Introduction
On November 22, 2024, the ITA Arbitration Report unveiled its latest initiative, the ITA Reporters Roundtable, a virtual webinar series designed to foster dialogue on critical global developments in international arbitration. The panel was led by co-managing editors Monique Sasson, founder of DeliSasson and arbitrator with Arbitra International, who has particular expertise in international investment law, and Dr. Crina Baltag, a Professor of International Arbitration at Stockholm University, member of the Board of the SCC Arbitration Institute, chair of the ITA Academic Council and qualified attorney-at-law, who has over 20 years of extensive practice in various aspects on international dispute resolution, as well as private and public international law.
The session featured a distinguished panel of ITA Reporters, including Damian Sturzaker (Marque Lawyers), Maria Beatrice Deli (DeliSasson), and Nicholas Fletcher KC (4 New Square Chambers). Moderated by Monique Sasson and Crina Baltag, the discussion delved into several pivotal issues, including the right to a fair hearing in arbitration, the enforcement of arbitral awards, and the adequacy of reasoning in arbitral decisions. The panel also explored whether parties could waive their right to a reasoned award, a question which continues to provoke legal debate.
The ITA Reporters Roundtable also highlighted timely topics recently addressed by national courts decisions, including significant rulings by the Singapore High Court in cases such as Federal Republic of Nigeria v. Process & Industrial Developments Limited (“Nigeria v. P&ID”);1Federal Republic of Nigeria v. Process & Industrial Developments Limited (“Nigeria v. P&ID”) [2020] EWHC (Comm.) 237.1 A v. B and Others;2A v. B and Others [2024] H.K.C.F.I. 751.2 and Danieli & C. Officine Meccaniche S.p.A. and Danieli Malaysia Sdn. Bhd. v. Southern HRC Sdn. Bhd., ICC Case No. 22174/CYK/PTA (“Danieli case”).3Danieli Malaysia Sdn. Bhd. v. Southern HRC Sdn. Bhd., ICC Case No. 22174/CYK/PTA.3 These decisions have underscored critical concerns about balancing procedural fairness, transparency, and the efficiency of arbitration proceedings.
This article provides key insights into the significant rulings and issues currently shaping international arbitration. It then further examines the consequences of an arbitrator’s failure to provide reasons for their decisions and explores whether recent court cases offer any guidance on this matter.
Right to a Fair Hearing and Reasoning of the Award
A. Introduction: Ensuring the Right to a Fair Hearing in Arbitration
The right to a fair hearing is a cornerstone of procedural justice in arbitration and is vital to ensuring both the legitimacy of the arbitral process and the enforceability of awards. As Gary Born, leading commentator has noted, this principle mandates that parties be treated equally and afforded a full opportunity to present their case, thus serving as a foundation for the integrity of the arbitral process.1See GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 2167 (2d ed. 2014).1 Its consistent application safeguards against both bias and procedural irregularities.2Id.2
This right is embedded in several authoritative legal instruments. For example, Article 18 of the UNCITRAL Model Law guarantees equal treatment of parties and their right to be heard, described by Holtzmann and Neuhaus as “the cornerstone of due process protections in arbitration”.3HOWARD M. HOLTZMANN & JOSEPH E. NEUHAUS, A GUIDE TO THE UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION: LEGISLATIVE HISTORY AND COMMENTARY 552 (1989).3 The New York Convention, through Article V(1)(b), similarly permits the refusal of enforcement of an arbitral award in instances where one of the parties was not able to present its case.4See Convention on the Recognition and Enforcement of Arbitral Awards (“New York Convention”), art. V(1)(b), Jun. 10, 1958, 330 U.N.T.S. 3.4
Moreover, while primarily addressing judicial proceedings, Article 6(1) of the European Convention on Human Rights has influenced arbitral practices, particularly within Europe. Franz T. Schwarz and Christian W. Konrad highlight in their commentary, The Vienna Rules, on arbitration in Austria that this provision, which guarantees a fair trial, is increasingly referenced to align arbitration with principles of procedural fairness.5See FRANZ T. SCHWARZ & CHRISTIAN W. KONRAD, THE VIENNA RULES: A COMMENTARY ON INTERNATIONAL ARBITRATION IN AUSTRIA 110 (2009).5
Additionally, the International Bar Association’s Rules on the Taking of Evidence in International Arbitration provide practical guidance to ensure fairness during the presentation of evidence. For example, Jeffrey Waincymer emphasizes that these rules act as a framework for balancing procedural rigor with flexibility in international disputes.6See JEFFREY WAINCYMER, PROCEDURE AND EVIDENCE IN INTERNATIONAL ARBITRATION 749 (2012).6
These legal provisions reflect the importance of maintaining procedural fairness in arbitration, not only to secure the integrity of awards but also to reinforce the legitimacy of arbitration as a preferred method of dispute resolution. During the panel discussion certain cases, such as Nigeria v. P&ID, served to highlight the practical implications of these legal provisions, demonstrating the evolving standards of fairness in international arbitration.
B. Case Summary: Nigeria v. P&ID – The Arbitration and English Court Challenge
Regarding this matter, during the round table, the most relevant cases were debated, including Nigeria v. P&ID.7Nigeria v. P&ID [2020] EWHC (Comm) 237 (Eng.). 7
In his remarks, Nicholas Fletcher KC emphasized that the right to a fair hearing is a cornerstone of international arbitration, which ensures that both parties have an equal opportunity to present their case and the tribunal gives due consideration to all arguments raised. Related to this right, in the Nigeria v. P&ID case, Nigeria alleged that it had been denied a fair hearing during the arbitral proceedings. The Nigerian government contended that the tribunal had failed to properly address several key defenses, particularly allegations of fraud in the formation of the underlying Gas Supply and Processing Agreement (“GSPA”). Nigeria further argued that the arbitral tribunal’s failure to consider these claims violated its right to procedural fairness, a fundamental principle under both Article 18 of the UNCITRAL Model Law and Article V(1)(b) of the New York Convention.
Nigeria’s challenge before the English courts was grounded in the lack of procedural fairness, particularly with respect to the tribunal’s handling of the fraud allegations, which were central to Nigeria’s defense. These allegations were centered on claims that P&ID had fraudulently induced the government to enter into the GSPA. Nigeria argued that this issue was not adequately addressed by the tribunal, thus depriving the Government of a fair opportunity to present its case.
Despite rejecting allegations of bribery against Nigeria’s legal team, the judge criticized the arbitral process, citing delays, lack of legal engagement, and failure to address important legal questions during the arbitration. The judgment also raised broader questions about the fairness of arbitration proceedings, particularly in cases involving significant sums and state parties, emphasizing the need for more intervention from tribunals in such cases.
The case further prompted discussions about the role of tribunals in addressing evidentiary issues and ensuring competent submissions, as well as the implications of a tribunal raising legal arguments that were not initially presented by the parties. The case also highlighted the challenges faced by tribunals in cases involving complex issues, corruption, and large-scale financial stakes.
During the roundtable discussion on the case and its implications, several thought-provoking questions were raised by Nicholas Fletcher KC, prompting a deeper consideration of the complexity of the right to a fair hearing and the potential consequences of its breach. Amongst the most significant questions posed were: How would a tribunal's active pursuit of arguments not raised by the parties or their counsel impact the fairness of the proceedings? And, if a tribunal initiates a question or issue of law, does this constitute a matter the tribunal has been asked to determine, or is it outside the scope of its mandate?
The issues raised above highlight the fundamental importance of fairness in arbitral proceedings. As Born rightly points out, “if the arbitral tribunal is not listening, then no opportunity to be heard really existed”.8GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 3515 (3d ed. 2021).8 An essential element of the right to be heard under Article 34(2)(a)(ii) of the Model Law, as well in other contexts, is the opportunity to comment on evidence or arguments introduced in the arbitral proceedings by a counter-party or by the arbitral tribunal.9See id.9 “Failure to permit a party the opportunity to provide such comments can in principle constitute grounds for the annulling or denying confirmation of the resulting award.”10See id.10
The Tribunal's Role in Raising Issues and the Consequences of Failing to Provide Reasons for an Award
The role of an arbitrator in identifying and addressing key issues during an arbitration is both a matter of procedural integrity and a legal obligation to ensure fairness. A tribunal must carefully balance its proactive involvement with respecting the autonomy of the parties, ensuring that its interventions are within the permissible bounds of the arbitration process.
A. The Tribunal's Right and Obligation to Intervene
An essential question in international arbitration that was also raised during the panel discussion by Damian Sturzaker is whether the tribunal has the right—or even the obligation—to intervene when it believes that a key point is not being adequately addressed by the parties. In responding to this question, during the panel, the well-known principle that an arbitrator’s primary duty is to render an enforceable award was highlighted. This inherently includes the obligation to provide reasons for the award.1Id. at 3656.1
Damian Sturzaker explored the understanding of what constitutes adequate reasoning in arbitral awards. This issue is often addressed in arbitration literature by, such as Born, where it is discussed that the reasoning must reflect the tribunal’s evaluation of the evidence and arguments presented, ensuring procedural fairness and clarity.2See id. at 3632.2 As such, there is a clear duty for arbitrators to ensure that the proceedings are fair, and this includes the possibility of actively guiding the parties to properly present their case. Other prominent scholars, such as Nigel Blackaby in Redfern and Hunter’s treatise, have noted that arbitrators are responsible for managing the process and ensuring that it is not derailed by procedural or evidentiary failures. The tribunal is therefore expected to act with due diligence and to raise concerns about missing points at an early stage, whether through case management conferences or otherwise.3See NIGEL BLACKABY KC ET AL., REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION 150 (6th ed. 2015).3
However, while it is open to a tribunal to invite submissions on specific issues, the question arises whether it should also raise new lines of argument or address points that have not been put in issue by the parties. The Nigeria v. P&ID case serves as a key example in this regard. In that case, Nigeria argued that the arbitral award should be set aside due to a failure to address certain key points or to explain the rationale behind certain decisions.4See Nigeria v. P&ID [2020] EWHC at 237.4 The tribunal’s intervention—or lack thereof—was a central issue in the court’s review of the award, with the English High Court emphasizing that an award must be grounded in clear reasoning, and the outcome of this case may thus have implications for future proceedings.5See id.5
B. The Limits of Tribunal Intervention
The tribunal’s role in questioning witnesses, experts, and counsel is also a critical area where the limits of intervention need to be considered. Tribunals have the right to ask questions and ensure that the evidence is properly presented, which may include requesting further clarification or documentation. However, the scope of such intervention should remain within the procedural framework set by the parties and the arbitral rules.6See BORN, supra note 11, at 3527–28.6 As noted by numerous scholars, while tribunals can request specific evidence or raise concerns about the sufficiency of the factual record, they should avoid introducing entirely new arguments or evidence that were not previously raised by the parties.7See id.7 This is particularly true when such interventions could be perceived as altering the balance of the proceedings or introducing new lines of dispute without consent.
Conversely, a tribunal’s failure to exercise its right to ask pertinent questions or to raise potential issues early in the process can also have significant consequences. As an illustrative example, in the context of the Nigeria v. P&ID case, Nigeria’s arguments that certain issues were not adequately addressed by the tribunal highlighted the importance of proactive engagement from the outset. The tribunal’s failure to raise critical issues led to concerns about due process, especially when it became evident that significant points were not part of the initial scope of the arbitration.8See Nigeria v. PI&D, [2020] EWHC 237.8 Taken together, the tribunal’s right to intervene must be carefully balanced to avoid issues of due process through lack of intervention or the introduction of new arguments or evidence not put forth by the parties to the proceedings.
C. The Role of Reasons in the Arbitration Award
Another significant topic raised was whether parties can waive the requirement for the arbitrator to provide reasons and thereby relieve the arbitrator of this burden. This issue is tied to the principle of party autonomy, which allows parties to define procedural aspects of arbitration, as recognized in Article 19 of the UNCITRAL Model Law. However, courts have often underscored that reasoned awards are critical for enforceability and judicial review, suggesting that waiver could be problematic in certain jurisdictions and have a direct impact on the enforceability of an arbitral award.
The provision of reasons in arbitral awards is essential for upholding principles of natural justice, was underlined by Damian Sturzaker during the panel. The requirement for arbitrators to provide reasons for their decisions is essential to maintaining fairness and transparency in the arbitral process. For instance, Born emphasizes that an award lacking sufficient reasoning risks being set aside under frameworks like the UNCITRAL Model Law.9See BORN, supra note 11, at 2523.9 Some courts have annulled awards where it appears from the text of the award that the arbitrators have not considered the parties’ arguments, reasoning that this constitutes a denial of the parties’ opportunity to be heard, even though a better approach would be to analyze awards of this character under the category of unreasoned awards, rather than seeking to infer a denial of an opportunity to be heard.10See id. at 2536.10
Most national laws, such as the English Arbitration Act 1996, mandate that awards must contain reasons unless the parties agree otherwise.11See English Arbitration Act 1996, c. 23, § 52(4) (Eng.).11 Conversely, in the United States, arbitrators are generally not required to provide reasons unless explicitly stipulated in the arbitration agreement.12See U.S. Federal Arbitration Act. 9 U.S.C. § 201, et seq. (as a primary source that US law does not require a reasoned award in international arbitrations); United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 598–99 (1960).12 This highlights the variability in legal standards and the impact of party autonomy on this requirement across different jurisdictions.
Institutional rules like those of the ICC,13See ICC Rules of Arbitration (2021), art. 32(2).13 LCIA,14See LCIA Arbitration Rules (2020), art. 26.2.14 and SCC15See SCC Arbitration Rules (2021), art. 42(1).15 typically require reasoned awards. However, these rules allow parties to opt out if the parties agree. The obligation to provide reasons often flows from a combination of the arbitration agreement, institutional rules, and the national law governing the arbitration. This hierarchy underscores the interplay of party autonomy and institutional frameworks in determining procedural requirements.
Most jurisdictions and institutional rules also permit parties to waive the requirement for a reasoned award. While waiving this requirement can enhance efficiency and reduce costs, it limits the ability to challenge the award for procedural defects. As noted by scholars, where statutory language allows, arbitration legislation should be interpreted to permit parties to agree to unreasoned arbitral award.16See BORN, supra note 11, at 3296.16 Furthermore, where parties have so agreed, an unreasoned foreign award should be recognized, even if local law in the judicial enforcement forum typically requires reasoned arbitral awards in domestically-seated arbitrations.17Id.17
D. Failure to Provide Adequate Reasons in Arbitral Awards – The Case of A v. B in Hong Kong
The Hong Kong Court of First Instance, in A v. B [2024] H.K.C.F.I. 751, refused to enforce an arbitral award, citing inadequate reasoning as grounds for setting it aside.18See A v. B, [2024] HKCFI 751. Readers of the award, namely the parties themselves, should understand how and why the tribunal reached its conclusion on a particular issue, in the context of how relevant issues had been argued before the tribunal. 18 The case involved a franchise dispute where the respondents argued that the sole arbitrator failed to substantiate key conclusions on the governing law, termination date and enforceability of a non-compete covenant. Justice Chan by carefully considering the award stated that it “would be contrary to public policy to enforce and recognize the Award when those important issues, which the parties were entitled to expect to be addressed in the Award, were not in fact addressed or explained.”19Id. at ¶ 34.19
The judgment aligns with established Hong Kong jurisprudence, where “as found in A v B HCCT 40/2014, 15 June 2015, it is fundamental to concepts of fairness, due process and justice, as recognized in Hong Kong, that key and material issues raised for determination, either by a court or the arbitral tribunal, should be considered and dealt with fairly,”20Id.20 which mandates that arbitrators adequately address core issues raised during the proceedings while allowing flexibility in the depth of the reasoning provided. Justice Chan clarified that failing to state reasons is distinct from failing to address every argument raised, a critical distinction recognized in international arbitration practices.21See id. at ¶ 35.21
The principle highlighted in this context mirrors findings in ICSID annulments, where failure to state the reasons is the second most frequently invoked ground (i.e. where a party sought to annul an award in at least 115 proceedings relying on this ground),22ICSID ANNUAL REVIEW OF ANNULMENTS (2023), at 95, available at https://icsid.worldbank.org/sites/default/files/publications/Background_Paper_on_Annulment.pdf.22 which as the roundtable noted was upheld in 11 cases. As noted in the ICSID Annual Review of Annulments 2023, the high threshold for annulment based on reasoning failures demonstrates the general deference to arbitral awards in international practice.23See id. at 90–95.23
This decision underscores the shared responsibility of arbitrators, counsel, and arbitral institutions to uphold procedural integrity and ensure transparent reasoning. It also highlights the rare but impactful role of inadequate reasoning as a ground for annulment or non-enforcement under frameworks like the UNCITRAL Model Law24See UNCITRAL, Model Law on International Commercial Arbitration (1985), with amendments as adopted in 2006 (2008) (“UNCITRAL Model Law”), art. 34(2)(a)(ii).24 and the New York Convention.25See New York Convention, art. V(1)(e).25 Particularly, we can conclude that in cases involving public interest or state entities, robust reasoning is crucial for maintaining the legitimacy and enforceability of awards.
Procedural Missteps and Public Policy Violations: Legal Perspectives in the Danieli Case
The Danieli v. Southern HRC case,1Danieli & C. Officine Meccaniche S.p.A. and Danieli Malaysia Sdn. Bhd. v. Southern HRC Sdn. Bhd., ICC Case No. 22174/CYK/PTA.1 highlights critical issues in international arbitration, particularly regarding procedural fairness, the protection of due process rights and the strict observance of arbitral mandates. This judgment reflects the ongoing judicial scrutiny over how arbitration processes align with fundamental principles of justice and the expectations of parties in high-stakes disputes. The underlying arbitration was conducted under ICC rules and the award was reviewed by the Italian Court of Appeal in Trieste, and underscores the impact of a tribunal’s deviation from the agreed terms of reference on the validity and enforceability of arbitral awards. During the ITA Roundtable, Maria Beatrice emphasized the tribunal’s failure to consult the parties regarding a critical remedy—the restitution of a steel plant—and how this omission raised issues of due process and public policy.
A. Breach of Due Process and Equal Treatment
The tribunal’s decision in Danieli to order the return of the steel plant, without consulting the parties or including it in the terms of reference, deprived the parties of their right to present defenses, thus violating due process under UNCITRAL Model Law which provides that “each party shall be given a full opportunity of presenting his case.”2UNCITRAL Model Law, art. 18.2 Under Italian law, namely in the Code of Civil Procedure,3See Codice civile, art. 840, as amended by Legge n. 137/2023, Oct. 10, 2023 (It.) (“Italian Civil Procedure Code”) (“ . . . (2) the party against whom the award is invoked was not informed of the appointment of the arbitrator, of the arbitration proceedings or was otherwise unable to present its case during the proceedings; (3) the award decided upon a dispute that was not contemplated in the compromise or the arbitration clause, or fell outside the limits of the compromise or the arbitration clause.”) (English translation).3 this failure to respect procedural fairness provides grounds for refusing recognition or enforcement of the award, aligning with Article V of the New York Convention. This generally covers cases where the arbitral tribunal has improperly decided issues not submitted to it by the parties, or the tribunal grants remedies that no party had requested. This principle later was affirmed in the Danieli case by the Trieste Court of Appeal,4See Danieli & C. Officine Meccaniche S.p.A. and Danieli Malaysia Sdn. Bhd. v. Southern HRC Sdn. Bhd., ICC Case No. 22174/CYK/PTA, Trieste Corte di Appello (App.), 4 agosto (2023) (It.).4 which emphasized that procedural fairness is integral to public policy.
B. Tribunal Acting Ultra Petita
In the Danieli case, the tribunal exceeded its mandate by addressing issues not submitted by the parties, contravening the principle of ultra petita. While broad “catch-all” clauses in the terms of reference allow tribunals discretion, it is essential that such clauses must still respect party autonomy and procedural fairness. The tribunal’s decision in the Danieli case to mandate restitution of the plant, absent any prior discussion, violated these principles. This aligns with the interpretation of the New York Convention (Article V(1)(c)) and has been explored in cases such as Hebei Import & Export Corp. v. Polytek Engineering Co. [1999] H.K.C.F.A. 40, in which tribunals have exceeded their mandate by ruling on claims not raised by the parties.5See Hebei Import & Export Corp. v. Polytek Engineering Co., [1999] H.K.C.F.A. 40.5
C. Violation of Public Policy
The tribunal’s failure to notify the parties about the potential remedy of restitution also breached public policy under Article 840 para.3 (5) of the Italian Code of Civil Procedure, “the award has not yet become binding on the parties or has been annulled or suspended by a competent authority of the State in which, or under the law of which, it was rendered,”6Italian Code of Civil Procedure, art. 840, para. 3, subsection (5).6 which protects the right to due process. Public policy violations, including procedural irregularities, have been grounds for refusal of enforcement in Italian case law. As an illustrative example, in Danieli, the tribunal’s failure to consult the parties and its lack of clarity on logistical and financial responsibilities for the plant’s return contributed to the unenforceability of the award.
D. Procedural Oversight and Institutional Scrutiny
Arbitral awards must also comply with the form requirements set forth in the parties’ arbitration agreement.7See BORN, supra note 11, at 3288.7 Additionally, in certain jurisdictions, national arbitration legislation imposes mandatory form requirements that override the less demanding form requirements set forth in institutional arbitration rules.8Id.8 Some institutions have amended their rules to reflect additional procedural safeguards and institutional scrutiny of awards. For example, the most recent version of the ICC rules mandates that terms of reference and draft awards undergo a scrutiny to ensure procedural compliance.9ICC Rules of Arbitration (2021), arts. 23 and 33.9
Noncompliance with the form requirements set forth in institutional rules may expose the arbitral award to annulment or non-recognition on the grounds that the parties’ agreed arbitral procedures were not complied with.10See BORN, supra note 11, at 3288.10 However, it is only in an exceptional case where even material noncompliance with a form requirement has a sufficiently serious effect on the arbitral process which will warrant either annulment or non-recognition of an award.11See id.11 In instances where there is no additional scrutiny by an institution, such as in the Danieli case, the failure of institutional oversight allowed procedural lapses to undermine the award’s validity.12See Danieli & C. Officine Meccaniche S.p.A. and Danieli Malaysia Sdn. Bhd. v. Southern HRC Sdn. Bhd., ICC Case No. 22174/CYK/PTA ¶ 38–39.12 Enhanced review by arbitral institutions may have avoided such a result and could bolster the validity of future arbitral awards by identifying and addressing the tribunal’s failure to consult the parties.
Taken together, the Danieli case underscores the vital importance of procedural fairness and the integrity of arbitral proceedings. Arbitrators must act within their mandate, respecting the agreed terms of reference, while arbitral institutions must rigorously oversee adherence to these principles. Institutional scrutiny of arbitral awards further reduces the risk of noncompliance with such form requirements.13See BORN, supra note 11, at 3289.13
Conclusion
The tribunal’s role in raising and addressing key issues is crucial to the integrity and fairness of the arbitral process. While arbitrators have the discretion to invite submissions and raise concerns about unaddressed issues or gaps in the parties’ submissions, their interventions must remain within the procedural framework agreed upon by the parties. Failure to adequately intervene and to provide reasons for decisions can have significant legal consequences, as demonstrated by the Nigeria v. P&ID case. The requirement for reasoned awards is not merely a procedural formality but a safeguard for transparency, accountability and the enforceability of arbitral awards. As the arbitration community continues to evolve, the need for arbitrators to engage early, manage the process proactively, and provide clear reasons for their decisions remains a cornerstone of fair and effective dispute resolution.
