Singapore High Court finds insufficient nexus in tribunal's reasoning

Reproduced from Practical Law with the permission of the publishers. For further information visit www.practicallaw.com.

In DOM v DON [2025] SGHC 103, the Singapore High Court partially set aside an arbitration award concerning a construction dispute on the basis that the tribunal's decision to award a percentage of consultancy fees did not have a sufficient nexus to the parties' arguments.

The Singapore High Court has partially set aside an award finding that the tribunal's decision to award a percentage of consultancy fees did not have a sufficient nexus to the parties' arguments. The dispute originated from a construction contract where the claimant (DOM) was the main contractor for works to the respondent's (DON) factory building. Post-completion, multiple disputes arose concerning variation orders (VOs) claimed by DOM and rectification costs for numerous defects counterclaimed by DON.

The contract contained an arbitration clause and arbitration was commenced with a seat in Singapore. The tribunal directed parties to prepare detailed Scott Schedules and ultimately awarded various amounts to both DOM (for the VOs) and DON (for various defects, plus consultants' fees). DOM applied to the High Court to set aside nine portions of the award, citing breaches of natural justice, fraud and public policy.

The High Court dismissed the application, except in relation to one portion requiring DOM to pay a percentage of DON's project manager fees. The tribunal had repeatedly found it was not necessary to have a project manager but still awarded the fees without further explanation, discounting them by half "due to insufficient evidence". Therefore, the tribunal's reasoning lacked a sufficient nexus to the parties' arguments on whether the consultants' fees were justified. A reasonable litigant could not foresee that the arbitrator would still award its fees in this situation. Accordingly, the decision was in breach of natural justice and that portion of the award was set aside.

This case provides a rare example of a court finding that a tribunal's reasoning has an "insufficient nexus" to the parties' arguments. Here, it arose from inconsistent conclusions within the award, which arises when there are many different and distinct issues to consider during a fact-intensive arbitration. Tribunals should carefully ensure that each conclusion made is not detached from the issues and evidence presented.

This case also illustrates the increasing complexity of applications to set aside awards and the heavy burden on judges when assessing them, who may find themselves forced to engage in a forensic deep dive into the material presented at arbitration. Construction disputes (especially those involving delays, defects and detailed Scott Schedules) are particularly prone to such issues. The complexity of quantification and valuation often leads to tribunals adopting approaches not put forward by either party, but which lie somewhere between.

Case: DOM V DON [2025] SGHC 103 (28 May 2025) (Wong Li Kok, Alex JC).