terminated the power plant construction contract due to PVN’s failure to fulfill its payment obligations. As a result, the tribunal awarded the claimant approximately USD 500 million in damages.
In 2024, PVN submitted an annulment request to the Singapore High Court. In its judgment on 24 September 2024, the court determined that some aspects of the award violated natural justice principles, as the arbitration tribunal had not given the parties a fair opportunity to present their case. Rather than annulling the award, the judge referred the matter back to the arbitral tribunal for reconsideration. (In contrast the same award was enforced by the Moscow Commercial Court in September 2024.)
PVN and PM filed cross-appeals against the Singapore High Court’s decision of 24 September 2024. PVN challenged the High Court’s order for remission instead of setting aside the award, while PM appealed the finding that grounds existed for setting aside.
Appeal of the Singapore High Court Decision and New Evidence
The Court of Appeal judgment from 17 March 2025 focuses on PVN’s appeal regarding remission. While the main appeal proceedings remain pending, the court has decided on the request to adduce two pieces of evidence in the form of the solicitors’ notes. PVN intended to rely on the notes to establish that neither party had made a request for remission.
PVN argued that it should be permitted to present the notes, as they relate to a matter that arose only after the High Court decision. PVN claimed that the July 2024 hearing notes incorrectly show that the respondent requested to remit the case to the arbitration tribunal, and that the judge’s decision was based on this incorrect understanding.
The court rejected the application to adduce new evidence for several reasons, primarily focusing on the applicant’s failure to act with reasonable diligence. The applicant did not raise the alleged error in the judge’s notes until over five months after becoming aware of it. This delay was considered unreasonable and unexplained by the tribunal. Furthermore, the applicant failed to raise the alleged error with the High Court judge before escalating the matter to the appeal level, and the procedure for challenging the official record was not followed.
The court also found that the applicant did not satisfy the materiality condition required to admit new evidence. The solicitors’ notes were deemed immaterial as the applicant did not demonstrate their relevance to the appeal. The court emphasized the legal framework governing the application, which requires showing “special grounds” to admit further evidence, a condition the applicant did not meet.
Ultimately, the court concluded that the applicant’s delay and failure to satisfy the legal requirements justified the rejection of the application.
ABOUT THE AUTHOR
Esen Aydın is a Legal Content Manager at Jus Mundi and a PhD candidate at Istanbul University. Her research focuses on private international law and commercial arbitration. She holds two Master’s Degrees in International Arbitration and Dispute Settlement from Istanbul University and SciencesPo, Paris. Prior to joining Jus Mundi, Esen worked as a teaching assistant in Private International Law.
